Budget to Survive Unemployment

It is obvious that if you don't have a job, you had better be extremely careful about how you spend the small amount of money you have

, right? Why is it, then, that so many unemployed people fail to understand this until it is way too late. People do end up on the streets or broke through no fault of their own, but all too often they play a hand in their own demise.

Let me make it perfectly, crystal clear: If you are unemployed, set up and stick to a budget from the beginning. The clock is running from the moment you get your pink slip. You can slow the clock down by sticking to a budget.

It doesn't matter how high the maximum unemployment insurance payment is in your state. Maybe you get $1,000 a week. Unless you got a severance package worth millions or your spouse is wealthy and patient, the best financial protection you have is frugality. Frugality begins with a budget. A budget does not just happen. It is worked out in steps.

Specifically, it happens in four steps:

Analyze -- Sit down with your spouse or partner (or if you don't have a spouse or partner, sit down by yourself or with a friend) and figure out how much is currently going out and how much you can contribute based on your unemployment insurance, part-time income, picking cans out of the garbage or whatever you do for money. Know about every penny coming in and going out.

Figure out where you can cut, then do it. I'm talking about non-obvious stuff. Cut until it hurts. Yeah, get rid of cable television. Do without meat, instead buying huge bags of rice and beans. Cut, cut, cut until you have your monthly outflow down to a trickle.

Negotiate with your creditors. One of the few advantages of joblessness is that it provides decent negotiating leverage for reducing your debt load. The last thing your creditors want is for you to go bankrupt. You might find that they are willing to work with you or your representative.

Execute your plan and do not waver. This is the hard part. Anybody can plan. Anyone can theoretically save hundreds or thousands of dollars each month. Few actually follow through and save that kind of money. Discipline yourself to pare your lifestyle to the bone. Get used to living that way. Even when you find a job, you will be in much better financial shape for becoming accustomed to frugal living!

It is that simple. Accept that you are going to have to make sacrifices, then make them. Resign yourself to the obvious, and it will be easy to develop and adhere to a frugal lifestyle.

Budget to Survive Unemployment

By: Chuck Lin

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