Friday, April 3, 2009

Before an economic crisis hits you, are you willing to live on half?

Did you watch Oprah on Thursday, April 2? Suze Orman was on the show and apparently she predicted an economic crisis a couple of years ago on the show when she lamented about how much debt Americans were in.

On Thursday, Suze challenged viewers, whether they are single or married to live on half of what they are currently living on now and put the other half in the bank. "If all of a sudden you find yourself without a job—or your partner finds themselves without a job—you are now going to have your income cut by 50 percent almost immediately," Suze said. According to her, unemployment also only makes up about 50 percent of your income. It is better to figure out where to tweak and cut now, before a lay-off, then later when you are distressed. She challenged viewers to live on half for 6-8 months, because it can take that amount of time to find a new job.

I immediately grabbed our household budget and tried to cut it in half. It is one thing to actually be in that dire of a situation, but to cut the budget in half before we are forced to do so is another. We don't live lavishly, but we do have some luxuries built into our budget that I'm not sure I want to give up just yet. I wrote back in early March about how we had a difficult February with our business. We reduced our spending in March, but we didn't cut our spending in half. Cutting the budget in half would call for some serious slashing. There is a big difference between slashing and reducing. I need some time to ponder this and of course cutting the spending in half would have to be a decision I make with my husband and I know he is not ready to give up his NFL channel just yet.

Grab your budgets and take a look. Can you cut it in half? Are you willing to try?

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