Friday, January 16, 2009

What Would You Do If You Lost Your Job Today?

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?


Lisa Zahn said...

What a great post. I think a lot of us are running through the same things in our minds. My plans are similar to yours. Hope neither of us needs them!

Anonymous said...

You might not want to do #2 if you think you'll need to do #4, especially since both cars are paid off. Great ideas, though! Clare

Anonymous said...

I have recently been concerned about my job as my company has changed hands. I like your idea of listing actions that can be taken. That will take some of the stress out of the situation, and I think I'll start working on it.

Fig Fighter said...

Take up an enriching hobby now to help save for the then...

Though almost unheard of in todays society gleaning has been practiced for centuries as a means of acquiring the things you need. More commonly known as dumpster or skip diving this enriching practice can help reduce spending in a variety of different ways. The easiest form of savings can be realized by scavenging food. I know, you're shaking your head saying, "No way am I eating out of the trash!" I felt the same way until I recently, out of curiosity, took a look in the bin behind my local grocery store. Beutiful produce as far as the eye could see. You see we are all "perfection shoppers" we don't opt to purchase the blemished apple when a prestine apple can be purchased at the same price, yet nthing is wrong with the less than perfect apple. To learn more about what gleaning can provide visit http:/ also visit some of the links especialy dumpster liberastion front.

I was layed off this last Tuesday. This fear can become a reality but with some savings in the bank from past gleanings things won't be too bad. Good luck all.

Anonymous said...

It's something we all have to keep in the back of our minds, I guess.

Personally, I've been keeping a list of money-making ideas for years, so the first thing I'd do is go through that list and look for the best options to explore further.

I'd probably spend some time working on web sites for income, and maybe do a bit of online consulting.

My wife, being an accountant, is fairly likely to be able to pick up work quickly. So another option would be for me to stay home with the kids and her to find work.

And of course, get planting in the vegie garden!

Green Bean said...

We just had this discussion tonight. We'd likely do three of the four - I doubt we'd sell the car because (1) it's paid for and (2) even though I stay home I need it to get the kids to school. We'd kiss cable and a few other expenses goodbye and look to barter - goods and services - more.

Anonymous said...

Great post. Hopefully I never have to revisit it....but some of these are worth thinking about even without loosing a job. We are considering getting rid of our second car..Tricia

Kate said...

LisaZ, Thanks. I also hope neither of us needs such lists.

Clare, that could be an area of difficulty, but not too likely. My husband mostly works from home, so if I got a job that required a car, it probably wouldn't be an issue.

Jan, yes, listing the steps we can take has definitely removed some of the worry for me. Facing such worries head on is usually better than the alternative, no?

Fig, I wholeheartedly agree, and I have enjoyed and posted here about dumpster diving before. We tend to do this more in the summertime, as it's really cold in the winter. I also glean, but I take that to mean gathering food from gardens, trees, or fields where the owners are letting the food go to waste. Then there's wild foraging of course... So many possibilities!

Darren, thanks for sharing some of the items on your list.

GreenBean, which of the three things did you mean? My list had six things, so I'm not sure which ones you meant. But yes, any type of subscription service is a good first place to look when trying to reduce monthly expenses.

LEFP, thanks for stopping by. I enjoyed visiting your site as well.

Anonymous said...

Sorry to belabor the point ... but wasn't your scenario predicated on a situation in which the main breadwinner, your husband, had lost his job? Getting rid of a second (or even a first!) car is terrific, but maybe not if you're both going to be looking for work.

Your photo of bread inspired me to make a pumpernickel molasses bread. I love how much you're able to improvise in the kitchen ...