Please welcome back our usual Thursday contributor, Laurie from The Frugal Farmer
If you’ve been involved, in any capacity, in the personal finance blogging world for any length of time, then you have at least an idea of how to create a budget, and of how important budgets are to your money’s well-being. But have you ever thought of creating a Desperate Measures budget to get you through difficult and unexpected circumstances?
A Desperate Measures budget is one that you will need to implement if something serious happens with your money, like a job loss that takes away the majority of your income, you encounter a huge unexpected expense, or to pay off a massive amount of debt. It’s different from a standard budget because it’s specifically designed to kick into action when you encounter extreme circumstances.
We started our first budget one year ago, along with a plan to track all spending, and we haven’t looked back. Budgeting and spend-tracking have absolutely changed our lives, and I would encourage you to research the two more if you haven’t already. That being said, the value of a Desperate Measures budget was brought front and center for me last week as my family and I shivered through the Polar Vortex that blanketed so much of America in frigid, bitter cold.
You can read the details here, but the gist of the story is that, although we had a propane fill (propane is how we heat our home, run our oven, and heat our water) scheduled for Monday, when the Polar Vortex was supposed to hit hard, the sub-zero temps preceding the super freeze had drained our tanks faster than expected, and we were forced to take every possible measure to limit propane use until the driver came on Monday. And then, he didn’t come on Monday.
This could have been a very dangerous and costly issue for our family had we not implemented our Desperate Measures propane “budget,” and it got me thinking that we should probably have a Desperate Measures financial budget as well. Here’s how you and I can create a budget that will work when we need to seriously reduce our spending due to some unforeseen circumstance.
Cut the Fluff – All of It
To create your Desperate Measures budget, the first thing you’ll need to do is to go through every expense, and take away all unnecessary expenses. By this, I mean ALL unnecessary expenses. Your Desperate Measures budget will have no entertainment monies, no clothing expenses, and no cable TV. All expenses that are not crucial to survival (and no, ESPN does NOT fall into the “crucial to survival” category. ) must go.
Dance class and soccer? Gone. Friday night happy hour? Buh-bye. In our case with the propane, this meant no heated garage for Rick, no matter how much his precious garage floors might have suffered.
Take the Necessary Expenses, and Reduce Them Even More
Yes, you need food, but it does not have to be steak tar-tar. My parents have the perfect story about understanding what a true need is. When they were first married, before I came along, dad was a Marine stationed at camp in Tennessee. One month, money was tight. And by tight, I mean, we-are-seriously-broke tight. They knew that they had to take desperate measures to make it through the month, so they went to the store and bought a giant box of macaroni, and a giant pack of cheese slices, and they ate mac & cheese for nearly a month straight.
Did it suck? You bet it did. It was decades before my mom could stand the sight of mac & cheese. But they did what they needed to do and cut their necessity expenses down to the bare minimum in order to make it through. Remember that, back in the sixties, credit cards were only issued to the elite, so, for most people, it was go-cash or go-home. Putting the groceries on a credit card wasn’t an option, so you had to do what needed to be done to live within your means.
In the case of our propane issue, for us this meant no showers, no dishwasher, and no oven cooking. We used the crock pot, the microwave and the air popcorn popper for three days, like it or not.
Get Extreme With Your Desperate Measures Budget
Your Desperate Measures budget needs to be a case of extreme cutting of expenses. It will require you to be brutally honest about what you actually need to survive until the emergency at hand is over. This is not the normal ” how to create a budget ” class, my friends. This is the ” How to create a budget that includes only what we absolutely, positively need to survive, as in food, shelter and water” class.
Look over your budget a third time and cut out anything that isn’t absolutely necessary for your survival. This might mean a lot of rice, beans and pasta for your family, or a lot of staying home so that you’re not using gas for your car. Again, it’s important to remember that the point of this type of a budget is to reduce your expenses to true “necessity only” costs.
Hopefully, you will never have to use your desperate measures budget, and hopefully we won’t either. But won’t it feel good knowing you’ve got a plan in place in case you ever do need it?
Have you ever made a Desperate Measures budget? What expense would hurt the most to cut?
Photo courtesy of: StockMonkeys.com