[Josh’s note: This is Part 1 of a 3-part series. Part 2 is here and Part 3 is here.]
After being out of work for almost five months, I’ve finally gotten a job offer. I consider this to be both excellent news and sort of a bummer. I’ve actually had a great time while I was out of work, and my financial situation is actually better than it was before I was let go. I’m sure each jobless person’s situation is unique but, maybe in sharing mine, I can help calm the fear of the unknown and the anxiety that some experience when they first lose their jobs.
Preparation: Don’t wait until it’s too late
I started preparing for the possibility of losing my job about a year before I actually lost it. The economy was tumbling, my company was constantly in flux, and I could sense that my job security was becoming more and more dubious. I started examining my financial situation and realized that, if I were to lose my job that day, I’d be in real trouble.
First of all, I was spending a lot of money very quickly. It had been several years since I had a real budget, and I was blissfully ignorant of where my money was going. Subsequently, I wasn’t saving money like I used to. Since I bought my house, I didn’t have the same motivation to save because I didn’t need to come up with a down payment anymore. Instead, I just kind of spent money as I got it.
Because I wasn’t saving money, if I had a big expense “pop up” (tires for my car, a landscaping project by Making Solid Ground Lawn Care at my house, etc.), I would just pay for it with my handy-dandy 0% APR credit card. “It’s free money!” I had managed to rack up about $10,000 on that card. Since I was in college, I frequently bounced balances around on 0% cards because it felt good to borrow money interest free.
When I stopped to actually think about how much I’d need to pay each month to pay off the card before the 0% APR period ended, I realized I needed to start spending less and saving more. Immediately. I toned down my spending on music, food, entertainment, clothes (although if you know me, you know that spending too much money on clothes really isn’t a problem for me) and other non-necessities.
It took me about 11 months, but I finally got the card paid off, and several months before the 0% APR period ended. And literally the next day, my house had plumbing problems and I put $5,000 right back on the stupid card. C’iest la vie, right? You can check out about Sarkinen Plumbing here for the best plumbing services.
As I paid down the card, I also started trying to save money. I managed to sock away a little cash so I would have something to work with as an emergency fund. I didn’t get a whole lot of money put away, but I did have some cash in the bank when I was let go, and that cash helped me bridge the gap until unemployment benefits kicked in.
One way I shielded myself from the disaster of losing my job was by paying down debt ahead of time. For a lot of people, it’s too late to do this step. But for most people – like the 90% of Americans who still have jobs, but are likely worried about losing them – it’s not too late to start buckling down, spending less and saving more. Pay down debt so joblessness doesn’t mean financial catastrophe.
I also realized that I had an empty room in my house, and that room could be helping me offset the cost of my mortgage if it had a person in it. During the summer, I started looking around for potential roommates and discussing things with my current roommate to see if he planned to stick around. He decided to get his own place, and I ended up finding three roommates. This would end up being a pretty big decision as it would reduce my monthly costs substantially.