Personal Austerity Plan

Enacting a personal austerity plan and radically cutting expenses, most people would be surprised at the changes that can be made when they rethink the definition of the word “necessities”. If you want to be somewhat immune to the financial difficulties coming down the pipe, you need  to perform a financial makeover to pare down the monthly output to the bare minimum. 

People in Venezuela and parts of Europe will tell you, as they scramble for food, OTC medications, and shelter, that “necessities” are those things essential to life: Water, Food, Medicines, Basic hygiene supplies, Shelter (including sanitation & lights). Everything above those basic necessities is a luxury. Based on your lifestyle and might be considered secondary necessities such as transportation, work clothing, a computer and an internet connection, electrical appliances, a cell phone. 

Personal austerity plan:

1. Relocate to a cheaper location.
2. Moved into small home or apartment.
3. Get rid of all loans.
4. Cut cable and home phone.
5. Restrict home expenses budget.
6. Limit outside food in restaurants & enjoy road side food.
7. Limit personal spending viz cigarettes, liquor etc.
8. Get rid of the current gas guzzling luxury car and get an smaller fuel efficient car.
9. Limit usage of car for absolutely essential trips.
10. Subscribe for low cost digital magazines.
11. Shop through online with discounts.
12. Use credit card for making payments only and never for interest bearing credit.
13. Never spend on expensive & excessive clothing.
14. Restrict gifts and charities payments.
15. Look for low cost or free entertainment.
16. Stay at home and avoid unnecessary expenses.

It is important to make these changes, because if you don’t change your way of life, the government will.  A job loss will.  Inflation will.

Making some difficult changes now can provide a stable standard of living in a world that is going downhill at breakneck speed. By decreasing monthly output, you can hang on to necessities.  It is better to choose your own austerity plan than to have it forced upon you.

Don't buy what you want; Buy what you need; 40% cut down is easily possible.

My View:
If you commit 30-40% of take home salary towards savings and contain living expenses to the remaining amount, automatically you will be leading frugal life with no distractions of lavish spending and simultaneously building security for future expenses & retired life. Those who gets carried away with easy credit and 'spend now and pay later', for other than capital items like home and car, will have happy going as long as income is stable or increasing year after year but in case of downturns or loss of job will simply collapse under debt burden.