Reduce Spending or Downsize

Due to the recession many people have been forced to or voluntarily made adjustments to their lifestyle due to loss of income, unemployment, reduced hours, reduced benefits, etc. However, many others are still struggling with making changes to their lifestyle. Many Americans are stubborn and want a different result but refuse to make the necessary sacrifices required to survive the recession.

If you don't much money left over after you get paid you may need to reduce expenses and spending. Everyone should reduce spending no matter what your situation to ensure you live well below your means so that if a financial crisis occurs you can overcome it without having to make drastic changes.

It is better to reduce spending because it is much easier to scale back by making small adjustments to your life than to make drastic changes. People are better able to adjust to small changes than having to make drastic changes to their lifestyles.

You don't have to sacrifice quality just because you reduced spending. There are many discount and outlets stores that sell the same things that department stores sell at a much lower price. Also, you can shop at discount or wholesale stores to purchase groceries instead of the regular grocery stores. This can save you tons of money and you can still enjoy the same quality of life.

You should downsize:
1) if you were previously a two-income household and you are now a one-income and you have been unemployed for 2 months or more

2)if you are behind 2 months or more on your mortgage, car payment, utilities

3)if you owe late fees on all of your credit cards

4) if you owe so much in late fees or over-the-limit fees on your credit cards that you will never get caught up by just sending in the minimum monthly payment or are unable to make the minimum monthly payments

You should save at least 10% of your monthly income towards savings. If you are not currently saving you can start by saving at least $1 a day or $1 a week. If you can save more than do so. It may take a while and you may not feel it is worth the effort but after a few months you will have a savings account which helps to provide motivation for you to continue to save.

Put your money in a high interest online savings account and you will earn interest at a faster rate than putting your money in a traditional bank. You can then move your money to more long-term savings products.