Saving During Tough Times: Five Questions to Ask Yourself

Phoebe Hendricks, 26, and her husband Willie, 29, both rely on Willie's income as an electrician for a power distribution company in Missouri. His specialized skills are in demand everywhere, but if he were to lose his job, their family would most likely need to relocate.

"His job is pretty stable, but we still wanted to be prepared in the event that he lost his job," Phoebe said. "He should be able to find a job fairly easily; however, we would have to move. With that there are added expenses and we wanted to make sure that all of our debt was out of the way and we had some money saved back for our normal expenses."

They had about $36,000 in debt before deciding to take control of their finances in 2007.

"I laid out every single expense we had, wrote it down, and we just kinda looked it over," Phoebe said. "It was almost like a wakeup call."

They trimmed their grocery bill from $650 a month to $300 a month by staying away from processed foods. "I make everything now," Phoebe said. "I honestly think that your grocery budget is the easiest place to cut. Using cash [to pay for food] has really helped us. It was a major, major factor."

Now they're saving about 20 percent of their income whereas before they spent more than 100 percent. For the Hendricks family, life has changed a lot since they first started saving a few years ago.

"It's more peaceful and less stressful in a massively great way," Phoebe said. "I appreciate things so much more now than I ever did then. I think it's because we're a lot stricter with our money. We really have to think a purchase through before we do it."

Phoebe also said they are closer as a family because they spend more time together, including family game night.

"Now for our entertainment, instead of going out to dinner we have dinner at home then go outside and do something," she said.

Economic Survival Question 3: Where Do You Live?

"Is your town teeming with potential employers or have jobs gone to the dodo?" Yochim asked. Figure out your ability to relocate for work. If you're willing to move then that makes you a good candidate, but Yochim says if you have kids in school and want to stay local you'll need to sock away more in savings.

When Ayesha Barker, 33, lived in St. Paul, Minn., she was struggling to support herself and her son Najah, who is now 10 years old. In Minneapolis she sold home equity loans, lines of credit and other bank products, but she lost her $35,000-a-year job due to downsizing. She searched for a new job for six months to no avail before finally deciding to move back to Kansas, where she had lived years ago.

"I knew it was inexpensive to live [in Kansas] so I decided once I couldn't find anything that was stable to pack up and move back," Barker said. In Topeka, she was finally able to save. She found two part-time jobs within weeks of moving, and even though she earns less now than she did in Minnesota, she's saving at least 50 percent of her $28,000 salary. In Minnesota, she said, the cost of living ate up her paycheck.

"I am very frugal," Barker said. "I started coupon clipping last month, after 'Oprah' had a show that showed you how to cut your grocery bill in half. What I've been finding is in some cases you can buy name brands."

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