Have you heard? Consumer confidence is down. Foreclosures continue to rise. The whole de-leveraging process is a giant hangover from the debt-fueled excesses of a few years past.
To combat this doom and gloom, I’ve decided to play a little game for the month of November, and I invite all my readers to join in. The game is called: Emergencyopoly!
The rules of the games are simple:
1. For one month, live the lifestyle that you would live if you were to lose your income (for most of us, this would mean our job. For small business owners, it could mean months where you’re in the red and cannot afford to pay yourself.)
2. Approximate to your best abilities any additional expenses you expect to incur as a result of the income loss
– For example, I have great health care through work. If I lose my job, however, I’d have to spend an extra $50-$100 a month buying individual health insurance. This expense is expected and thus must be taken into account.
3. Concentrate on the core expenses (rent, food, utilities, car payment, etc.)
– If you spend $500 every year flying home to Thanksgiving, there’s no reason that you’d have to forgo that for Emergencyopoly (your family might not understand your dedication). Just focus on the core costs that you have to pay month in, month out.
4. Take the money that you don’t have to spend right now because you still have income and funnel it your emergency fund.
– In my case, I should be able to save an additional $225 (individual health insurance and job search expenses) to my Freedom Fund
So I’ve narrowed down my core expenses
Rent + Utilities/DSL: $810
Car Insurance: $105
Student Loan: $160
Gas / Parking: $155
Health Insurance: $125
Job Search-Related expenses: $100
Take out the health insurance and job search expenses, and I’m down to $1,425.
That’s my goal for Emergencyopoly: to come under budget for every, single, category for the month of November.
Looking at this scenario, I am slightly (but only slightly) comforted by the fact that if I really want to ensure that my cash lasts as long as possible, the quickest way to reduce my burn rate is to move back home. But I’m going to wait until push comes to shove (6 months without a job?) before I make that move.
I think this game will help me figure out how many months my savings can realistically take me.
So, who wants to play? 🙂