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What to do when your income disappears

How to survive no income

My husband currently works on a contract-by-contract basis.  He’s associated with a company that is pretty good about making sure their employee’s have work.  When he started his last project, we knew it was supposed to be around 8 weeks.  It ended up running closer to 12.

We knew the project was winding down, but we hoped that it would last another week or two.  Alas, he came home from work yesterday with news he had about 4 hours of work left!  The firm has several new projects starting up, but nothing will be ready for 2-4 weeks, possibly longer.

We knew this could happen, but boy it sucks!  I was getting so used to that regular paycheck after our year of unemployment.  We got our savings replenished, replaced our barely running beater car with a slightly newer, better-functioning beater car, and got all caught up on doctor visits (yay health insurance!).  Which is good, because now we are doing a surprise no-spend month!

We are really fortunate that we know this is only a temporary situation this time around, but we also know what it’s like when your next paycheck could be six weeks or six months away!

Whether you are worried about a layoff, or working in a freelance field where the work ebbs and flows, here are a few tips for preparing for months when no money is coming in.

Prepare beforehand

As long as you depend on someone else for a regular paycheck, you should plan for a situation where that person/entity no longer provides it for you.  This is the basic idea of financial independence!

Obviously, nobody plans on losing their job.  But have you actually thought about what you would do if you did?  Having a plan is the first step!

Start your emergency fund

Job loss is exactly the kind of situation you want to use your emergency fund for!  I have a detailed article about calculating and starting your emergency fund here.

Develop alternative income streams

Having a side hustle like a drop ship business or a blog might not make you rich, but if you lose your primary source of income, it can make a huge difference!

For many people, job loss results in racking up massive credit card debt to pay the bills.  This debt becomes incredibly difficult to pay off once you are employed again.  If you have other sources of income, you can stave off credit card dependence while you look for a new job.

I write more about alternate income streams in my post here, and you can learn more about a great side hustle selling on amazon here.

Grow your network

Networking is the key to getting a job.  Period.  Even if you are happy at your current job, cultivating your professional network provides a safety net of contacts!  These people can help find you a new job if you ever find yourself unemployed.

Slash your spending

Okay, so you’ve lost your job.  After you send out your first round of resumes, you should sit down and evaluate your spending.

If you have a budget, pull it up.  If not, start one right away!  I have a helpful guide here if you need it.

When it comes to spending, remember that your money is limited to what you have in savings.  It may be possible for you to access investments or retirement accounts, but that should be an absolute last resort.

Without a steady income, your budget has to be cut down to the bare essentials.  What are the essentials?

Housing

You have to have a place to live.  If things get really desperate, can you move in with mom and dad?

In the meantime, how are you going to pay your rent/mortgage?  Can you decrease your bills by setting the thermostat two degrees higher?

Food

Time to start eating rice and beans.  No more luxury foods – nothing pre-packaged or ready-to-cook.  When you have more time than money, you cook from scratch.

Communication

If you’re gonna get a new job, you have to be able to talk to people.  Keep your internet, but downgrade to a basic plan.  Look for ways to cut your phone bill by reducing data or switching carriers.

Transportation

Gotta get to those job interviews and networking events!  In all seriousness, look closely at how you get around.  Is it more cost-effective to ride your bike?  Could you use public transportation?  Without a job, you have way more time and taking a slower method of transport is worth saving the money.

Take inventory

Review your finances.  How much do you have in savings?  Investing?  Know what you have so you can use it if you need to.

Look at your emergency fund and make a plan to make it last.  If you have three months of expenses saved, can you stretch it to five?  Hopefully you won’t have to, but luck favors the prepared.

Make your budget go farther

While you’re looking for another job, stretch your income by doing freelance work or taking side jobs.  Here’s a few more ideas that will supplement your savings –

  • Swagbucks – I wrote all about how I use swagbucks here.  Do some surveys in the evening and cash it in for gift cards to help pay for groceries.
  • Look for gigs on Craigslist – During our unemployment stretch, we found all kinds of gigs.  My husband did a few stunts as an extra in some local films, we moved furniture or hauled things to the dump, and we cleaned out someone’s old RV.
  • Start driving for Lyft or Uber

Change your mindset

When you have a steady paycheck, you should be saving and investing.  Without a paycheck, those things need to be put on hold so that basic living expenses can be maintained.

The other big shift when there is no steady income is the idea that you need to trade time for money.  Like I said earlier, if you have more time, you should make your food from scratch.  No job?  You’ve got way more free time on your hands than you used to!

My favorite quote about frugal living that got us through our no-income phases is by Boyd K. Packer –

“Use it up, wear it out, make it do, or do without.”

We often said “Fix it up, wear it out…” because we like to repair what we have or upgrade free alternatives to get us by.

Just recently we got a nasty free couch on craigslist.  I pulled it apart and soaked and scrubbed and bleached.  It’s not quite good as new, but it doesn’t smell anymore and it’s a place to sit until we have enough money saved for the couch I want!

It’s not forever

Hopefully, more income will be on it’s way soon!  But don’t act like it’s coming – it’s best to keep up a frugal, basic lifestyle until you get your next pay check.  Not when you get a job, mind.  Until the first paycheck is in your bank account, you should be in super frugal financial survival mode!

If it does take you longer than expected, you might take a look at my unemployment article for more detailed ideas for getting by without a job long-term.

In the mean time, stay hopeful.  Learn to enjoy the simple things in life and congratulate yourself for being so frugal.  You can do it!

What to do when you lose your steady income

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