Do You Have Job Loss Emergency Plan?

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by Elle Martinez · 9 comments

Thinking about losing a job is not just  an exercise on paper for couples right now. There are many families struggling to pay the bills as one or both spouses try to find gainful employment. While I hope none of you have to go through that experience, planning ahead now for that possibility of a job loss can take some of the sting out of it.

Learning to Live on One Income

A few years ago we had a situation where over a period of around 9 months where we lived off of one regular income. Long story short – I was working full-time while my husband was looking for a software developer position. Shortly after he secured that position, I decided to give my resignation at my job since we couldn’t work out a compromise.

While we wished it worked out differently, it turned out to be a blessing in disguise and the experience helped us to change our financial system for the better. We also learned to communicate and combine our efforts better. Should we have to go through a similar situation, here are a few ways we’d deal with the emergency.

Reduce, Reduce, Reduce Expenses

The first thing on our to do list with a job loss keep our monthly expenses low. While we have an emergency fund to help us out, if we can reduce or eliminate expenses so as not to need it we’ll do that. This will allow the one who lost their job to have the time to find the best option instead of rushing to find the first job opening.

  • Cut back on our cell phone plan. Now that I’ve been trying out Republic Wireless for their smartphone plan, this is looking a viable plan for us to switch over to should we have to immediately cut back on bills. The only thing I’d like from them is the ability is use our current phones. However if we’re down to one job, then that isn’t such a big deal. Money saved ~ $100/month
  • Reduce dinners out. Unless it’s a loved one’s anniversary or very special occasion, we’ll eliminate eating out. Date nights will become dates in as we’ll swap babysitting duties with friends.  Money saved ~ $100/month
  • Downsize our grocery budget. Right now we allocate a bit of our food budget to try out different recipes and drinks. If we were down to one income, we’d trim that out of our budget until things got back to normal. Money saved ~ $50/month
  • No extra debt payments. Any money going towards paying down the mortgage or the student loan would be suspended. Money saved ~ at least $200/month

As far as utilities, while we could shave some money off of our bills, it would be minimal. So basically after doing the above cuts, we’d be saving about $450/month, which would help us not tap into the emergency fund as much. In addition to cutting our monthly expenses, we’d also look at taking on some more productive hobbies.

We’ll need that money saved so we can take care of the next part of our plan – taking on projects for work and income.

Take Work Projects On While Job Hunting

The next step is to find another income source. When I was looking for work I split the time between hunting for a job and doing work for a friend. He had a web design business and he needed someone to help with the content creation for his clients.

It might seem weird to take on work on the side while job hunting, but it was a good move for us for a couple of reasons.

  • Income: It was a very part-time job, but it was a paying job. Any income was welcomed.
  • Resume Upkeep: I already was doing work online and this job was well within my skill set. It also allowed me to polish up my resume with additional skills and gave me conversation pieces for interviews. I wanted to minimize the gap of unemployment.
  • Explore Work Options: Working on the side also gave me an opportunity to see if this could be an employment option for me in the future.

It actually worked out that becoming self-employed was the financially best option for our situation. I gained some flexibility in my schedule while keeping my hourly rate from my previous job. When our baby girl arrived, being self-employed was a bonus and we adjusted accordingly.

You too may find that going back to being an employee is not the right fit for you. If you need some expert advice on getting your side projects into a business, SCORE is a wonderful free resource that allows you to connect with experts in the business field with years of practical experience.

Even if you want to work at an office, taking on side projects that highlight and use your talents and skills can make you a more attractive job candidate.

Thoughts on Dealing with Job Loss

As I mentioned above, while not the best of scenarios when forced, learning to live on one income has been extremely helpful for us. It helped us to see that if we work together we can not only survive a job loss, but grow from it.

I’d love to hear from you. How many of you had to deal with a job loss? How did the two of you work it out? How long did it take for you to find a comparable job?

Photo Credit: sacks08

About Elle Martinez
Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..

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  • http://twitter.com/Yakezie Yakezie

    Living off one income is definitely key, and for singles, living way below one’s means.

    Holiday time is one of the riskiest times for layoffs. Everybody beware and plan. Elle, ping me about my book if you’re interested.

    Sam

    • http://couplemoney.com Elle Martinez

      Thanks Sam for your book! I’m having some time coming up where I’m planning a weekend of reading and your book is at the top of the list :)

  • http://www.moneylifeandmore.com/ Lance@MoneyLife&More

    I’d cut back my expenses immediately and start searching for a new job like crazy. I’d probably also try to build up my online presence and consider trying to take it to a full time income but I don’t think it is at a point where I can do that yet.

    • http://couplemoney.com Elle Martinez

      You never know Lance you could make the leap to full-time or at the very least boost your income a bit while job hunting. It’s good to have some options.

  • http://authoritywebsiteincome.com/ Jon Haver

    It is something me and my wife have thought of. We looked at it and thought the game plan would be pretty simple, cut expenses, apply for new jobs, pick up side jobs wherever possible. However, with a baby on the way that definitely wouldn’t make the game plan quite so easy!

    • http://couplemoney.com Elle Martinez

      Congrats on the baby! Planning ahead can make a job loss a bit more bearable. Glad you guys are willing to look at both – earning income and cutting expenses.

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