Budgeting the Orman Way
In a recent episode of Oprah, Suze Orman advised people to begin living on one half of their income, and putting the rest into a savings account. She thinks that this will better prepare you to deal with a job loss in the future. You can quickly build your nest egg, but you are also reducing your expenses now. This budget by Suze Orman can help you stay on top of your finances.
But how do you start living on half of your income now? It sounds as though you need to begin cutting your expenses drastically in order to follow this budget by Suze Orman. In order to reduce your spending, you should start by listing your normal expenses. This will include your mortgage, your utilities, your debt payments as well as the spending that you normally do.
First look at your fixed bills, such as your mortgage and other debt payments. You may not be able to reduce these bills, but if they take up a large portion of your salary you may need to do everything you can to reduce your payments now before you lose a job. Trading down in car, refinancing your mortgage for a lower interest rate or selling items in order to get rid of your debt can help.
Next, you need to look at your bills. This would include gym memberships, utility bills, cable and any other monthly expenses that you have. Look at the ways that you can reduce these bills. Do you actually use your gym membership? If you don’t, you may want to get rid of it. Additionally, look at cutting back your cable and for ways to reduce your utilities. At the very least, make a list of things that you should cancel if you were to lose your job.
Finally, look at your discretionary spending and cut back. This means the amount you spend on your groceries, clothes, gifts and entertainment. Many of these categories can take the biggest hit right now. You may want to skip a new outfit or that concert until you have saved up at least a six month emergency fund. Making these cuts will help you to follow the suggested budget by Suze Orman.