Worried about the economy? How worried are you? If you yelled, ‘A lot!’ In answer to that question, it may be time to consider extreme savings.

If your job is in jeopardy, your debts are high and increasing, and you don’t have an emergency fund, enough to cover expenses for at least 3 months, it’s definitely time to consider extreme savings. Extreme savings mean more than smart shopping. You need to do more than skip manicures. You need to cut your monthly expenses to the core.

Achieving extreme savings can be painful, but remember: it is a way to gain some control over your finances. And you won’t have to do it forever.

Think about your absolute essentials: food, shelter, medical expenses, health and other insurance premiums, electricity, heat, telephone, transportation. Extreme savings require extreme measures. Add up what your essentials cost each month, plus credit card payments and other debts. Eliminate everything else.

That’s right: no cable TV, no Internet access (unless you need it to make part or all of your income), no DVD rentals, no eating out, no new clothes allowed. Watch television at a friend’s house; use the Internet and borrow DVDs from your public library. Again, remember: it is not forever. Extreme savings are necessary in tough times, but tough times come and go. You’ll make it. What is more relaxing, dinner and a drink in a restaurant or knowing that you can pay the mortgage this month?

The next step in your quest for extreme savings: See if you can cut back on some of those absolutely essentials. How much would you save on groceries if you replaced store brands with name brands, used coupons, looked for weekly specials, and eliminated junk food altogether? How nice is your student loan company? Will they allow you to suspend or reduce payments until you are out of the woods? Can you meet budget payment plans with your gas and electric companies?

Keep going: how extreme can you get in your extreme savings plan? Can you reduce the number of long distance calls you make? If you have a cell phone plan that you can’t get out of, why not ditch your landline and use cell phone as your primary phone? Does your city have adequate public transportation to get you to and from work and allow you to give your car a break? Can you join or form a carpool?

Extreme savings should allow you to start an emergency fund. Take the reduced version of your monthly budget and subtract that amount from your monthly net income. What’s left should go into a savings account, not one that allows you to easily transfer money to your checking account, but one that can be accessed day or night for true emergencies. Open an account at a different bank, seal the ATM card in an envelope with the word “EMERGENCIES ONLY” and hide the envelope in a safe place in your home.

Putting your extreme savings plan into action won’t be easy, but you’ll soon start to see rewards. Just thinking about your growing emergency fund should make it easier to sleep at night.

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