June 19, 2009 -- The consequences of the recession have changed the lifestyle of Houston's Bell family.
Latavious Bell, a computer engineer, has been out of work for two months and the family's household income is down 75 percent.
"Good Morning America" financial contributor Mellody Hobson offered the Bells the following advice on how to cope with the situation.
Mellody Hobson's Advice to the Bell Family
Preserve Your Nest Egg:
If you have savings, try your best to preserve them. Don't dip into them if you don't have to. That doesn't mean that you won't eat into some of it, but you don't want to live like normal. It's not normal times right now. This environment is a once-in-a-75-year type of financial crisis and certainly the toughest recession that we have seen in modern times, and things can go on longer than normal. My suggestion would be to leave this nest egg alone, because you never know what could happen.
Start thinking about what you need to have versus what's nice to have. Once things are better, budgeting will continue to serve you well, not to mention that it will teach your children a valuable lesson. I know you want to have two cars, but you might not drive both cars as much, and that will just help you save on gas. I'd just completely make a commitment to eliminate eating out. Just 100 percent. I would completely rethink your ATM withdrawals, where you take cash out, and I would cut that number in half. Mint.com is a great site for online budgeting. It has you put in all of your accounts into the computer and it ultimately analyzes all of your spending. I think it would be really interesting, as well, if you had your children participate in some online budgeting. They can do that by using mint.org.
Limit Credit Card Use:
If it's possible, don't use your credit card at all. For your miscellaneous credit card spending, I'd go to zero. I know it's going to be really hard, but I would see if you could spend nothing on credit cards during this time. Again, these are in the spirit of things that are nice to have because I would assume that you have a little walking around money.
Reduce Your Number of Cell Phones:
I understand that your kids have cell phones, and maybe it's been a way to keep in touch with them, but it's summer, so they are obviously going to be with you. You might just cut that back. You can lend them one of your cell phones.
Keep Your Cable:
Instead of eliminating your cable, keep it because you're not going to have a lot of other forms of entertainment. But I would eliminate things like going to the movies. Rent a DVD instead. I would eliminate all entertainment outside the home.
Free Summer Fun:
I would really think about all of your summer fun being free. Discover the city or town that you live in by taking excursions to local museums. Instead of taking a plane to a vacation somewhere or to an amusement park, what is the local amusement park that you could visit? Use that as a tradeoff to a big expensive flight somewhere. I would rather you spend a couple of hundred dollars locally versus thousands of dollars traveling.