Reducing Your Personal Burn Rate

How do you survive when your bank account suddenly goes on an involuntary crash diet? That pile of bills isn't getting any smaller, and you only have so many organs you can sell. It turns out that when the paychecks stop coming, you have to become a professional ninja at cutting costs and managing what money you have left. If you've never heard of a burn rate, now's the time.

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Here are Five Fast Facts on keeping your head above water when the money faucet gets turned off:

1. 👀 It's Not Just You - First, realize that around two-thirds of Americans don’t have enough cash on hand to take care of a $400 emergency. That's probably more of a commentary on American financial habits than anything else, but that's for another day.

2. 🔥 Burn Rate - Your first mission is to calculate your monthly burn rate, which is the total amount of money you spend just to exist, including things like food, rent, and your excessive streaming subscriptions (not really).

3. ✂️ Cut The Easy Stuff - You should immediately cut all unnecessary spending, which means saying a painful goodbye to your daily five-dollar lattes and that gym membership you only use to get free paper towels.

4. 🤏 Think Short Term - It can be daunting to think about stretching your wallet's current contents indefinitely, so instead just think about the next three months. If you can live without it for just that long, cut it. It's about survival right now.

5. 📱 Hard Calls - Turn off autopay so you don't get nasty surprise overdraft fees. And call your creditors - they may give you some flexibility on missing a few payments or reducing what you owe. They'd rather get something than nothing, so it's worth asking.

🔥Bottom line: Get gut-level honest with yourself. You need to build a survival budget that prioritizes the four walls, meaning the things that keep you from being a cold, hungry person living in a cardboard box. By taking a long, hard look at where your money is disappearing and cutting out the fluff, you can hopefully avoid eating ramen noodles for every meal for the next three years. It might suck to live like this for a while, but it is much better than watching your bank balance go negative because of a subscription to a magazine about llamas.

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And then lean into your network and go get that new gig!

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Do you know your burn rate?

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