- Personal Finance
How to Save Money when You’ve Lost your Job
How to Budget Your Finances When You Have Lost Your Job
You have lost your job and are barely hanging on...don't give up!
You need to step back and look at the total situation and realize that there are many steps that you can take to help you through this extremely trying time.
The worst thing you can do in this situation is give up and not try or to be in denial and not take any steps in to minimize expenses now.
Sure you may get a new job tomorrow and everything will work out perfectly, but you may be out of work for a year. The best thing you can do is take a good long look at your budget and prepare for the worst.
This step can be a real eye opener. Do you spend $100 a week on eating out? Did you realize your groceries were costing your $900 a month!? Really take a close look and see where your expenses are going. What can you do without or at least cut back on?
This is the point where you really need to take a close look at your income and those dreaded expenses and stop living in denial.
You might be in a very tough spot financially right now and it can be down right scary, but I know from experience it won't get better unless you take some action and stop just hoping for a change.
Here are my (learned from Dave Ramsey) simple steps to creating a budget.
1. List out your income and every single expense. I mean every single expense!! This includes your makeup, dog food, household supplies, gas, haircuts, etc.
2. Blow money - We all need a little money to blow on whatever we want...I don't care how tight your budget is, you need blow money!! Even if it is only $5. The more money and the less debt you have, the higher your blow money can be. This will help keep you on track so that you don't overspend in other areas.
3. Make sure your bottom line equals ZERO! This is extremely important! How many times have you had an extra $100 bucks or even $10 bucks and you have no idea where you spent it?
What to do if You Have More Expenses Than Income
Now here's the hard part...what do you do if you can't make the bottom line = ZERO???
If you are in the negative the income has to increase or your expenses have to decrease (it really is that simple). Just like loosing weight - burn more calories than you take in...sounds easy, but we all know how difficult and painful the process can be.
This is where you need to make some immediate changes to fill some of those gaps. Sell a car, have a garage sale, get a job delivering pizzas...I am not trying to act as if these things are easy, but something has to change. Your situation won't magically get better just from ignoring it.
This step will separate the winners from the losers. The winners will pick themselves up, put down their pride and make the difficult decisions to change the present to be able to make it to the future. The losers will make every excuse in the book why they can't sell the car, the boat, the 20 things in the attic collecting dust.
I highly recommend Dave Ramsey's book, "The Total Money Makeover," to really go in depth in all of these areas. He will give you the motivation and determination you need to get out of this mess and make a plan that will work.
The Total Money Makeover
No Credit Cards, Only Cash!
Instead, follow your budget and use CASH.
Absolutely do not use a credit card! The last thing you need is to get yourself further in a hole that you will need a bigger shovel to dig out of.
Don't even use a debit card if you can avoid it. It is way too easy to overspend with a debit card than it is if you use cash. When you can actually see how much you are spending, you will end up spending a lot less.
Using cash will also force you to stick to your budget. When you take only cash to the grocery store, you will stick to your $150 budget instead of risking looking like a fool with $200 worth of groceries and only $150 to pay for it.
Remember many people are in this situation and it is what you make of it that matters.
Don't lie on the couch and pout, tighten the belt and reduce your spending and be willing to work as hard as possible to improve your situation.