PLAN "B"

To be quite frank about it, the population was not prepared for the fact that there would inevitably be a devaluation of the manat after oil prices had dropped. Today, if people are not in a state of shock, then they are in the course of reassessing what has really happened. It is clear that people who economised on their outgoings, will be even more careful with their money now, while those who allowed themselves a little excess spending will begin to think about getting by tomorrow.

Therefore one of the most important elements in "the new life" will be mastering its "new rules", when the majority of the population will be forced to re-examine their expenditure anew, in order to soften the blow to their pockets. This is easy to say, but harder to do. This is difficult not only for material reasons, but also for psychological ones too, for over the last few years and even decades, throughout the world, including in Azerbaijan, the consumer society has been actively developing, with the flows of glossy adverts, commercials from all mass media sources encouraging people to spend excessively. Now the need is arising to get a sense of priority.

Get to grips with the money you owe

One of the invariable attributes of our life today is the ubiquitous offers of credit, such as loans to buy real estate, consumer goods, cars and so forth. For some families "life on credit" has become a natural state of affairs, and frequently one person has several loans in his name. The psychological factor here is quite obvious: firstly, the striving for immediate gratification (in desires for domestic appliances, new cars and so forth); secondly, buying on credit is based on some kind of confidence in tomorrow, in that there is a steady wage making it possible to pay it back. 

After the devaluation of the manat, some borrowers found themselves in a fairly difficult position. The fact is that many loans granted by local banks were in foreign currency. According to Article 439.7 of the Civil Code, the payment of interest on loans is made according to the conversion rate set by the National Bank on the day in question.

But the economist Qubad Ibadoglu gives some extremely valuable advice here: "In order to extricate oneself from that situation, you need to turn to another article in the code and the relevant points in the contract. According to Article 442 of the same Civil Code, the cardinal change in the existing conditions may be sufficient grounds for amending or annulling the contract. In a number of loan agreements it points out that a change, assessed as force majeure, may provide a good reason for discussion or revision of the terms, for which one of the parties should immediately make a written application."

According to the economist, the steep rise in loan commitments may be beyond the means of many people making repayments, which will increase the number of unrepaid loans, as a result of which the banks in their turn will suffer losses. Thus indirectly (as well as directly) re-examination of the repayment terms and arranging an optimal variant for them will guarantee that the banks will get their money back at all events.

As far as those townspeople are concerned who have deposits and savings in manats, they can also send a written application to the banks requesting (on the same force majeure grounds) that the interest rate on their accounts be raised. In the existing situation, the commercial banks should be interested in boosting the amounts of manats held. If they are not, then they will be faced with a shortage of local currency and will not be able to function properly. At any rate, an adequate response on the part of the banks to the applications submitted to them is in the interests of the banks themselves.

Everyday points

It is known from the academic course that the economy takes, that the inclination to save money increases as citizens' incomes go up. In order to assess whether your well-being is above the poverty line, calculate whether you spend half or more than half of your budget on food.

In all classic advice on economising in a period of recession, the main thing is to cut expenditure on a number of items, first among which is amusements. Here is a classic example: if you give up your daily cup of coffee, then over the year you can save a tidy sum. But there is another issue. A working person is often inclined to spend money on unnecessary things like going to a caf?, doing shopping, as a kind of reward to himself. In the period of today's economic upheavals in the world, stress and tension increase and therefore a need for an "incentive" is felt even more keenly. A paradox arises: you do need to economise, but, on the other hand, life will seem less pleasant without these little treats. The same is true of other expenditure, very often like buy things on impulse.

The first rule with which you should arm yourself is to keep a precise account of what you spend. It is worth acquiring the habit of writing down what you spend every day for a month. Practice shows that, in just the first month alone, keeping a precise record will already reveal what your real needs are, and what your unnecessary and impulse buys are. On the basis of this, you can already draw up an approximate budget for the family, which should definitely include a sum of money for unforeseen expenditure and for the amusements that you can afford.

The classic rules for going to the shops envisage making purchases on a full stomach, with a list in hand and with a strictly limited sum of money in your purse. Incidentally, it is well known that it is much easier to spend money when you use a credit card rather than cash, since it is easier for us to part with the sum "we don't see".

Food is the last thing on which you need to economise since it costs us much more to eliminate the harm done by eating poor-quality foods than the sum we economise. But this does not mean that nothing should be cut from the food budget. You can go to the market from time to time instead of making visits to the nearby supermarket where the products obviously cost more due to the costs of service and packaging. The weekly farmers' markets held in different parts of the towns and cities also help you to cut your outgoings a bit. It is obviously advantageous to buy from local producers, whose produce does not rise in price as much as imported produce does. Stop using semi-prepared foods and spend time preparing them yourself.

As far as expenditure on clothing is concerned, you can recall the well-known premise that "I am not so wealthy that I can buy cheap things". Have a basic selection of clothes, naturally good-quality clothing, in your wardrobe that can be mixed and matched with everything to suit every occasion, without risking being regarded as "boring" or "dull". But good does not always mean expensive. Seeing that there are many factory outlets in a lot of urban shopping complexes, you can buy clothing from last year's collections for moderate sums.

For many women expenditure on beauty salons is a must. There are various ways of doing this such as replacing an expensive salon in the town centre, where rents are high, and correspondingly the price of services are high, for a similar salon a bit further away from the centre or by learning to do a number of simple procedures oneself.

Avoid getting trapped

One of the most common commercial traps lying in wait for people trying to economise, which is very easy to spot, are various discounts and special offers. Naturally, at first glance, it is best to take a good look at all discounted offers. But, in the quest for concessions on goods and services, especially in the buying frenzy that grips the public, when they are trying to stock up on things, it is easy to lose a sense of proportion. Firstly, make sure that you know whether you really need the goods and services on special offer. Sometimes, the discount is purely a formality as the prices of the goods are excessively high, or there is obviously something wrong with them.

Secondly, make sure you are using goods and services in a rational manner. For example, if a food item is on special offer, be sure that you usually eat it and that the expiry date on it is the relevant one. If the service, for example, is a discounted gym subscription, also ask yourself whether you really need it and whether you will only use it two or three times. 

It is usually quite difficult to cut down expenditure on utilities. But here you can think of something besides the usual "switching off of the light or turning off the tap". For example, the Internet. Some companies are prepared to provide you with an Internet and television package at quite reasonable tariffs. This is usually cheaper than paying for both service separately from different providers. Besides this, if you do not really need the "hyped-up" high-speed broadband, you can limit yourself to a lower-speed or even 3G-modem. 

For many families, and this is gratifying, one of the obligatory items of expenditure is education: courses, private teachers and so forth. It can confidently be said that this is not expenditure on which it is worth cutting down, since education is always an investment in the future. On the contrary, if this is not an item of expenditure for you, this might be the right time to learn another profession or skill.

It is worth re-organising yourself 

Recessions always introduce an element of tension and stress into the life of even the most "thick-skinned" and "well-heeled" people. How can you re-organise yourself so that you keep on enjoying life, even though your budget has changed?

According to the psychologist Alya Allahyarova, such situations always create a sensation of breakdown and changes, whereas we are seldom prepared for them. And paradoxical as it might seem, it is people who enjoy a stable lifestyle and living conditions who find it difficult. When a person finds him- or herself unemployed, or with substantially reduced incomes, it is difficult for that person to find their feet again, perhaps even in a new, less prestigious profession. In a situation like that, it is easier for him or her to become depressed but "save face" rather than "lower himself" to the level of a sales assistant, a service employee or a waiter. People like that consider their position in society as a measure of self-respect. In these situations, especially if they do not have any savings allowing them to preserve an appearance of status, they have to rapidly re-organise themselves. The main thing that they have to get the hang of is that self-respect does not equal respect for your own social status.

It is not sufficient to respect yourself simply because you are a person. We are becoming knitted together in our social roles to such an extent that our true essence is being substituted by them. But, in these circumstances, it is worth finding strength and new resources within oneself, for difficulties always present opportunities to do something else, something new, to mobilise our own assets and seek out effective ways of realising them. But the main premise in what has been said above, is that in the present situation we should spend less than we earn.

Experts advise us to put by at least 10-20 per cent of our incomes. Moreover, if this money is put by in the form of savings in the bank, then it is desirable where possible to keep your savings both in Azerbaijani as well as freely convertible currency. Firstly, this is a little cache for a rainy day. Secondly, this is a fund for major purchases or holidays. This means you won't have to borrow money to acquire that commonplace washing machine. If your outgoings are less than your income, you will always have money.