Deep Frugality: A Crash Course

In October of this year, the world entered the 'crash' phase of the 2007 Depression: markets tanked; orders were canceled; shipping froze; factories began closing; mass layoffs accelerated. The crash is continuing world-wide, and shows no signs of letting up. What this means for pretty much everyone, among other things, is loss of income - usually a lot.

How best to deal with that loss of income? The thing that will give the most immediate results is to cut spending. Rather than cut expenses willy-nilly, it is best to have a plan. First of all, you need to think long-term. Create a program for how you are going to divvy up your income, and then live within that guideline.

If you really want to thrive, you should think about saving 50% of your income. This may sound outrageous, but there are people who can do this - sometimes whole countries. No matter how little you make, you must 'pay yourself first'. This is especially important if you want to improve your condition. The prognosis for wages and salaries in the future is not good. Your hope for financial betterment will depend most likely on self-employment and investment.

Another severe suggestion is to limit your housing expense to 25% of your income. If you are paying more than that, you are at risk. In many parts of the country, such a limit is quite a stretch, but there are ways to meet it - usually by sharing space.

As for cramming the rest of your spending into 25% of your income, you must rethink what your 'needs' are. You do not need the following: new clothes; prepared food; cable tv; and many other things. When your income is low, managing on this limit is quite austere. You need to accept that. Resist social pressures to spend. Ignore marketing. If your friends try to tease you into spending, educate them - or find new friends. The alternative to frugality is to remained mired in creeping poverty, and risk sinking into destitution.

There are infinite ways to cut expenses, and develop Peasant Virtues. Sometimes it is even fun. You will learn new skills, and perhaps make new friends.