Living Well in a Down Economy For Dummies, 2nd Edition
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How can you save for retirement when you need all your income to make ends meet now? What do you do when college loans come due and money is tight? How can you trim back household expenses?

When the economy is down, you can still save money without sacrificing your quality of life. Every little change you make to your finances can help.

Here, you get some tips on saving on energy costs, shopping smart, and making a budget.

How to save on energy costs

The following tips, when combined together, can help cut your electricity and gas bills considerably (which is a great help when the economy is down):

  • Find out whether your local energy provider has off-peak hours when electricity use is less expensive.
  • Use a programmable thermostat that you can set for different temperatures at different hours.
  • Wash clothes in cold water.
  • If you need a cup or two of hot water, don’t let the tap run until the hot water comes out; heat water in the microwave instead.
  •  If you have outdoor lighting for safety reasons, install motion detectors on the lights.
  • Refrigerators and freezers work better if they’re full. Fill the empty spaces with clean milk jugs filled with water.
  • Clean the coils of the fridge regularly so the cooling mechanism can run more efficiently.
  • Use a water heater insulation blanket and keep the water heater’s temperature set at 120 degrees Fahrenheit.

Shop smart

You can reduce typical household expenses and still enjoy quite a few of life’s luxuries, even in an economic downtime. Check out the following tips for shopping wisely:

  • Go to a “cash only” basis for budgeting.
  • Shop from a list for everything from food to clothing to holiday gifts. Stick to the list!
  • Consolidate your little trips to the grocery store into one weekly trip to save on gas.
  • Don’t shop for groceries when you’re hungry. People who do usually spend more and buy more processed — and, therefore, more expensive — food.
  • Buy merchandise when it’s going out of season.
  • Shop at discount stores and buy dry goods in bulk.
  • Avoid brand names when a generic equivalent is available.
  • Don’t buy impulsively.

Three easy steps to creating a budget

Does the word budget send chills up your spine? It shouldn’t. Budgets allow you to be organized and have some control over what you spend, which is especially important in an economic downturn.

Budgets help you to decide how to spend your money, plan for your future, pay off existing debt, and save a few pennies each month by reducing wasteful and impulsive purchases. Follow these steps:

  1. Categorize your expenses. When you begin setting up a monthly budget, start with big categories before breaking your budget down into smaller expense categories. Within each general category, some items are essential (the mortgage or rent payment, the electric bill, and groceries), but other items are extra (new furniture, gifts, and pizza delivery).From your first list of general budget items, develop two separate budget lists, one for essentials and the other for extras.
  2. Estimate what you spend. Go through any receipts or records you’ve kept over the past few months (including those that are digital or online) so you can track how much you actually spend on essentials. Then for one month keep a detailed diary of all your extra purchases, even for cheap things like coffee from your favorite neighborhood café.
  3. Calculate and adjust. To find out whether your spending habits are keeping you in the red, add up the essentials list and the extras list separately. Subtract the essentials total from your monthly income.If you have money left over, subtract the extras total from that amount. If your extras list takes you into negative numbers, start looking for places to cut back.

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