Follow these 12 belt-tightening and budgeting tips as you’re looking for work, from Work It!: How to Get Ahead, Save Your Ass, and Land a Job in Any Economy, by Allison Hemming.
There is no time like the present to get frugal. To achieve Successful Unemployment, you need to start now. Even if you have a small nest egg socked away that you’re planning on using to finance your unemployed state, you need to be careful. Look first at how you’re spending your Benjamins. But be brutally honest about which expenses are “must have” vs. “nice to have” vs. “can’t have until I’m gainfully employed.” Each of us is different, so only you can decide where you can save money. Here are some belt-tightening tips that will keep you on track and out of debt. (Before embarking on any major financial change, it’s a good idea to consult your tax accountant or financial advisor.)
USE CASH WHENEVER POSSIBLE. Somehow, forking over cold hard cash is a lot more painful than slapping down a credit card. If you leave the plastic at home, it’s certain that you’ll spend less on impulse items. Instead, go to the bank and take real cash money out. When you literally see and feel the money leaving your pocket, you’ll soon start paying more attention to where it’s going. If you’re really low on self-control, put the money you can spend for the week into an envelope. When it’s gone, it’s gone!
KEEP A BALANCED CHECKBOOK. Keep track of every dollar down to the last penny. Start by keeping your checkbook or online checking account up to date. Then, as bills come in during the month, write out the checks (just don’t send them in until they are due). This will provide you a true picture of your cash flow, and you won’t be tempted to spend money that you don’t really have.
PAY BILLS AT THE LAST MINUTE. Do what successful entrepreneurs do when they launch start-up companies — stall paying bills to conserve cash. (Don’t do what unsuccessful entrepreneurs do blow your money on thousand-dollar chairs and foosball tables.) You need to hold onto every dime as long as you possibly can. Don’t pay bills before they’re due. And pay the important ones just before they are due. Also, try to determine ahead of time which monthly bills can be paid a bit late without having your service interrupted or your credit affected.
NEGOTIATE LEVEL BILLING. It’s tough to get a grip on your expenses if your bills are fluctuating wildly from month to month. Nowadays, service providers and utility companies offer many billing options. See if you can set up a level bill payment structure for as many accounts as possible.
SCRUTINIZE EVERY BILL. You’ve got the time; use it. Examine every bill you get for unexpected charges and random fees that you might have overlooked when you were too busy bringing home the bacon. If you find an error, call customer service. By following up, you might receive credits to your account or free services to which you didn’t even know you were entitled.
GET THE PHONE COMPANIES TO COMPETE FOR YOUR BUSINESS. Calling plans are moving targets. As soon as you sign up for one, a better deal comes down the pike. Call your current service providers (long distance and mobile) and negotiate to get on the best plan currently available based upon your calling habits. You won’t believe the money you’ll save.
TRY TO CUT YOUR RENT. Most people’s biggest expense is keeping a roof over their head. The rent or mortgage check can be a brutal one to write each month, even if you’re gainfully employed. Now might be the time to get a roommate to share rent and other expenses. Alternatively, you can always consider subletting your space and opt for a couch-surfing adventure. If you’re in plush digs that are suddenly out of your league, you might want to think about trading down to save money (just do the math and make sure you include the cost of moving before you do anything). Your last option (gulp) might be to move back home with your parents. This will certainly motivate you to get that job as fast as you can.
LIVE LOW ON THE HOG. Who hasn’t been here: you go out at night with five crisp twenty-dollar bills. The next morning you awake to find only a couple of crumpled one-dollar bills and a pack of matches in your pocket. Dude, you’ve just spent your gas and electric bill for the month on a bad hangover. While you’re living in the land of unemployment, go out with a set amount of money for the night that you can afford to spend. When it’s gone, mooch off your friends or go home.
PUT OFF LAVISH PURCHASES. Put off budget-busting expenditures until you get your new job. If you couldn’t afford it when you were employed, now is definitely not the time to buy. Don’t justify purchases with the handy excuse “I owe this to myself.” You’ll just spend money you shouldn’t be spending in the first place. Rather than buying something on a whim, do the research on a big-ticket item you’ve been eyeing and reward yourself with it after you land a new job.
SPREAD OUT BIG UNEXPECTED BILLS. Say your car breaks down, your pipes burst, or Uncle Sam informs you that you owe more on your taxes than you originally thought. Before you cut a check, discuss payment options upfront with the plumber, the mechanic, or the friendly IRS man. Explain your situation and tell them you’d be willing to pay a little more to have the bill stretched out in installments instead of paying a large lump sum. Generally, if your credit is good, service providers will work out a special payment plan.
FIND HIDDEN RESERVES. If you have a brokerage or mutual fund account, consider cashing in the dividends you earn instead of automatically reinvesting them to buy more shares. Even if your brokerage account is minuscule, it might be worth it. Just do the math and you might find an extra hundred dollars a month for the time you’re unemployed. Think of this as a temporary solution that will give you a fixed income stream during the time you are unemployed. Just remember that you cannot do this with your qualified retirement accounts. And set the account back to reinvest after you land the job.
DO NOT BORROW FROM YOUR QUALIFIED RETIREMENT PLANS (I.E., 401K/IRA). When you get your monthly statements, don’t salivate. The funds you’ve saved in these accounts are officially off-limits: they are for your retirement, not your unemployment. You’ll incur hefty penalties for early withdrawal that will make the exercise hardly worthwhile. For example, if you have $100K socked away, you could lose fifty percent or more to taxes if you withdraw it before reaching age fifty-nine and a half. If you take it out, you’ll regret it for the rest of your life.
ABOUT THE AUTHOR
Allison Hemming, author of Work It!: How to Get Ahead, Save Your Ass, and Land a Job in Any Economy (Copyright © 2003 by Allison Hemming), is the founder of The Hired Guns, an interim workforce agency. She lives in New York City.
MORE ARTICLES BY THE AUTHOR
- Being Downsized 101
- How to Sneak Out of Work Without Getting Caught and Other Job-Search Tips
- The Armchair Millionaire’s Guide to Negotiating Your Employment Package
- The Tao of Interviewing: 12+ Tips to Help You Land the Job
- Why the Internet Is Ruining Your Job Search
- Read Chapter 1, “Get Out of Your Own Way: Diversify, and Get the Job You Really Want,” from Work It!
- Read the book’s Introduction