A Little Ray of Sunshine

Thursday, December 11, 2008

What you absolutely have to pay--forget those rude people on the phone

Triage is basicly a medical term. It's used by military, by emergency responders, and so on. Basicly it's a way of allocating scarce resources to great needs. Picture yourself at a first aid station. You have people who are injured all around. Some of them will die, no matter what you do. Some of them can be shipped elsewhere, to be treated. Some of them will die unless you do something RIGHT NOW. That third catagory is the catagory you help. If you have extra morphene and some extra hands, you ease the pain of the first two catagories. But you concentrate your resources on the third catagory.
This is what you're going to do with your finances. Your bills: some of them have to die. Some of them might be able to be saved if/when things are better. Some of them you have to keep alive. Get a peice of paper and a pencil, put three columns on the page, labled 'item', 'amount due', and 'monthly due'.
Necessities are pretty simple, we all know them: water, food, shelter, clothing. Because of the society we live in, they have to take on certain forms. We have laws that make it difficult to cut to the real minimums of what we need.
Water: you can't just walk down to the river with a bucket, bring it back and sterilize it, and call it good. Social Service agencies won't allow that, even if it's safe. So you have to pay the water bill. In our town it's bundled with sewer and garbage, and we have to pay all three to get water. This is frustrating, because it'd be much cheaper to take the garbage to the dump ourselves, but in order to get water we're forced to pay for garbage service. On your page write 'water' under 'item', write the amount currently due if there is such under 'amount due' and write the normal monthly amount under 'monthly'.
Shelter: we've all got to live somewhere, and for today, where you are is where you are. We'll talk about ways to make it cheaper later. For now list it out on your page. If it is more than 25% of your net income, that is, the amount you get to keep to pay your bills with, it's probably hurting you.
Electricity: while not a necessity, it's become such, legally. You can loose your kids if you don't have electricity, but that doesn't mean you have to actually use much. So write it down. It may actually be a necessity in your case, if you rely on electricity for heat or to drive a fan for another heat source. While you're at it, walk through your house and unplug stuff from all the outlets and turn out the lights. By not leaving things plugged in while not in use, you can save money on the million clocks and lights that run on them. Even if you don't use any electricity, you'll pay the company for the priviledge of being connected.
Heat: if you're lucky, you don't need electricity for heat. Figure out what your cost per month is, and write it down. You may buy a load of wood each year, you should be setting aside 1/12 of the cost of that each month so it doesn't ruin your budget when it comes around.
Food: $100 per adult, $50 per child, or no more than 25% of your budget, whichever is less. We'll talk about how to attain food for this amount later.
Transportation: if you've got a job you've got to get there. I hope you don't have a car payment if you need a car. If you live reasonably close to where you work you can walk or bike. Or ski, if it's too snowy to walk or bike. If you live in an urban area, there's probably public transport. If you live out where we do, you've got to have a car or motorcycle. Try to drive a car over ten years old and keep it well maintained. Write down your gas and insurance costs. If you have a car payment pencil that in, we'll decide if you can keep it later.
Phone: you won't have a job if you don't have a phone, these days. That doesn't mean you need the phone you have now. Can you cut back? Smaller plan? Tell all the relatives they can't talk to you except at night? Ditch the cell and have just a local landline and get them to foot the long distance? Ditch the cell and the landline and get a pay-as-you-go cell? The pay-as-you-go is particularly nice if you have a lot of debts you can't pay as much on as the debt holders would like: they don't know the number and can't call constantly. Don't give the number out, either, except to those who actually need it.
Insurance: with any luck, your employer is helping to foot the bills. If you have kids, look into Medicaid or your state children's health insurance. Term insurance for life. Keep that auto insurance as long as you have the auto. Keep the homeowner's or renter's insurance. Keep whatever disability insurance you have, your chances of using that are greater, so I'm told, than using your life insurance. Insurance takes up more of our income than any other expense. If you don't have a pretax health account, make sure you budget your copays here.
Internet: it sure feels like a need, but it likely isn't. Is there someplace you can get free wi-fi? What about using the library's computers? Can you check your personal email and surf the web on your lunch break at work? A lot of jobs and potential employers can be located on the internet. If you need home internet for work--likely if you work in computers--then it's a need. A cost of having the job.
And that sums it up. You might have a few other bills around. Credit cards, old medical bills, cable, what have you. They aren't needs. They'd just like you to think they are. If these things are paid, you're going to be okay. Add up your totals in the monthly column. If it's less than or equal to your net pay, you're good. If it's more than, you need to cut some of these expenses. I'll talk about how to do that later.

Wednesday, December 10, 2008

Might help someone

We've lived on just one income for . . . well, pretty much ever since we were married, coming up on seven years. Sometimes I've brought in a little money here and there. Last year was our best year, financially, and we didn't break the $50k mark. This year I don't expect we'll break $40k. We're a family of six, I should mention.
So, it seems that with all the financial news being so dire out there, I might have learned a few tricks that would help other folks out. I'll be posting some of these.