If your job is in jeopardy, your debts are high and getting higher, and you don't have an emergency fund - enough to cover at least 3 months' expenses - it's definitely time to consider extreme savings. Extreme savings involve more than just smart shopping. You need to do more than skip manicures. You need to cut your monthly expenses down to the bone.



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

Think about what your absolute essentials are: food, shelter, medical expenses, health and other insurance premiums, electricity, heat, phone, transportation. Extreme savings call for extreme measures. Add up what the bare essentials cost you each month, plus payments for credit cards and other debt. Cut out 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. Watch TV at a friend's house; use the Internet and borrow DVDs from your public library. Again, remember: it's not forever. Extreme savings are necessary in tough times, but tough times come and go. You'll make it. What's more relaxing, having dinner and drinks at a restaurant or knowing you can pay the mortgage this month?

The next step in your quest for extreme savings: see if you can trim anything off of those absolute essentials. How much would you save on groceries if you substituted store brands for name brands, used coupons, looked for weekly specials, and cut out junk food entirely? How nice is your student loan company? Will they allow you to suspend or lower payments until you're out of the woods? Can you get on 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 you can't get out of, why not get rid of your landline and use the cell as your primary phone? Does your city have adequate public transportation that gets you to and from work and allows you to give your car a rest? Can you join or form a carpool?

Extreme savings should allow you to start an emergency fund. Take the trimmed-down 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 easily allows you to transfer money into 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 'For Emergencies ONLY' written on it, and hide the envelope in a safe place at home.

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