In our third part of making a budget we need to talk about variable expenses. For the purposes of this explanation, a variable expense is one that can be delayed or postponed when expenses are exceeding income. For a lot of people these days, that is the case and the blog entries are to help you get back on track.
Some variable expenses that you can postpone (though you may not want to and that is where your discipline comes in):
Vacations – instead of spending 3-5 thousand dollars to fly to Australia or China and travel, spend time cleaning your house or take local trips to parks (before they get closed if city/county/state govts keep going the way they are) and save some big cash. Knock down some credit card payments instead with the cash.
New car – if you aren’t planning on driving 80 miles back and forth for a commute, what is wrong with an older car? It doesn’t matter if you have a clunker if the transportation is reliable and you don’t have to spend a lot on repairs or maintenance.
New furniture – I would suggest looking for used furniture at fire sales, swap meets, garage sales. You can find some great stuff just down the block and hopefully for pennies (or dimes) on the dollar in a lot of cases.
Entertainment – I am not suggesting that you don’t entertain yourself, just watch your expenses. Money for movies, books, music, restaurants, cable, etc can be budgeted down and kept at relatively managable levels.
Gifts- Go easy on the big and smaller ticket gifts to keep costs down. You are working at making and keeping a budget, not impressing your friends.
Club memberships – It may be time to temporarily let things go for your golf membership or country club. Do it for a year and see if you can keep doing without unless the social connections help you with your day job.
Charitable contributions – Lower or discontinue the amount that you are giving if you are deep in debt. Charity begins at home so take care of yourself first.
Elective medical procedures – Do you really need that tummy tuck? Can it wait a year or two where the prices for procedures might go down? If you have the extra cash for the surgery, can you use it instead to knock down some of your debt. That is what a budget is all about.
My next entry will deal with Fixed Income. Stay tuned!
Oct 07 2009
Kim Isaac Greenblatt
Variable Expenses and Dealing With Them