Q&A: Crisis Budget

Q. We have been in our house for several years and did not refinance or get a second mortgage like so many people seem to have done over the past few years. We have managed to make our payments on time and things were fine until they cut back my hours at work six months ago. We struggled but we were still getting by until my husband was laid off two months ago. He cannot find a job even though he is trying really hard. We have already talked to the bank about trying to work with us on the mortgage but they can’t with the little bit of income we have. I don’t even care about the house any more. What can we do to try to keep food in the house until we have to move? We need help just to survive. Can you make any suggestions? We will try anything.

A. For many people today the truth is that they, like you, are in survival mode. I will not address any possibilities for saving your home since your focus is survival of your family. First, you should be applauded for looking at the survival issues as being more urgent than your housing issue.

I would encourage you to immediately adapt a crisis or survival budget. I will cover a whole list of things to do, some I am sure you’ve already thought of but some which you might not have considered. Here goes.

1. Household necessities—food and medicine

• Cook at home—no fast food
• Switch to store brands, minimize food purchases when possible by using simpler dishes (spaghetti instead of lasagna)
• Use coupons and watch for store specials
• Check again to see if you NOW qualify for food stamps
• See if the “Angel Food Ministries” is available in your area
• Look for short dated meats which are dramatically reduced (use immediately or freeze)
• For prescriptions—switch to generics and/or ask your doctor for samples

2. Car expenses

• Can you switch to a lower car payment? Use public transportation?
• Get rid of a second car? Carpool?
• Reduce the number of miles you drive, saving on gas
• Increase the deductible on your insurance to get a lower monthly premium
• Barter for an oil change but DO NOT delay when one is needed

3. Minimize household expenses

• Get rid of cable and minimize the expenses with a land line if you also have a cell phone
• Go to a minimal package with your cell phone company
• Reduce personal care expenses for haircuts, nails (can you barter for the hair or do it at home?)
• Change entertainment to free park or other community events instead of movies, bowling etc
• Cut out playing the lottery or other gambling
• Give up cigarettes or drinking (big saving on 1 or both of these)

4. Look for ways to generate income such as:

• Selling items on eBay
• Holding a garage sale
• Taking items to a consignment shop
• Take in a roommate—be upfront with them about your mortgage situation
• Sell items you don’t need at a flea market
• Look at your skills to see if anyone will pay you for a skill you have (mowing lawns, painting, childcare, fixing items, any one of 50 things)
• Do you have a hobby which could generate income (cake decorating, sewing)

5. Other possibilities

• If the car is paid off, reduce the insurance coverage to liability only
• Change the number of dependents on your W-2’s
• Use conservation methods to reduce your utility bills

6. Housing

• Apply for government subsidized housing (Section 8), even if there is a long waiting list
• Consider moving in with someone (family/friend) for a period of time
• Use techniques for “buying TIME” to stall foreclosure until your situation improves

This is typically called a crisis budget, you can get the definition, and more information, here.

Please share any suggestions you are already using which are not included in the list above. We’ll use them in a future blog and you can help someone else to make it over the hump. We really are all in this together. (You can either leave a comment here, or send an email to Heather at homeownershipmatters@gmail.com).

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(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)