MONEY COMMENT
Coping With Financial Crisis

By Cliff D'Arcy
October 20, 2004

However well-organised your finances are, you can't predict the unexpected.

Financial lightning strikes us all at some point, but we can't just sit back and wait to see what happens. We need to react – decisively and speedily – in order to get things back on track.

My finances (and my wife's) have been ticking over nicely for a few years now, even after I gave up my financial services job to become a writer. However, recent developments (moving home) mean that we find ourselves needing to raise an extra £1,300+ a month. With any luck, this tight spot should only last for a few months.

This is a tall order, given that my wife and I have already tightened our belts since our children were born. Until our firstborn arrived, we both had well-paid, full-time jobs. Nowadays, my wife works part time, I make ends meet as a hard-up Fool writer, and we have two extra mouths to feed. So, since 2001, we've already made serious spending cutbacks.

However, we're going to have to dig deep to make further savings. Here's what we've done (or are planning to do):

• I'm going to stop spending so much on leisure and entertainment. Socialising in London is very expensive: it's easy to spend £100 a week on eating out, drinking and smoking. Yikes!
• Takeaways and tasty sandwiches are also a no-no. I spend about £5 a day on breakfast and lunch during weekdays, plus about £30 a week on takeaways. That comes to about £200 a month more than I need to spend. Blimey!
• Stop saving £100 a month for my daughter. Luckily, her regular-savings account matures in December, so I have only the final (twelfth) payment to make.
• We're not very organised when it comes to grocery shopping. We tend to drop into our local Waitrose or Marks & Spencer store every other day, instead of making occasional trips to a cheaper store, such as Tesco. Altering our shopping habits could save us, say, £50 a month.
• Discontinue my broadband Internet connection. At £27 a month, this is a luxury I don't need, especially when I have weekday access here at the Fool.
• Cancel our milkman. Although I like to support local businesses, at almost 50p per pint, this luxury costs about £25 a month more than buying four-pint containers of milk at the supermarket.
• Stop buying newspapers, which cost me about £20 a month. For a while, I'll stick to reading the news online or on Teletext, and watching evening news programmes.
• Cancel my BT second phone line, which is used only for Internet access. This will save me roughly £11 a month.

These eight cutbacks should save us about 400 + 200 + 100 + 50 + 27 + 25 + 20  + 11 = £833 a month or thereabouts. That leaves another £467 a month to find, which is where our savings come in. It's at times like these that having big savings, a small mortgage and no other debts really pays off. Phew!

One thing we don't plan to do is to dispense with our cleaner. She does three hours' work each Friday for under £20 a week. This is one luxury that we, as frazzled working parents, feel we can justify at the end of the week!

More: 25 Quick Money-Saving Tips | Seven Deadly Spending Sins.