Recession 2.0: Living Within Means

A Silicon Valley blogger says she and her family are making big cuts.

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SVB from The Digerati Life responds to the question: How is the financial crisis affecting you?

So how are we coping during this recession? To be honest, we're much more affected by the slowdown than we'd like to be. Here's our situation: We're both self-employed—my spouse left his job two years ago to launch a start-up, while I quit my job around eight months ago to pursue a full-time career in "blogging" (or, as I would euphemistically call it, a stint as an accidental entrepreneur). Unfortunately, as we both work to build our incomes through our current endeavors, we're seeing ourselves caught in the grip of the economic slump.

Before we tried to strike off on our own a couple of years ago, we decided to give ourselves a year or two to get solvent through our businesses, and if we didn't make it work (have our cash flow equal what we were receiving as full-time employees), then we'd seriously consider returning to salaried jobs or finding additional ways to make money. Well, that two-year allowance has since past, and we're only halfway there. So we're definitely feeling the strain of being new business owners during this current economic period.

You may also be wondering how we're surviving at this point. We haven't taken on any debt as we are pretty debt averse in general. We've actually been living off some of the savings we've accumulated during the great tech boom of the 1990s. But even those savings have a limit, so unless we shape up financially, we'll have to resort to Plan B, which I've just described: finding work to support our family while we try to continue growing our businesses on the side.

These days, we're also coping by making deep cuts in our family budget. I used to be a much more relaxed spender, and I was a loyal customer for many shopping catalogs. These days, any form of spending is scrutinized very carefully in our household. We are delaying any plan that will incur an expense. Our latest frugal moves include doing away with many services we used to enjoy, especially those that were set up to automatically service our way of life. So yes, we've been making many adjustments to our lifestyle: Out with our pest control guy, the bimonthly professional house cleaning visits, and any traveling for the next few years. And holiday gifts? I am hoping the Grinch won't be too nasty to us this year.

Despite all the cost cutting, the main strategy we've focused our efforts on is still to build up our cash flow so that we can close the gap between our income and our outflow each month. That 50 percent discrepancy in favor of expenses needs to be resolved: We need to worry about getting our family balance sheet back in the black. We'd like to somehow get our household income to cover our outflow, and then some. At this juncture, we're more careful with our savings while we seek ways to supplement our income with freelancing and contract work. If these measures don't cut it, we're probably going to have to hit the pavement along with many other job seekers out there who've been recently laid off. Yeah, good luck to us on that, given the state of the job market in our neck of the woods!

It is clear that our businesses are still way too young to successfully kick off the type of income that would replace our former salaries. And with the recession throwing a monkey wrench in our plans, we're definitely seeing the progress toward our financial goals somewhat hindered.

The recession is no fun, but we're determined to ride it through. We're buckling up and getting ready for a wild ride.

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