Downsizing My Household Expenses After Losing My Job

by Guest Blogger on 2011-01-0714

We’ve discussed how to survive a job loss before, but the following post, which was written from the point of view of someone I personally know, sure hits home. Thanks to Emma Chez Sun for sharing her personal story with us today.

I just lost my job. Boohoo, woe is me. After 16 years at this place, surviving three different CEOs and keeping the faith for the original investors and Board members, I am left with squat. Two weeks ago, all the remaining employees were given notice that we are being converted (read: demoted) to independent contractors or 1099s.

For our services in January and February of this year, we are being paid a token amount each month regardless of how much time we actually spend as contractors — roughly a week’s worth of regular pay. We have also been advised during a company meeting to search for another means of employment as well as to apply for unemployment benefits with the state. To add insult to injury, we were also asked to sign a severance and release agreement with non-compete clauses attached in exchange for this token amount. What is one to do?

Unemployed, Lost My Job
It’s a shock when you first find out the bad news. But we seek the silver lining (by Natalie Dee).

What everyone else in this country seems wired to do: take care of number one! Instead of moping (a natural reaction initially), I refuse to wallow. And now I am proactively keeping my spirits up by taking concrete action, allowing the resilient dragon to rear its head. Attack where it hurts.

I Just Lost My Job! How I’m Downsizing My Household Expenses

I am taking a closer look at the family budget. After managing to dial down the burn a couple of years ago due to hubby opting for early retirement with the steady annuity payout per month (which is not equivalent to what he was taking home when employed by the US Postal Service), I have to slow it to barely a trickle. I itemize everything again: namely, house payment, car insurance payment (thankfully all vehicles are paid up!), utilities, term insurance, school tuition (yes, I opted for private school for the four kids), student loan payment, sustenance (aka food and groceries), cable and internet, cell phone family plan, home equity line of credit payment, dog food.

At this time, there are things I cannot cut nor do I wish to disrupt as of yet:

  • Home mortgage and private school tuition. I’m not changing much in this area while I have my kids all on work-study or financial aid. We’re also sticking with the family dog.
  • Cable and internet. What I can negotiate, I do; I even threatened to disconnect these services after being a loyal customer and the service providers cut my bill in half!
  • Cell phone. I am presently utilizing a special additional discount as a member of a local Honor Society AND I’ve taken out all extraneous features like texting, for now.
  • Car insurance. I kept all coverage to the minimum required by law (or just liability) and the cars I do not drive regularly are put on “garage” insurance. Doing this helped me save $100 per month. Of course, I am even more extra cautious when I drive these days.
  • Student loan payment. I opted for the minimum payment plan for now, instead of paying extra. I also asked for an extension for the longest term possible: 25 years to pay. And if I die before that time…I am forgiven! This is just a temporary set up in order to control costs.
Job Loss, Got Fired
Try to keep a positive attitude through it all (by Natalie Dee).

Here are a few more moves I am making to address our cash crunch:

For utilities, I applied for assistance and opted to enroll in the budget plan so the payment is steady and expected per month. Also, I have practically forced my family to get used to turning down the heat and bundling up inside the house. The thermostat is kept at 60 degrees (maximum) and less than that when we are asleep.

I also installed surge protectors to handle appliances on constant power like the DVD and computers (due to those internal clock devices). We’re also making sure to know when to turn the surge protector off so power is completely at a standstill. Also, no more of those plug-in clocks since we have cell phone and battery operated ones.

Seattle also loves to recycle so I cut the garbage container size in half and consequently halved my garbage bill. What usually ended up in the garbage receptacle before is either recycled or composted: you’ll be amazed at how much one saves with this approach! Little items add up: whoever said “take care of the pennies, and the dollars will handle themselves” was right on the money! I do not buy garbage bags to line the trash cans at home — I recycle the grocery bags. For composting, I always ask for paper, not plastic, so I spare the need to buy compostable plastic bags. I have not subscribed to newspapers and opted to read them online instead, or I listen to the TV or radio.

For the home mortgage, I have asked my lender to cancel the escrow account so I handle homeowners insurance and the state taxes directly, and they agreed. There may be some ways to lower homeowner’s insurance on my own.

I have also asked for a mortgage loan modification in case I qualify, but we didn’t, as we have 9 years remaining and currently have a good rate. I called all the private schools the kids were at — one had a huge endowment, so they have the best chance of extending additional relief, at least temporarily.

DIY haircut, Natalie Dee
Cut costs where you can (by Natalie Dee). Here’s how to save money on haircuts!

Now for the most important item on our budget: food and related sustenance. Scratch eating out or even buying fast food! But do some research for online deals or deals of the week per store. One can save on the cleansers, detergents, toothpaste, deodorant, soap and shampoo. Buy up to the “limit” to stock up on the items you really use and try and compromise on the brands of shampoo, soap and toothpaste: they contain the same basic ingredients regardless of which brand you use (I should know since I used to work with formulation scientists). Create dishes around the deals of the week and freeze the excess for the following week or for sometime later. During Saturdays, if you are a member of Costco or Sam’s Club, take advantage of their free samples and look to save on the lunch budget, even if you don’t intend to buy anything.

Wish us luck as we tighten our belts for this period of time!

Thanks to Natalie Dee, for their images.

Copyright © 2011 The Digerati Life. All Rights Reserved.

{ 12 comments… read them below or add one }

Sandy @ yesiamcheap January 7, 2011 at 5:42 pm

You’re doing it the right way! Chin up, head down and not moping. You’re taking concrete steps that aren’t too painful that will add up in the long run. And really, how much did you really text. I bet not that much. I’m sure the family dog appreciates your efforts too. Good luck.

Silicon Valley Blogger January 7, 2011 at 5:55 pm

Thanks for the kind and encouraging words Sandy. Despite improved unemployment rates, people are still losing their jobs and could use the positive support and assurance! Hopefully the economy is recovering enough such that it won’t take as long now (relative to past years) to find a new job….

Mrs. Accountability January 8, 2011 at 10:58 am

Thankfully it sounds like your husband does have something coming in, and hopefully you have savings or an emergency fund to back you up. It sounds like you do and I think that helps you to be optimistic. If I were to lose my job, I would need to find another one to replace my income within two months or we would have to start relying on credit cards to survive. My husband does own two businesses but they are not bringing in enough steady income to make up for my loss of income. If I were laid off, I would definitely look for employment closer to where I live as opposed to fifty miles away (which is my commute currently). Good luck and I hope you will give us an update here at TDL.

Michael January 8, 2011 at 7:05 pm

I just broke my ankle and I am out of work for 6 weeks…at least. With no short term disability, I’m in a little crunch myself. I’m glad I found this article. Thanks for the advice, I can’t imagine being completely out of a job. Keep your head up and good luck to you!

Johnny Debt January 10, 2011 at 4:19 am

I remember once many years ago I became unemployed. As part of the process I treated unemployment as a 9 to 5 job!!

Every day I would go to my new office (the dining room) and start my day’s work. I would dedicate a whole day to getting back into employment. Also when I found myself with periods of nothing to do, I would make sure that I learn something new.

This time was also dedicated to looking at the family finances to see what could be cut back on.

With regards to your mortgage and credit cards, contact the creditors and informed them of your situation. Ask them for a payment holiday, if that is not available reduced payments for a period of time.

SavingMentor January 10, 2011 at 4:31 am

That is a great list of steps you’ve taken to cut down on your spending and many of those things are saving you money without impacting your lifestyle at all. This is the approach I recommend to everyone everyday to save money even when you have a stable job. You might as well keep as much in your own pocket as you can!

I truly hope you find another job soon and then all these cost cutting measures you’ve taken will carry over into the new job and the money you have left over for savings, investing, retirement, and fun will be significantly more!

Vinit January 10, 2011 at 1:10 pm

This post should help those who are feeling low…

brokeprofessionals January 12, 2011 at 10:24 pm

Great to see the positive attitude. What I found perhaps most troubling was the fact that they were trying to make everyone sign a backend non-compete in order to get a small sum of money. Interesting. I wonder if that is standard practice. I also wonder about enforceability and what % of employees signed them.

Pam McCormick January 14, 2011 at 7:51 am

I think what you have done is admirable and the positive attitude amazing! I did wonder if not too personal why not cancel cable,private schools etc the expenses that are not crucial to survival? or is it managed in your budget because spouse has steady income?I inquire because I have always run 3 budgets on paper for 1)essentials 2) steady income 3) luxury budget always planning for the “just in case” which happened to you and many people across USA.I also have always had more than 1 job/career to provide for the “just in case” situation.Even with all that in place I worry.

Karen604 January 16, 2011 at 5:49 pm

If you can avoid signing the non-compete clause do so. My husband is now 8 months out of work and we have 4 months to go on the non-compete. Those who did not sign managed for the most part to be employed with similar pay to what they were betting within 2 months. We suspect my husband could have been as well as about 5 weeks after there was great interest in his employment status. That is how long it took the companies to realize that the loss of the department he was in was impacting their business. Alas, he had to tell them no or likely be sued by the former employer.

Political Atheist January 19, 2011 at 4:20 pm

Great attitude! I’ve been laid off twice. Each time lead to better career opportunities. I believe in my heart of hearts that people who remain flexible, take a creative approach to the changing workplace and have a great attitude will thrive in the new economy. People who think or expect things to “same as it ever was” will not. Kudos and remember, everything happens for a reason.

Bob March 1, 2011 at 9:12 am

Great Attitude! and i love the little cartoon figures 🙂

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