The economy is a scary thing right now. Many people are losing their jobs. Most of the rest of us are nervous about job security. I've been giving some thought to what would happen if my husband lost his job, which is the largest and most stable income stream we have right now. There are a number of things we could do, if we had to, that we're not doing right now. I've run through them a number of times in my mind, just to make sure I'm considering all possibilities.
What would you do if you, or the breadwinner of your family, lost their job? What immediate steps could you take to cut your costs or replace some of that income in other ways? Here's a list of actions I consider to be "emergency response."
1. Recast our mortgage. We've been paying ahead on our mortgage, which means we've built in the possibility of reducing the amount we're obligated to pay each month. Recasting costs much less than a refinancing, and leaves both the original term of your loan and the interest rate unchanged. This is something I would do immediately upon learning our financial situation had changed. Better to do this as early as possible, rather than wait until a few months' worth of savings has been eaten up. As of right now, our early repayment would let us reduce our monthly mortgage payment by a little over $250.
2. Sell a car. Right now we own two cars we paid cash for, and we don't really need both of them. Selling one car would give us cash in hand, and also reduce our auto insurance rates. I actually wouldn't mind doing it now, but my husband has half convinced me it's the worst time to sell.
3. Get a roommate. We love our privacy, but if our main income stream were cut off, we'd find a way to live with someone else in our own home. We've got a nice place to live and we've got the room. An extra $400+ per month would mean our savings would stretch considerably farther.
4. Look for a straight job. If my husband lost his job, I would look for steady work. It would likely be for low pay, and given the economy, any job at all would likely be hard to come by. So I would make sure I'd settled the first three items on this list first, since those would be fairly easy to accomplish. He would make his own job search a 9-5 chore every day.
5. Increase the hustle. There are a number of things that I do that bring in a small income, such as some paid writing, and teaching cooking classes. I'd do a lot more of them, and also work on bartering even more than I already planned to this year.
6. Expand the garden and work it more intensively. Last year was the first year I gardened seriously enough to supply a lot of our own food. If things got bad for us this year, I would ratchet it up even more by clearing as much new ground as I could find, though there really isn't a whole lot left to clear that would produce a good crop. But spending more time out there tending it would give us better yields. Building cold frames to extend our growing season would become a bigger priority.
Surprisingly, when I considered what small economies I could make in our day-to-day routine, there really wasn't all that much we would change. We already live very frugally in terms of how we spend and conserve money. I suppose we'd not buy any more alcohol when we ran through the beer and cheap wine we have in the basement, and we might eat a little less meat. Other than that, there aren't many places to trim our monthly budget.
It's also a little surprising to me that bartering and cold frames showed up on my list of goals for 2009, as well as on this emergency list. So it looks like I'll be slightly better prepared for any financial emergency by the end of this year if I achieve my goals.
If you assemble your own list of crisis management steps you'd take in a financial pinch, it's worth asking yourself why you haven't taken those steps already. I admit that all of the things on my list (other than recasting the mortgage) are things that I "should" be doing already, if I were really serious about frugality. Mostly it boils down to issues of our quality of life. We could and would do things differently if we had to, but not without sacrificing something significant. The truth is, none of the hundreds of little things we currently do to save money feel like real sacrifices. That's the real beauty of a frugal and self-sufficient mindset.
When I run through a what-if scenario such as this one, I can't begin to express how much difference it makes to know that we carry no debt other than our mortgage, and that we have cash saved for a full six months of expenses. Of course the prospect of our main income stream being cut off makes me nervous. But it doesn't make me panic; it's not unthinkable. Living the frugal life affords me the confidence to say we'd get through it, and know that we really would. I feel there are plenty of rewards for living the way we do, but peace of mind ranks really, really high on that list of rewards.
So what steps would you take if you lost your job? Any reason you haven't taken those steps already?