What are Necessities?
I was thinking the other day about what would happen if I lost my job. If I lost my job, both Mr. Money and I would lose our health insurance, matching 401k contributions, and about 1/3 of our total income. We’d have to make some cuts to our lifestyle to be able to make it work. It got me thinking: what truly are necessities?
Here’s what I’d consider necessities:
-A place to live
-Food/water
-Heat (in winter)
That’s about all that I think it critical to live. However, if I did lose my job, I would probably not cut everything to include those bare essentials. I would cut the cable (I know, haven’t cut it yet!), be very careful with our grocery budget, and drop our cell phones (or at least mine). I don’t think we could afford private health insurance, so we’d probably have to go without health insurance.
I would have to say- it would be extremely hard to cut the internet. That would be pretty much my only source of entertainment.
Have you considered what would happen if you lost your job? What would you keep and what would you cut?
Cutting the internet would be rough on me! I stay at home all day, we don’t have cable TV, and we don’t get a newspaper. I neeeeed it, lol. We’ve already cut most of our nonessential spending for me to stay home, but if we had to cut further I think we’d look to our grocery budget. We are junk food junkies and could probably cut $15 per trip if we really tried. We’d have to figure something out for health insurance or get on Medicaid, because we have kids. Also, if I got pregnant and a homebirth didn’t pan out and I had to have a hospital transfer, not having insurance could be financially catastrophic. It makes me lightheaded to think of paying an entire hospital birth bill OOP!
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Mrs Money Reply:
July 26th, 2010 at 7:49 pm
Jenny- I am glad I am not the only one who would have a hard time cutting the internet.
I think I need mine too!
Being without health insurance would scare me too. Hopefully we could figure out something!
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I don’t have a specific list of things I would cut, but I know that almost everything could be on it. I agree with you that there are very few things that are really necessities. (Although for us AC in summer would be on the list instead of heat!)
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Mrs Money Reply:
July 26th, 2010 at 7:49 pm
Jackie- That is definitely true for the AC where you are! You couldn’t live without it.
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It is amazing when you think about it, how much we spend on “non-necessities”.
Great exercise, to think through what we would do in an emergency!
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Mrs Money Reply:
July 26th, 2010 at 7:50 pm
Dr Dean- That’s definitely true! I think it would be interesting for me to go through our budget and see what we could cut out. I just did that stuff from the top of my head. Hopefully we won’t have to figure it out!
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Yeah, in the summer I think the A/C might go at least to keep the house as cool as we do on hot days today. We’d probably try to spend more time in the basement during the day and try other ways to keep the house cool going into the evening and overnight hours, which is when ours gets the most. I’d look at other stuff too but that would probably be the ‘first things first’ item.
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Mrs Money Reply:
July 26th, 2010 at 7:51 pm
Money Beagle- I think it would be easier in some areas to do without the A/C. If you lived in Arizona, I think A/C is necessary. I like the idea about spending time in the basement!
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My partner and I both lost our jobs in the summer of 2008 so we suddenly had no income other than some private share cash (and that wasn’t as much as it has been in past years.) We moved cross country (in the UK so less dramatic than it sounds!) to a rented house, and rented our place out for 2x what we were paying. We settled for a very, very outdated place which was d**n freezing in the winter in order to save some money on rent. We ate out a lot less often, and we cut out all holidays other than visiting the family beach house. We did reduce our food budget as much as we could, but we kept Sky TV, mobiles, the internet etc which we could have cut if we really needed to. We could have reduced our expenses down more, but luckily my partner was only out of work for 6 months, although I was unemployed for 13 months. We managed ok.
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Another necessity is clothing. But if I am unemployed, I don’t need to keep up with fashion. I would be just happy to keep my shirt on my back.
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When I wrote a post on this in March, I took about 2 days to really think about it. Here’s what we’d cut first:
Gas $40 – No more driving to work.
Mortgage Overpayment $160 – We would only pay the $740 payment instead of the $900 we’ve been paying.
Vacation Account $250 – That’s how much we put in a month to take a couple of annual vacations.
Eating out $100
Entertainment Expenses $50
“Fun” Money Allowance $250 – We each get $125 a month.
Biweekly Maid Service $120 – I love Jacquie and would invite her over for dinner, but we would have to cut this cost.
Groceries $100 – We could cut back to $300 or less a month if we needed to.
Cable but we’d keep Netflix and the internet- $60
If we were about to starve, I’d stop contributing up to matching in my 401k and stop maxing out our Roth IRA to save $575 a month.
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When we were still living on our own and had to cut things down, we eliminated cable, text messaging on our cell phones, and really slashed our grocery budget. The one thing I couldn’t give up was the internet. How geek is that?! But I think the internet is so useful – it’s entertaining, you can find work, you can make money (if you know what you’re doing). I see it as pretty darn useful.
The one thing I wish we could afford right now is health insurance, but we’re taking care of ourselves as best we can and have found a great doctor who works with those without insurance. We have no complaints.
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Living below your means is the key to savings, but its very hard to do.
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