I got some good new recently: I got a pay raise at work. It's not some little cost-of-living pay increase, either. It was a good, respectable multi-thousand-dollar-per-year raise. Considering the current state of the economy, that's pretty darned good. There should be lots of extra cash for saving and investing and living it up (just a little), right?

Well, not exactly. While my pay has recently increased, so have my bills. It's not that my family has created new monthly bills or made any new, large purchases. We certainly haven't. So why doesn't it seem like I'm rolling in the dough?

The bills that have increased are things over which we have no control. My gas and electric bills have increased because the utility services have increased their prices. Gasoline is more expensive. So is food. Also, medical bills and prescriptions seem to have gone up in price, too. These are things we must pay for, and we've been very careful about shopping for the best deals, when available.

Still, my family had a "business meeting" this week. We need to locate areas where we can cut back on expenses. My son's digital video recorder box, which has had for a year and is provided by the cable company, is going to be a casualty. "But it's only $11 per month," he protested. That's true, but that also adds up to $132 per year. Locate 5 or 6 other small expenses like that, and we're saving almost $800 per year. That's money I can apply toward my son's college fund. He seemed to like the sound of that.

Nobody in my home has lost a job. I have been the sole bread-winner for the past three years, and my wife homeschools our son. I make extra money on the side with freelance projects. My earning capacity has actually increased over the past year. However, climbing expenses have whittled away our spending power.

Sometimes, no matter how frugal we are, we still need to adjust our budgets to cope with outside economic forces which are beyond our control, such as climbing prices. We either need to earn more money, which I'm already doing, or cut costs, which is what we will need to do. Last year, I had predicted the economy may start to recover around September or October of this year. There are some early signs that it may be doing just that, but the recovery is going to be very slow, which I also predicted.

Even is you took steps before the recession to try and weather the storm (which we did), it's always a good idea to reassess your finances every couple of months, and identify areas of spending which can be cut eliminated altogether.

The lesson: no budget should be carved in stone. You must be able to react to market forces (what other people are doing that affects your bottom line) and adjust your budget accordingly.


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