05 May5 Budget Overhaul Tricks for the Recently Unemployed
Losing your job is an overwhelming experience. Not only do you have to deal with the emotional and psychological fallout of being let go, but you also have to quickly figure out how to survive financially until you land a new job.
Fortunately, there are some budgeting tricks that even the most budget-averse can use to stretch their dollars after a job loss. Here are five tips that can help you make the most of your finances while you are unemployed.
Cut spending from easiest to hardest
The trick to an effective budget overhaul is to start your cuts with the expenses you care the least about. Freeing up money that is going to budget items you don’t care about is much easier than having to restructure your life by moving to a cheaper place or selling your car. So it is always smart to start with the easy cuts, and move up the chain to the ones that are harder to cut.
1. Cancel unused subscriptions
Subscription-based companies are a huge part of our economy right now, and many companies make their money through subscription services their customers no longer use. You are probably aware of your subscriptions to services such as Audible or Stitch Fix if you use them often, but if you’re like many consumers, you’re still paying for older subscriptions you’ve forgotten you signed up for.
Taking a couple of hours to comb through your statements to find unused subscription charges and cancel them can free up a surprising amount of money without you having to give up anything you need or use. Even if you are unwilling to do the work of canceling these subscriptions yourself, apps like Trim and Truebill will do the work for you for free.
2. Reduce necessary expenses
Once you’ve taken care of the expenses that you didn’t know you had, you can start working on reducing your necessary expenses — without eliminating them entirely. In particular:
- Cut your cellphone bill by reducing your data plan. Not only will you probably be using less data while you are job hunting from home, but you may already be paying for more data than you need. Android and iPhone users can download the free My Data Manager app to track their data usage.
- Call your internet or cable company to downgrade your package. Canceling cable is the standard advice for saving money, and for a good reason — it’s an easy place to trim budget fat. However, even if you don’t have cable, you can often negotiate a lower price with your internet service provider simply by asking. When you call, know the lowest going rate your provider is offering to new subscribers, as well as the rates of the competition. Mention that you are a loyal customer for however many years, and ask for some price consideration. (See also: 3 TV Must-Haves Once You Cut the Cable Cord)
- Reduce your energy bills by plugging energy leaks, lowering (or raising) your thermostat, and using your appliances more efficiently.
- Lower your food bill by reducing or eliminating dining out, and by following the rules of frugal grocery shopping: eat beforehand, make a list and stick to it, and shop your pantry before you go to the store.
3. Call your creditors
If you have a student loan, it’s a good idea to call your lender let them know of your job loss. Federal student loans offer options for hitting the pause button on your payments if you are struggling financially. While there are no such options for private loans, calling your lender and explaining the situation can still potentially get you a reduction in your monthly payment. Creditors would prefer to have you be proactive about a financial hiccup than have to get in touch with you after you miss a payment.
You can make a similar call to your credit card issuer if you are unable to afford the minimum payment. Many banks will work with you if you explain the situation and propose some sort of repayment plan. They may even waive fees and reduce your interest rate. You may also want to request that they report your payments as on time to the credit bureaus. They can always say no, but it’s worth asking.
Just be aware that many of these actions will mean you are spending more for your loan overall, because they will increase your repayment timeline. If this will give you the breathing room you need until you find another job, it will certainly be worth it, but be mindful of the long-term consequences. (See also: 5 Tricks to Consolidating Your Debt and Saving Money)
4. Negotiate your rent payment
Even though your rent payment may seem like it’s a take-it-or-it leave amount, there is often some wiggle room, especially if you are a reliable tenant and have plans to stay where you are for a while. The best way to accomplish this is by asking your landlord for a longer-term lease in exchange for a discount on your rent. That can be a win-win for both of you.
5. Slash your car payment
Having a car payment is a tough Catch-22 when you are unemployed. Unless you live in a place like New York City, you generally need the car to be able to effectively search for a job and show up to interviews. But without a job, the payments can be overwhelming.
If you have good credit, your lender may be willing to let you adjust your loan by extending the term to lower the monthly payment. This helps you keep your car and lower your monthly expenses, although it will increase the amount you pay overall for the life of the loan.
If eliminating the expense of the car payment will make a big difference to your unemployment budget, then it might be a good idea to sell the car. This option is best if it will enable you to secure other transportation. In some cases, car owners with enough equity in their cars can sell it off and buy an inexpensive used car for cash.
Know what luxuries you need to keep going
After a major financial setback, many people are tempted to cut every expense to the bone in an attempt to stretch their money as far as it’ll go. While you certainly do need to cut back and be mindful of how you spend your money, an austerity budget can be a mistake because it can be next-to-impossible to adhere to. The minute you cheat a little bit on your budget, it triggers the “what-the-hell” effect, wherein you think that you’ve already screwed up your budget a little, so why not screw it up a lot?
In addition, being unemployed and looking for a job is emotionally taxing. If you cut out every little luxury, then you’ll have less emotional bandwidth to keep up the difficult slog of applying for jobs.
So it’s a good idea to maintain a small line item in your budget for a luxury that will help sustain you through the unemployment. For example, you might maintain your gym membership, so you can keep working out and enjoying the mood-enhancing effects of endorphins. Or you could keep the occasional happy hour with friends, so you can stay connected with your favorite people or former colleagues (who may even provide knowledge that could help you find your next job).
The important thing to remember about these types of luxuries is that they do need to be small line items. There is a difference between sustaining yourself and indulging yourself, and you need to keep that difference in mind until you find a new job.