Worried about destitution? Try prostitution!

There's a point though, after you've trimmed, cut, chopped, minimized, cancelled and downsized as much as you can without actually being homeless and living in your car or moving into your mother's basement, that what's left is just a matter of white-knuckling it and praying nothing apocalyptic happens. (Which is where a lot of people are right now.)

If there was ever a time when "one paycheck away from disaster" was literal, it's now. There will still be more families crushed and destroyed by this before it gets better.

I started scaling back my lifestyle about 7 years ago in preparation for moving home after staying in Japan for almost two decades. I didn't want to accumulate lots of possessions that I'd have to pay a lot of money to ship home or try and sell at a loss. I also wanted to sock away more money to set me up when I got back home. I haven't actually made it back home yet, but have completely adjusted to a scaled back life as a matter of course.

Living like you're thinking of moving to another place and considering setting yourself up elsewhere is a really good way to view your life if you want to scale back. It makes you seriously question every purchase both in terms of having to haul it elsewhere at a cost and in terms of saving money and encourages you to save.

If you make an effort to live within your means, then when tough times hit you should be well prepared. I would like a bigger TV, better car, larger house, etc, but I would rather live debt free (other than my mortgage) and not have to sweat the economic downturns as much.

If you want a big ticket item, then figure out how you can save enough to buy it - don't just put it on a credit card. That interest is money that you're throwing away.

And really, buying more stuff isn't going to make you any happier - it is true that the best things in life are free.

Wow, that's not how I read the MSN article at all. She doesn't seem to be advising doing any of this stuff if you're okay; the point is what you can do when your income stops. "Swallow your pride--and seek aid" is its title, and it's a good piece about understanding what's available to you and facing the importance of keeping yourself and your family going rather than preserving your pride.

I don't think she's at all suggesting that you do the rehoming, or any of the other changes, while you're still getting income. She's talking about being aware of the possibilities if the crunch does or has come.

When this all started a year ago (arguably before of course) we split our annual financial plan into two - estimated normal plan, and emergency batten down the hatches plan. Turns out, we needed the second plan.

I have not changed my lifestyle all that much because of the recession. Mostly because of these factors:

I graduated at the beginning of the recession. Basically, all my working life has been in the recession. Arguably, my lifestyle inflated in the recession (more out of necessity, and not anything to do with the financiapocalypse).

I am a minimalist. I would have had pretty much the same lifestyle even in boom times*. Sure, during the highs, some people would think I am odd, for not making risky investments and living life king size, but thats their problem, not mine.

Add to it the fact that I am just starting out, and am single, my life is a lot less complex, and my immediate and midterm goals are much more clearer.

If there was ever a good time to be single and free of responsibilities, this is it. Ofcourse, it is always nicer to have someone, especially in times like this, but I'll take what I can get (which apparently does not include a raise, despite a stellar performance >_<)

We took stock and moved closer to the city. It was more expensive for us, considering the amount of space we were giving up - but it was cheaper in the long term. We didn't need two cars, so we sold one.

We had easier access to public transportation, which I take, and we spent less time on public transportation than before we moved (saving money on travel costs). The place we moved to is smaller, so it takes less electricity because we're more likely to be in the same room (as opposed to an office and a living room before).

We don't have to pay for things like pool access and trash pickup, and we are much happier. I'm not as tired because I don't spend four hours of my day on a bus or metro, and I get home early enough that I can relax.

Another benefit to moving closer to the city is that we were able to really look at the overall benefits and conclude that we didn't really need a DVR. We had one because I would be on the road coming home and we'd miss a lot of our favorite TV shows because I was tired from traveling back and forth every morning. Now that my commute is 40 minutes to work, and 40 minutes back, we have time to watch TV and we saved ourselves $16 a month for a DVR.

@ShariC: I could not agree with your second paragraph more.

Though admittedly it does not scale very well if you have a family (cmon, kids have got to have their fun).

Apart from moving, I also think in terms of "what if I had to move... AND that too into a smaller apartment?"

@tailstoo: Clearly you have not had a date with Karamel.

Apart from that though, you are spot on. Even if you do not whip out the credit card, and save up for a purchase, you might still be hurting your longer term goals. I could save up for a couple of months and buy a mac, or simply buy a PS3 straight away, and still end up in the black, but that is seriously going to push back my car savings and vacation savings. And all that is certainly not going to make me any happier.

Well, technically, playing a "shoot everything that moves" game on PS3 will make me happier, but thats a different discussion altogether.

@BZMedia: I always wondered about the statements "one paycheck away from disaster" and "living paycheck to paycheck". If you're not in debt, but say losing a paycheck would wipe out a good chunk of your savings- is that disaster?

Lot of ascetics here.

I'm not advocating lost weekends in Vegas -- well, not many of them, anyway -- but some of you need to lighten up a bit. Frugality can be good; hoarding can be pathological. Financial disaster will not befall the majority of you, so once you've reached some measure of fiscal safety and sanity, live a little. Buy that PS3 (although an Xbox would be better). Buy that TV. If these things will entertain you, be entertained a little. Life is too short for artificial squalor.

I'm not advocating credit-card-fueled spending sprees. I'm asking for a happy medium. If you are genuinely happy with the simplifying and the minimalism, more power to you and ignore what I wrote. But please understand -- that kind of lifestyle won't work for everybody.

@lpranal: I would bet most of those "living paycheck to paycheck" folks don't even HAVE savings...

@lpranal: For someone to be living paycheck to paycheck, I've always understood it as by losing one paycheck, they would have no other means of support to cover their loss. Havings any sort of liquid savings would mean you can't justify using that statement to describe your financial situation.

Changing your lifestyle is key - and a part of that is saving up a nice big 6-8 month emergency fund that can tide you over if and when you do lose a job. Don't white knuckle it until you do lose a job, plan ahead and be ready for it - especially in this economic climate!

I've done this to a lesser extent. I put all of my annual pay raise and then some into an increased 401K contribution. I'll force myself to live on a few hundred less a month and put more into savings.

Next challenge, fully supporting my girlfriend while she finishes her degree. That one isn't going to be as easy.

@PunditGuy: I couldn't agree more. There needs to be a balance.

While saving and trimming during scary times is wise, I'd like to see a lot more of the other side of things: People setting up additional sources of income, BEFORE THEY NEED TO.

The best time to start turning that business idea or hobby into some extra cash is BEFORE you're unemployed and trying to figure out how to pay the mortgage. Then, if the worst does happen, you may not be flush, but you'll be in a good place to survive on less income while you figure out how to replace your former job.

Also, people should be thinking of MORE sources of income, rather than single sources. Think "single points of failure" -- jobs aren't secure right now, and they're not going to be for a long time. Planning to have several smaller revenue-streams coming in protects you much better than looking for another insecure job that pays all your bills.

I need, need NEED to build a savings cushion. For the last year we didn't get bonuses at work and every time we did before that, I ended up blowing it or paying bills. No more; I'm paying myself first.

This bonus, however, is partially going toward a laser printer, because I need it. I don't want to shell out for Staples to print stuff for me every time I need to. I'm getting it through a company that we order cartridges from, and they will not only give me a discount on cartridges, but will service the thing if it should break. Retail won't do that. I get a break on service, too, if needed.

If I sell anything, the printer will make back its cost eventually. :)

(Wait, not if - WHEN! WHEN!)

Why wait? Be proactive and panic now, sell everything you own, live in your car and start smelling bad and looking funny when you go into work!

@PunditGuy: Depending on how you shop the PS3 or Xbox and TV might actually save you money in the long run. If your spending a lot of money on out of house entertainment like going to the movies and you can watch those same movies at home on your new TV for less (rather than spending $50+ for a family of 4 to go to the movies) the TV will pay for itself eventually.

You might be able to buy your kid a $10-20 Xbox or PS3 video game and have them get a whole day's or more entertainment out of it, certainly cheaper than taking your kids to Dave and Busters where you can easily drop $100 on gameplay and dinner without even realizing it and the entertainment will only last a few hours. In comparison its much cheaper and you will get more value out of it, to cook at home for the family and buy your kids a cheap video game for entertainment.

There is a reason why a lot of people are staying home more these days.

@ShariC: Another good mindset to have is to never buy a storage rental place or use your garage as one. If you're at the point of, "Nice, but where will it go?", it might stop many needless purchases.

I see much of the false security (smugness with being "prepared") of an emergency fund here. The term emergency fund should be rainy day fund or something. Very very few of us will ever have a real fund able to address emergencies in any palatable fashion. A $1,000 mini, a standard 6 month, a recession 12 month? NOPE. Something as simple as a car accident injury or work injury will most like bankrupt you. Think you are secure with your work sponsored health insurance, workers' compensation coverage, disability income policy, Social Security? GOOD LUCK!, you'll need it. Do not get lulled in by that false sense of security or the advertisements that "you're in good hands", "we've got you covered". My advice, keep your long term fixed expenses relatively low by having a modest sized home, buy the best lifetime quality durables when you can afford it (furniture, appliances, cookware, etc.), a modest car that is cheap to repair, and learn how to do things yourself (home repairs, cooking, etc). Do these things & live it up on the "extra" money, but never create any type of long term expense for yourself if it can be avoided. This might help you survive an actual emergency.

@Outrun1986: I also think that parents who play games with their kids, whether it's board games or video games, get satisfaction from interaction as well. And the kids get to play games.

I already did the lifestyle adjustments about two years ago when I got out of a bad relationship that left part of my finances a mess. By making these changes, I was able to work out a plan to get myself completely out of credit card debt, and even though I had a few hiccups (minor backsliding, emergency surgery) I am on track to actually finish my goal by October or November.

@Outrun1986: also, having the video game system and telling the kids if they want a new game, they have to earn the money for it, makes them [in an ideal world] appreciate the value.

That headline comes from the "No sh*t, Sherlock" files.

@Mary Marsala with Fries: Also, people should be thinking of MORE sources of income, rather than single sources. Think "single points of failure" -- jobs aren't secure right now, and they're not going to be for a long time. Planning to have several smaller revenue-streams coming in protects you much better than looking for another insecure job that pays all your bills.

Awesome point! No football team goes out on a field with the plan of only one person playing offense, and one playing defense, but with multiple plays going on.