If you’ve been around the debt free community for any amount of time, especially in 2020, you’ve likely heard these terms being thrown around.
So what exactly do they mean?
I use the term ‘bare bones budget’ to describe a budget that reflects only the essential line items we need to survive as a family. This means no extra ‘frills’ like extra debt payments, subscription boxes, fancy clothes, Amazon purchases, etc.
The bare bones budget gives you an idea of how much money you actually need and it is created to help you know how much to save for your emergency fund.
The bare bones budget, consists of only the four walls — in Dave Ramsey terms the four walls are:
• Rent/Mortgage payment
• Renters Insurance/Homeowners insurance
• Property Taxes if applicable
• Car payment if applicable
• Maintenance if needed (oil changes, tires, etc.)
• Auto Insurance
• Healthy groceries
These are only needs and not wants — that is the key to the bare bones budget.
I’m not going to lie and say this is exciting, because it’s not. When you are in an emergency situation and you have to strip your spending down to the bare minimum, your life is probably not going as planned.
While you may feel overwhelmed and scared, that’s the reason we create these things in the first place. In a perfect world, you’ve done this before an emergency situation. Even if you haven’t, this is a wonderful way to adjust your financial situation and pivot to ‘survival mode.’
I recommend that you have a bare bones budget on hand at all times. Take time to sit down and figure out your own bare bones budget. This exercise is best when you aren’t already in “survival mode,” so that you can think through your finances with a level head. I personally have a tab on my excel budget spreadsheet titled “Bare Bones Budget” just in case we are ever in a situation where we need to quickly jump to that budget and implement it right away.
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What does a bare bones budget look like?
I used to share my personal budget, however, for security reasons I moved them to my Patreon. You are welcome to check them out if you’re interested in seeing them. If you choose to do so, you’ll also be supporting the channel with your Patreon subscription.
I’ll be creating a mock budget to showcase what a bare bones budget consists of. Check out the video here.
Please remember that this kind of situation is temporary. We run through these trial budgets so that we can be prepared for life, which is often unpredictable. If you’re just learning how to do this, I’m proud of you for taking the time to see what you need to protect your family in a crisis situation.
It’s not easy to think about the worst-case scenario, but it is necessary to grow financially.
A few tips to further lower your monthly expenses:
Negotiate your monthly bills
Currently, service providers such as internet, cell phone and credit card companies are giving their customers ‘breathing room’. These companies main priority is retaining clients, so they are jumping to action, offering relief programs due to economic hardship.
This is your time to shine, friend. Using the script below you can negotiate monthly bills and interest rates:
You: “Hi, I was looking at my plan and it’s getting pretty expensive. Could you tell me what other plans you have that would save me money?”
Them: Blah blah same plans as on the website blah blah
You: “What about any plans not listed on the website?”
Them: No, what we have is listed on the website. Plus, you’re on a contract and have an early cancellation fee of $XXX
You: “Well, I understand that, but I’d be saving $XXX even with that cancellation fee. Look, you know times are tough so I’m thinking of switching to [COMPETITOR COMPANY]. Unless there are any other plans you have…? No? Ok, can you switch me to your cancellation department, please?”
Note: What you really want is to be switched to their “customer retention” department, which is the group that has the ability to retain you by giving you a bunch of free deals. You can either ask to be switched directly to the customer retention department, or play a game and hope that by asking for “cancellation,” you’re actually transferred to retention. Play around with a few phone calls and see what works best.
When you get to the customer-retention department, ask for the same thing. This is when you pull out your competitive intel on the other services being offered. If Verizon is offering something for $10 less, tell them that. That’s $120 savings / year right there. But you can do more.
You: “Listen, you know times are tough and I need to get a better deal to stick with you guys. You know and I know that your customer acquisition cost is hundreds of dollars. It just makes sense to keep me as a customer, so what can you do to offer me this plan for less money?”
Lower your auto insurance
Before using Gabi, the ‘shopping for car insurance process’ looked like this: Call 10 companies, get the whole rigamarole, write down what their best rates were and compare — then pick a company to go with and have to sign up with them.
Whew — I got tired just typing all of that.
Now, with Gabi, you can save hundreds of dollars a year in under 2 minutes. Gabi is an automated algorithm that compares your car insurance to what is currently on the market from other auto insurance companies.
The average customer saves $720! Just by using their service.
Increase your side hustle game
I’ve discussed side hustles for the entirety of my YouTube channel ‘career’. Now it’s time to sit down and see what you can make off of them. Check out the below videos and blog articles on how you can increase your income with side hustles today.
Here are some of my side hustle and passive income videos:
Ways to bring in extra money:
•Healthywage has been a leading provider of wellness challenges, both for corporations and direct consumers, for over 10 years. It uses cash prizes to make weight loss and fitness more fun and effective!
•Mistplay pays you to play games! Discover new games in your mixlist, choose a game and start earning units! Redeem your units for cash rewards, whenever you want.
• MyPoints: Earn free gift cards for answering polls, surveys and so much more! Earn $5 when you take 5 surveys!
• Opinion Outpost: Earn free gift cards by sharing your opinion in online surveys.
•S’more is a lockscreen rewards app that allows you to earn points in exchange for us placing ads and content on your lockscreen.
• Survey Junkie: Share your opinion to help brands deliver better products & services.
•Handy.com: Handy is the quickest, most reliable way to book household service providers. Within a couple of minutes, you can book a pre-approved cleaner or handyman for any time you’d like.
Note — Some of these may not be the best fit for you, but I am confident that you can find at least one that will increase your bottom line.
Ways to save money:
Here at Freedom In A Budget, I am all about saving money! Here are some of the EASY ways that I save money:
• Fetch Rewards is a free grocery savings app that rewards you just for snapping pictures of your receipts. That’s really it. Free gift cards on groceries on thousands of products every day, no matter where you get your groceries. Just scan your receipts and get gift cards from places like Amazon, Starbucks, Target, Ulta, Applebees. Use code QHKBH to earn 2,000 points ($2)!
• Rakuten/Ebates: Rakuten is my to go way to earn Cash Back from over 2,500 stores like Macy’s, Amazon, Sephora, Walmart and much more. Join Rakuten today for free, and you’ll get a $10 Cash Bonus to get you started! Every three months, you’ll get a Big Fat Check in the mail or a PayPal payment just for shopping.
• CIT Bank offers high-yield savings accounts that provide a safe, secure way to grow your savings.
• M1 Finance is an easy to use brokerage platform that allows you to invest in Fractional Shares and auto reinvest!
• Honey: Stop wasting money- Honey finds you the Internet’s best discount codes.
• Budget Templates: Excel budget templates with pre-populated categories and formulas to keep you on track with hitting your financial goals.