Tuesday, 12 June 2007

LBYM Challenge - what would you do?

Over on the Fool, Electrasmom posted a link to a financial makeover article in the Dallas Morning News. Today's story involves a forty-something couple with two preteen daughters and a baby on the way. They're deeply in debt and have very few assets, but she wants to stay at home with the baby.

The Financial Experts have given them a tight budget, which leaves them with $275 of discretionary income for the month. It got me thinking - how would I live on that amount of money in their circumstances? So I thought I'd throw out a challenge: how would you manage living on $275 a month? What 10 things would you do?

Assume the following:-

- Your circumstances are the same as the couple in the article, right down to the baby due in August.
- All currencies are equal. It's $275 or £275 or € 275.
- The money is for food, clothes, parties, hobbies, petrol/gasoline, car repairs, hair cuts, health insurance co-pays, prescriptions, etc.
- Local taxes and other housing costs are already built into your budget.
- Ditto your utilities and insurance which are on a pay-monthly budget plan (you pay the same amount each month for the next year). At the end of the year, you may get a refund.
- You have no emergency fund.

Answer in the comments or post a link there to an answer on your own blog.

I'll give you my ideas tomorrow on what I'd do.

- Pam (taking the challenge too)


Mother of Chaos said...

Ouch!! That's REALLY tight!! I don't envy them THAT paradigm shift...

BTW, your Snowflake Cardigan is looking fabulous! What a lovely, lovely pattern...

Stephanie said...

Food's not included in the rest of the budget? Really? Or gas? Those two items alone would basically wipe out the whole amount for me. And I'm single, not a family of 4.5. Of course maybe the dude's commute is shorter than mine. Or maybe there are public trasnportation options that are cheaper than CalTrain and don't involve walking 3 milkes along the side of the freeway.

According to one of my co-workers whose wife just had a baby, the co-pays for the hospital stay and stuff under our insurance plan are $1000. That right there wipes out almost 4 months of discretionary spending!

I truly don't see how their budget would work at all. In their situation? I'd find a way to make more money. I really would. I'm normally not defeatist about this stuff, but I don't think I could do it unless I managed to get rid of my commute.