Cutting corners

With the oil prices escalating and forecasts pointing that there is a possibility of hitting $200 a barrel around 2009 to 2010, obvious costs will follow suit with the oil price increase like food, electricity and of course gasoline. As is the current trend, gasoline prices are increasing by P1.50 to P2.00 per weekend every weekend! Electricity may have just become cheaper as NAPOCOR has just decreased its rates by 0.036cents per kilowatt-hour, but this definitely won't hold for long as Napocor will soon feel the pinch of the increasing cost of production. Food costs are also on the uptrend, as seen in the rise in the price of rice.

And what can we ordinary folks do?

Make sure your emergency fund is getting fat. Past readers can possibly see that the emergency fund is really an important thing to have, as I have been repeatingly been advocating this topic. In the environment of inflation shooting up every month, we have to be prepared for price spikes especially in the prices of our daily necessities. This emergency fund can cushion the impact on your wallet when spending for these necessities, so we won't feel the pain of basic commodity price increases while we wait for the correction of our salary rates, hehe!

Get rid of stuff you don't need and earn for it I just sold my car (pictured above), since I haven't been using it ever since I started working in Makati. It was just left in the garage - a useless asset that doesn't help me earn, since it doesn't take to me work anymore, hehe. As I view it, you have to be smart about using your car nowadays, to save on gas and to save on repair and maintenance, because this will just drain your funds from much needed resources. Also, do a quick round around you living space and pick out things that you have no more value for, then hold a garage sale.

Cut corners

I reviewed my budget and looked at the places/ expenses that I can cut corners, and I saw our household phone and internet bill that I pay for (around 3k a month). Looking at our past usage of the internet, it would be ok to downgrade our DSL line, and so that's what I did. By next month, I'm expecting to save at least P1k from the downgrade. Give your budget and your expenses a review and check where you can cut the spending, and focus on saving for the hard times ahead.

Spend to save Sometimes you have to spend more dough upfront to cash in the savings in the coming years. The government just launched the SWITCH movement that advocates the use Compact Fluorescent Lamp (CFL bulbs) in place of incandescent bulbs program. CFL's are usually more expensive that those regular incandescent bulbs, but the savings you get from its electricity consumption and its lifespan makes it cheaper in the long run. Another example of spending to save is bulk buying. The underlying concept here is that you can usually get the item's price per piece at a cheaper price when you buy by bulk versus buying the item individually. Another advantage of bulk buying is that you freeze the price of that particular item for the duration of the stock of that particular item with you, thereby helping you escape the effects of inflation.

Get with the program The substitution effect is already making waves in the grocery stores. I suggest you join the club. Look for cheaper substitutes for the items you usually purchase to get more bang for your buck.

Do you feel the increase in prices already? Have you done anything to increase your cash on hand (to decrease your monthly expenses)? Share them in the comments! Thanks!