Preparedness Tuesday: Job Loss Budgeting

It's Preparedness Tuesday - each Tuesday I post one thing you can do to help prepare you and your family for everyday disasters - be it job loss, bad weather (between being stuck in the middle of hurricane season, and the coming colder winter we're predicted), or even that ugly recession they keep talking about (blech!)

This week I am talking about budgeting in case of job loss or the possibility of it. Even if you are pretty sure your job is safe, you may want to go ahead and prepare just in case, and enjoy maybe saving some cash!

The first thing you will want to do is file for unemployment if you are able to. Sometimes, even if you don't think you are eligible, you actually might be, so don't step away from this very important source of help!

One tip is to always make sure your resume is always up to date and ready to go. You never know when the perfect opportunity might land on your lap, even if you're not in danger of losing your job!

Next, sit down (with your DH/DW/SO if this applies), pull out a pen and paper, and list every bill, including extra ones like Netflix, cell phones etc. Work through the list and make sure you place them in order of priority. All SECURED debt such as mortgages and car loans need to be at the top of the list! After you've done this, you'll want to see how much available cash each month you have to pay these bills. Try to avoid touching your savings if you can - this might be easier if you are a two income household.

A lot of financial folks will tell you to cut off everything non-essential - from your internet, to your cell phone, to your gym membership. I'm actually not one to suggest that unless you absolutely have to. What I do suggest is that you pare down - for instance, if you are paying for 7mbs high speed cable internet, drop it down to 1.5. My reasons for keeping internet? Simple:

1) You can job hunt without wasting gas (or bus fare) and study up on topics in your job field, as well as get tips from others in your same situation.
2) You can search for deals on shopping, as well as do online surveys and print coupons to help stretch your grocery budget. (you generally can't do this at the library)
3) If you have entertainment at home, such as being able to watch TV shows online, you're less likely to want to leave the house to find something to do and be more likely to break down and spend money you shouldn't be.

Your cell phone is pretty useful too, as potential employers could reach you anywhere, although I would also suggest you pare that down to the minimum plan.

Cable, Netflix, gym memberships again: if you're not 100% using them (such as going to the gym on a daily basis) close them down until things are more stable. You can usually borrow movies for free from the library, and every Monday, a new code is released for a free Redbox movie - that will help you keep up to date on new releases. If you need to work out, and you don't like to run outdoors, check your local freecyle or Craigslist for used equipment for free or very cheap. I often see weights, treadmills, and rowing machines on ours. Yes, they may be a little older in some cases, but at least you are able to work out.

If you decide to keep your cable and internet, call and see if there's a better rate available. The same goes for any phone lines, and your credit cards - often they will drop the interest rate a couple of percents if you just ask. Even if you don't carry a balance on them at the moment, it's still nice to know if you need to, you won't pay as much in interest.

I don't suggest cutting your credit cards in this situation, because I feel you never know when you might need them for an emergency. However, you want to stop using them immediately if you can, and definitely for anything other than food, gas, or shelter. If you're a compulsive shopper (see the guilty look on my face?) slip your credit cards into a zip lock sandwich bag and squeeze all the air out. Grab a plastic tupperware container, fill it with water, and put the ziploc bag of cards in it, and freeze them! You'll have to wait for it to defrost before you can use it, which usually curbs the shopping craving.

Remember, once you create your budget, you will have to stick to it. The first few weeks are generally the hardest part while you adjust, but after the first month, it gets easier.

For more random preparedness thoughts from my blog, click here.