Tuesday, January 26, 2010

No Chainsaw Here

"Our job is to cut costs. Cut them to the bone."
--Art Thomas (The Secret of My Success)

John's annual living expenses currently amount to ~$30K. For daily lunch during the workweek, he buys a $5 footlong at Subway. This habit costs him $1000-1500 annually, or about 3-5% of annual expenses.

Economic uncertainty has John thinking about cutting his spending over the next year. Here's what he decides:

-->Let's freeze spending on those lunchtime subs. No cuts, just no increases.

-->All other expenses, the other 95-97%, are exempt from the budget plan. Based on previous year's trends, expenses in the exempt categories have been increasing anywhere from 10 to 200% annually.

Based on his plan, how successful will John be at curbing expenses?

About as successful as President Obama's proposed spending freeze. As Mike Shedlock notes, given its tiny scope and hefty exemptions, proposing such a plan should be downright embarrasing for this administration.

Al Dunlap doesn't have to worry about surrendering his nickname anytime soon.

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