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End of Your Rope? Tie a Knot and Hang on Tight.

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Yesterday I explained how I got an e-mail from a woman who lost her job and the feelings that I went through in a similar situation. Today, I'll detail what I did about it then and what I'd do about it today.

First off, I'd break your plan of attack into three phases:

Phase 1 (Immediate Term) - Desperation mode

1) Cut costs - The basic concept here is to look around at everything that costs you money and either eliminate it or make sure it costs you the minimum

  • Extras - I would quit most any subscription service... Netflix, Cable TV, Vogue Magazine... all gone.
  • Utilities - Keep the high-speed Internet connection (as you can use it to make money, find a job, or learn how to save more money), but kill your phone line with the telecom company. I would get Vonage ($15 for 500 minutes a month), or better yet Skype ($68/yr for SkypeIn and SkypeOut - that's just over $5 a month). Drop the cell phone.
  • Food - I'm not entirely joking, but I'd go on the Survivor diet - lots of white rice and water. Perhaps some Ramen noodles if you want to splurge. I'd mix some beans in as they are a great source of protein and fiber and are relatively cheap. See also Nourishment on a Desperate Income from The Simple Dollar.
  • Insurance - Use Cobra to get health insurance unless you have a better option.
  • Housing - Looks like you own your home. How about getting a roommate? You could cut that mortgage problem in half.

2) Earn an income - You can't continue making payments on your home, if you don't have money coming in.

  • Look into Unemployment - This is an obvious first step, I hope. When I was jobless, my unemployment benefit was quite large as I was downsized from a high paying job. The downside of this is that it discouraged me from looking for work. The way unemployment works is that if you make $50 that week, you report it and then you get $50 less for the week. This extends your time on unemployment though, so if you are still unemployed when your unemployment would have run out, you'll still have that $50 to get the following week. This was not good motivation for me to find just any work. If I took a minimum wage job, I would be working 40/hrs a week to not make a cent more that week. The system seems backwards if you ask me.
  • Make Extra Money - See if there some ways you can make an buck on the side. There's another great example at Get Rich Slowly.
  • Think about small jobs - Don't be afraid to work double shifts at McDonalds or some other fast food place. I used to work at a fast food place and I actually thought it was fun (in high school at least). The bonus is that if you work the night shift, you can often bring some left over food home. It wasn't uncommon for me to bring home 12 calzones a night that would have otherwise been thrown out.
  • Talk to Friends - Tap your social network and see if you can find a job through that means.
  • Look for Jobs Online - Look online at Monster.com, CareerBuilder, and HotJobs.
  • Blogging - Blogging for money is possible, but expect to earn somewhere around 5 to 10 cents per hour spent for the first 3 months. It's taken me a year of 2 hours a night (on average) to make what I make now. Consider this article on why Blogging is not the answer. Nonetheless, if you are looking into blogging as a longer term solution here are ten reasons to be a personal finance blogger. And here is a little guide to being a successful blogger.
  • Consider selling things you have of value - This is a tough decision and must be made on an item by item basis. Still, you may find that you have spare books, DVDs, etc. that could make money on Ebay or a garage sale, etc.

3) Take Care of Yourself - It's more important now than ever

  • Pay Attention to Your Health - I mentioned yesterday that it's easy to get depressed when in this desperation mode.
  • Be Social - I was lucky enough to live with roommates which kept me social.
  • Exercise - My apartment building also had a gym, so I used some of the extra time there. If you are on the cheap diet I mentioned above, you should be working out. Exercising releases endorphins which will make you feel better. Studies show exercise works as well as some anti-depressants.

That's the end of my plan for phase 1, go see phases 2 and 3.

Last updated on December 16, 2008.

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13 Responses to “End of Your Rope? Tie a Knot and Hang on Tight.”

  1. Along with #3, I would add “You are not your job”. If you define yourself through your job or productivity, it will be a real shot to the ego. I know it sounds goofy, but try and use the time to find out what you truly value, what you want in life, and who you are.

    Blogging although you won’t make money, especially not in the short term, may help you think through a plan for your life and create a social support network. Both of these are big positives.

    For income, I would try go for something a little better than fast food. I enjoyed pizza deliver, if you have access to that. The hours were good, and the pay was 9-15$ an hour. I good part about working a ‘service’ job, is that it motivates you keep looking.

    -The Happy Rock

  2. Moneymonk says:

    When I was laid off. I did 3 things that same day. 1) Called my recruiter and let him know —so he can start looking for contract positions
    2) Went to the unemployment office to apply for benefits ( receive my first check in 2 weeks)
    3) Hit up a small portion of my emergency fund.

    I was married at the time, so my husband paid for most of the bills and my employment checks covered a few bills and gas and food.

    The good thing I found a better job that paid $12K more than my last job.
    Sometimes when you are laid off it’s like you are a free agent !!

  3. Jon says:

    Here are some things I might add…

    When I was younger and in “Survival Mode” I would collect aluminum cans. Definitely won’t get rich, but I’ll bet you make more than blogging at least initially. Aluminum prices are fairly high – I would always hit grocery story dumpsters and golf courses (at dusk). Tons of beer drinkers on the course – would find 20 cans in the garabage bins per hole. Desperate times call for desperate measures!

    I also did these medical study things while I was in college. They were medically supervised trials of drugs, medications, etc. They were very safe and completely controlled and you would make anywhere from $200 to $2000 per study. The company I was involved with was called Harris Labs – of course not all cities have something like this available. Being a guinea pig as a college student was awesome – get paid to study!

    This is obvious, but temp work was usually pretty profitable too. Sometimes interesting as well. I always got some pretty fun assignments, ex. being a greeter at a trade show, helping set up computers, etc. Pay was decent and it was good for networking.

  4. dong says:

    Great post, and comments. I concur with Jon say about temp work. Alot of time Temp work can lead to a permaneant job – it has for alot of people. I’m lucky I’ve never been laid off, but given the way the economy work today that can always change. We all need to know we can do what it takes to survive. That’s more important than money itself. Never be too proud.

  5. mapgirl says:

    Along with cutting costs, make sure you have looked into every source of revenue/income. When I quit a job unexpectedly, the first action I took was to call some business contacts for any job openings coming up. The second was to look at my cashflow and figure out how to make it through a short term crunch.

    Things to ask yourself:
    -Who owes you money?
    -What assets can you sell? A lot of PF bloggers are into eBay. Me? I liquidated some stock holdings that I couldn’t take with me anyway. It was worth 1.5 mortgage payments.
    -When you cut costs, think of how you can consolidate your debts to reduce your minimum monthly payments. Be as tightfisted with your cash as possible. It might mean being able to go an extra week or month without an income.

    Along with temp work, try pimping yourself out as a handyman for small tasks in the neighborhood and take cash only. Working under table informally can get you through a pinch. Oh right, SWALLOW YOUR PRIDE. That goes along with the working at a fast food joint advice. Don’t be too proud to do something like housecleaning. Remember that it’s only short-term and not who you are.

    This cook eats her own cooking. I worked retail and waited tables during my self-imposed unemployment. I stuck it out till I got an offer for 40% over my previous job. I sweated bullets for 5-6 weeks till I got hired, but I would do it again if I could get another 40% raise! (Ok, I did learn my lesson and start an emergency fund, but even with a fund, I’d still go back to waiting tables and retail. No point in draining the fund if I don’t have to.)

  6. Foobarista says:

    If you’re a programmer, check out short-term gigs on the Web that you can do from home. Sure, you’re competing with guys in Bangalore, but it’s still money. There’s always someone looking for a little language parser or file conversion utility that can be coded up in a couple of hours and can make you a few bucks. elance.com is a good place to start.

    And sometimes these can develop into Real Jobs.

  7. Plus6 says:

    Being in the earlier part of my career I can say I have had the good fortune to have never been laid off so far. Working in the technology field which is always changing and evolving, I would assume it will happen at some point in my career. I narrowly missed a round of lay offs at my last company having just accepted another job a few months prior. I always try to keep my resume updated and subscribe to daily job listings from Monster, Careerbuilder, and USAJobs just to keep updated with what jobs are in demand and what companies are hiring. I really like the company I am at now and intend to stay as long as possible, but in today’s market you can never be too prepared.

  8. I have been on unemployment after being laid off at a dot com. I’ve also done the “reduce burnrate” thing from $3,000 month down to $900/mo. I think a big key factor is that we slowly increase our burnrate without knowing it. A magazine subscription here or there, Netflix for $15, Tivo $15, adding text messaging for $5, etc… pretty soon we’re spending everything we make.

  9. Charlie Reddington says:

    I was laid of this year. Totally came out of left field and wasn’t expecting it at all. They did offer me a month of severance pay, but you didn’t get that til a month later. And they carried my benefits for 2 more months.

    I did about the same as everyone else.
    1.) Took the rest of the afternoon off (not that i had the choice) and didn’t think about a thing.
    2.) I showed up to a recruiting office and managed to score a interview on the spot for a position that they had.
    3.) went home and applied for unemployment online, much easier, and less of a pain in the ass.
    4.) Cut all costs as the article says.

    I scored a job that week, but I put in about 90 hours in that week that I got laid off. Losing your job, turns your new job into looking for a job. If you put your 40 hours in looking for a job you’ll get one.

    3 months later. I’m sitting with an extra 20k in my pocket, with full benefits that cost me 35 bucks a month. Score.

  10. PiggyBank Raider says:

    Just what I needed to read today… Thanks for the post. It’s nice to be reminded that it’s possible to live on less, whether we want to or not.

  11. philskaren says:

    Great suggestions here, but I have to say that I don’t agree with all the of your phase 1 ideas. Often dropping your cell phone completely will cost you about $200 for ending the contract, so maybe you should consider dropping it to the lowest possible per month plan and only using it weekends/bare minimum or trying to sell your contract on one of the websites out there or a friend/family member. $200 now may be the wiser choice compared to the monthly payment, but you have to consider all the options.

    Also, cobra can be a huge huge expense. You’d be shocked to find out that the same benefits you paid $150 a month for when you worked there will now cost you $500 per month! It’s a great idea, but the costs can end up being ridiculous! I suggest going to esurance.com and look into getting a bare bones plan for emergencies which can be more affordable than cobra.

  12. Lazy Man says:

    I guess I made the assumption that the person is out of contract on the cell phone. I would be cautious about telling someone to drop it to the lowest plan per month as that often requires extending the contract.

    I’ve lost my job and even though I was 22 with no health problems, I still think that cobra is usually a fantastic deal vs. the alternative. It may be worth calling around, but as soon as you bare bones, you know something big is going to pop up.

  13. […] BEST IMMEDIATE FRUGAL ACTIONS TO TAKE TO GET THROUGH A ROUGH PERIOD – sometimes you go into despiration mode due to a financial situation. Here’s some great tips to get through it! End of Your Rope? Tie a Knot and Hang on Tight […]

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