By Kimberly Palmer
When times are tight—as they are now for many Americans facing declining home values, depressed stocks, and tighter credit markets—cutting back on indulgences can seem inevitable. But it might not be. U.S. News asked budgeting experts for advice on how to make ends meet during tough times without sacrificing too many of life's pleasures. Here are their top tips.
Take bubble baths. If soaking in hot water doesn't cheer you up, find out what does, because it could stop you from wasteful splurges after a bad day. "Especially in times like these, it's very important for people...to find other ways [than shopping] to make themselves feel better, whether it's tantric methods, meditation, Chinese balls, or bubble baths—just do what will not break the bank," says Ken McDonnell, program director at the American Savings Education Council.
Host movie night. Going to the movies, especially if you're a popcorn fan, can easily cost $40 for two people. Instead, suggests Faye Griffiths-Smith, community leader for the American Association of Family and Consumer Sciences, rent a movie and invite friends over to watch.
Learn to cook. Not only does eating at restaurants add up, but so too does buying lunch. If you cook dinner at home, you can bring in leftovers to work the next day or take a few minutes to pack a sandwich. If mornings are always rushed, then try packing it at night before bed, suggests Jean Austin, family and consumer science educator for the Maryland Cooperative Extension Service. And when you shop for your ingredients, make sure you have a snack first. Going to the grocery store hungry often leads to impulse buys, Austin warns.
Use the library. Your taxes are paying for it, so take advantage of the free books and movies. Austin says that even her small library in Maryland's rural Kent County offers DVDs, audio books, and free Internet service.
Drink at home. Whether your beverage of choice is green tea, espresso, or beer, it's much cheaper when consumed in the comfort of your own kitchen. Going to a bar with friends can easily cost $50, McDonnell says. Instead, pick up a six-pack and hang out at a friend's house. The social interaction will cheer you up without the hefty bar tab.
Use your savings. If you squirreled away three to six months of emergency savings in advance of being forced to tighten your budget due to a job loss or other unfortunate event, now is the time to use it. "Everybody should be contributing to their own emergency savings fund where it's earning interest," says Austin, so when times are tight, the money can go toward monthly bills and even some small indulgences.
Decide what you really want. Most people can cut 10 percent of their spending within 10 minutes, says Ramit Sethi, author of the I Will Teach You to Be Rich blog. Just write down your major spending categories, such as food and loan payments, and then guess what percentage is going to each category. Make a second list with what you want the percentages to be, and then make a third list describing what they actually are. If the reality doesn't match up with your ideal, then adjust your spending.
Dress in layers. Turning your thermostat down a few degrees and wearing a sweatshirt to stay warm can save on monthly heating costs, says McDonnell, which adds up over time. Just don't skimp on your monthly mortgage or rent payment, or if you need to adjust the payment schedule, contact your lender. Keeping your home should be a top priority.