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How to cut a bare-bones budget even further

By Gary Foreman
Published: November 29, 2012

The New Frugal You
New Frugal You columnist Gary Foreman
Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website and newsletters. He writes "New Frugal You," a weekly Q&A column about frugal living, for CreditCards.com

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Question for the CreditCards.com expert Dear New Frugal You,
I'm in real trouble. I've been living on the edge for months. Just barely able to pay my bills. Don't spend anything on myself. Now, last week my boss cut my hours. I'm really stressed out. What can you do when you've already cut your budget to the core? -- Brooke

Answer for the CreditCards.com expert Dear Brooke,
If you've followed the news lately, you've seen the headlines and know you're not alone. Because of the economy or concern about the costs of covering full-time employees under the new health care law, a number of companies are reducing the hours of their employees.

That can be a serious problem, especially for people like you who are already living on the edge financially. Let's see if we can't find some frugal answers for you.

The first and probably most important step is to have good info on how much you're currently spending and what your new income will be. You need to know how much you're short.

Once you know how big a gap you're trying to close, you can begin the hunt for dollars. We'll look at ideas from the simplest to the more severe.

Expenses: Take a fresh look
Start by taking another look at your current expenses. You've already cut the easy stuff. This time you'll have to go deeper. It's time to eliminate any expense that doesn't feed you, heal you, put a roof over your head or make it possible to earn an income.

Get creative! Try to look at each expense with fresh eyes. Don't skip anything just because you don't think you can live without it. Make sure that's really true.

Spend some time searching online for solutions that are new to you. For example, have you ever visited a "salvage" grocery store? They often deal in overstock items or products in dented cans. Or try visiting a bakery outlet. Stop there before you hit your local grocery store.

Groceries are an excellent place to look for savings. Most families spend between 10 percent and 20 percent of their take-home pay on food. Plus you make purchasing decisions almost daily. That means that your food budget offers many opportunities to save.

Plan on eating and preparing all your meals at home. On average, people spend about 40 percent of their food budget on food prepared outside their home. You can have a steak dinner at home or you could make your own burger for a fraction of the cost. The same thing is true of any restraurant or takeout.

Home cooking
Cook as much from scratch as possible. Basic food items aren't that expensive, but if you're buying food that you just pop into the oven or microwave you'll pay top dollar. Eliminate single serving and convenience items.

Collect some frugal recipes. Even with grocery prices that seem to go up each week, you can still make some meals that are nutritious and frugal. Often the trick is limiting the amount of meat and sticking to staples.

Cooking isn't as hard or time-consuming as you might think. There are many resources online that can teach you. Doing your own cooking will save you money every time you prepare a meal.

Learn to buy and use fruits and veggies in season. We've grown accustomed to having the produce we like available year-round. But when it's out of season locally that means that it must be shipped in and the prices reflect that. Let your diet change seasonally. Take advantage of the food items that are grown in abundance locally.

Look for ways to avoid purchases of all types, especially things that you'll only use a few times a year. It's easy to fill your garage with things such as carpet scrubbers and wood chippers that you can borrow from a neighbor. Offer to pay them a few dollars for the rental and you'll be doing them a favor, too.

You may find that paring your food budget to the bone, eliminating entertainment, clothing and other smaller expenses aren't enough to get to your goal. Then you'll need to be prepared to make bigger sacrifices. Changes that could have a major impact on your lifestyle.

Search more widely for help, extra income
Before you consider deeper cuts, you'll want to see if either government assistance or a part-time job could help.

A reduction in your hours might make you eligible for a partial unemployment benefit. Check with your unemployment office. Also, find out about food stamps.

Don't be afraid to take on part-time work. It might take a bit of schedule juggling, but it's not like you're not used to working more hours. And, having an extra source of income could be really helpful if the cutbacks aren't temporary.

Finally, you might find that the only thing that can save you is a serious lifestyle adjustment. You may find that you need to move to cheaper housing, take in a roommate or sell your car. Those aren't easy choices, but they can provide serious monthly savings.

I hope the reduction in hours will be temporary, and you'll find making up the shortfall will be easy. But, don't go in with that assumption. The economy looks dicey and you'd be wise to be prepared for the longer haul.

See related: Bare-bones budgeting, How budgets fail (and how to make yours succeed)

For more than 35 years, Gary Foreman has worked to help people get the most for their money. Prior to founding The Dollar Stretcher.com, he was a financial planner and purchasing manager. Gary began The Dollar Stretcher website and newsletters in April 1996. Today the website features more than 6,000 articles on different ways to live better for less. Gary has been interviewed by The Wall Street Journal, The Nightly Business Report, USA Today, Reader's Digest and other newspapers and magazines. Gary answers a question about a budgeting or saving issue from a CreditCards.com reader each week. Send your question to The New Frugal You.