Credit Crunch: A Survivor’s Guide – Downgrade your expenditure

There are two simple ways downgrade your grocery shopping.

The first is by downgrading your supermarket. If you shop at Waitrose (you rich bastards!), you need to start shopping at Marks and Spencer. If you shop at Marks you need to start shopping at Sainsbury. If Sainsbury then Tesco. If Tesco then Asda. If Asda then move to Morrisons. Morrisons to Iceland, Iceland to Lidl/Aldi/Netto. If you have the misfortunate to shop at Lidl/Aldi/Netto you need to get a big stick and start mugging homeless people!

Ok, Morrisons might be above Asda, and its unlikely you’ll have all of those options in your area, but remember online shopping.

If you haven’t got the choice of which supermarket you can go to then you can always downgrade your label. A store-branded product can replace a brand name product. All the major supermarkets are getting in on the store value-brand now, even Waitrose. Both Tesco and Sainsbury have three levels of products, Tesco Finest and Taste the Difference being the top level, and the nicest, although sometimes only slightly. But also the most expensive.

The thing to remember when purchasing your food if that no matter how nice and yummy and delicious it is when you put it in your mouth, it all comes out the same at the other end. If that doesn’t induce you to purchase a Tesco’s value lasagne for 89p than I doubt anything will.

But seriously, downgrading your shopping should be taken slowly. Dropping down from a regular Tesco’s Finest menu to the value range will leave you feeling hard-down-by. Ease yourself down the range in small easily manageable increments.

Also, look at other things that can be downgraded. Your mobile contract can be downgraded as long as you are far enough into it, normally about 9 months. If you’re not using your current allowance give your mobile company a ring and reduce your contract.

Insurance can be downgraded, although check carefully that you are still covered for the things that you want to be covered for.

Downgrade your car. Sometimes this can work the opposite way too. A friend of mine purchased a newer car that had a slightly smaller diesel engine, the lower cost of insurance, lower tax and lower fuel meant that it cost £14.00 a month less to run than the older car. That’s including the more expensive hire-purchase costs. Obviously I cannot recommend getting into higher levels of debt, but in this case I can see the advantage. But debt is still bad.

Start downgrading now.

Credit Crunch: A Survivor’s Guide – Budgeting

Budgeting is not scary, it’s not difficulty and it doesn’t take a genius to do it. You don’t need a degree in finance, or 25 year experience as an economist, nor to you need a financial advisor or book-keeper do it for you.

Budgeting is about knowing what your incomings are (wages normally), and your outgoings (mortgage/rent, utilities, telephone, cable, shopping, credit cards, etc).

Start out by printing off your monthly bank statement. If you haven’t got internet banking then sign-up now. The easiest way to have control of your money is to know how much you have and how much is coming out. This is budgeting.

Make a list of your income:

To make it simple and give you an example we’ll say you receive £1000 wages a month and you have no other income.

Now make a list of your direct debits, standing-orders, and any other monthly payments that you can’t get out of, this should not include any spending on shopping or food:

Rent:               £300.00

Electricity:             £100.00

Gas:                £100.00

Water:                         £20.00

Taxes:             £50.00

Insurance:             £10.00

Travel:             £20.00

So you start with £1000

When you’ve paid all of the above you’re left with: £400.00

This is your working budget. Spend more than this and you’re going into debt. Debt is the enemy! You should always try to spend within your budget. Food, clothes, going out, holidays, petrol, everything that is not a regular bill will come out of your working budget.

Check your bank regularly, internet banking and telephone banking are very helpful in making sure you are aware of your spending.

Budgeting is the opposite of dieting, but both work in the same (although opposite) way: there are only two ways to improve your situation, get more money in or spend less money. (Dieting is use more calories up or take less in).

Being aware of your financial situation, however bad it may be, is always helpful. Remember that knowledge is power.

Next time: Bills

Credit Crunch: A Survivor’s Guide

The credit crunch has hit me hard. I haven’t lost my job (so far), but my income has decreased significantly (about 25%), the threat of redundancy has loomed over me for the whole of 2009 and is likely to be an issue again in 2010. During this time of difficulties I’ve had to tighten my belt, to cut costs, I’ve had to crunch my own credit, look at my needs and expenses and try to put together a back-up fund for emergencies.

It has been hard. The credit crunch was unexpected by most people, including me, and because there was no warning I found myself unprepared.

To give you some background, I have a full-time job (the joy!), I live in rented accommodation (which until recently I enjoyed alone). I enjoy good food, regular holidays, lots of tv channels, unrestricted broadband internet access, buying things when I want them, not having to save forever to get an iPod touch, and being in control of my money.

That is until I realised how precariously balanced I was on the financial divide. The divide between the haves and have-nots. Because of the credit-crisis it’s not so much of a divide any more, and there’s no border patrol stopping you going over to the other side now.

I plan to put together a series of articles aimed at making you look at your money and getting you to think about how you spend it. This isn’t a get rich quick scheme, it’s not a 12-step debt removal system, it’s just a common-sense way of looking at money and how you use it. The idea is to take in this information and use it to save yourself some money without having to go without too much.

Next time: Budgeting