Times may get hard. The dollar won't go as far. Unemployment may rise in the future from the present lows. High paid union manufacturing jobs may go overseas to be replaced with customer service jobs or high tech jobs. The stock market is unstable. The housing bubble is bursting. Clearly families, and individuals, need to prepare for the time when it may hit the fan. You can't afford to be holding a large debt (or even a smaller debt) if you lose your job or if capital gains taxes go up on your retirement accounts. You may have to cut back on luxuries like going out to dinner or paying for child care. Eat at home, watch the kids yourself. When you go to Wal-mart don't spend $300 but spend only $150 by trimming that shopping list. You don't need three TV's, a cell phone (we got along without them fine for years), a new CD or DVD. Of course, if you do cut back and tighten your belt then it will throw the economy into a further tailspin and things will get worse. Hey, I've got an idea. for a change how about if the one who should be cutting back should be congress instead of you and me. My family budget and your budget is no doubt pretty close to your annual income. That is small potatoes compared to what congress spends. We measure our expenses in terms of hundreds of dollars and thousands of dollars but congress measures their expenses in terms of billions of dollars. Congress could cut back for a change. They could simply reduce every program by some small percent the same way you and I have to reduce the parts of our budgets. Then after they have cut all the programs they could take a scalpel to each program individually and look for specific ways to cut. I wouldn't hold your breath on this last one. So far they have been completely unable to ever agree on a scalpel approach. But a forced tightening of the belt has worked before. Like when congress had to shut down because they could not balance the budget. I personally never missed them those few days when they were not working - and we saved lots of money to boot.