The following post is from Melissa Batai
Unexpected life events can happen in an instant. One minute you’re employed, the next minute, you’re sitting across the desk from your boss watching in slow motion as he tells you the company is downsizing and they’re going to have to let you go.
One minute, you’re driving your car, singing to the radio, and the next, you’re in an accident and you’re facing months of recovery time.
Yet, often, even in the face of major life changes, we humans remain optimistic. Optimism is often a desirable trait, but when it comes to finances, sometimes being a pessimist is better.
Jessica was not let go from her job, but her hours were cut in half. She spent the time when she was not at work searching for a new job. She was certain that she’d find a new job quickly, so she didn’t cut her expenses. Instead, she dipped into savings to meet her financial obligations. When the savings ran out, she started paying some of her expenses on credit, certain that any day now, she would have a new full-time job.
Unfortunately, Jessica’s story isn’t unique. Many people find that life changes affect their finances negatively, but they wait to make any changes because they’re sure the situation will resolve itself relatively quickly.
Instead, you can preserve your finances by taking steps immediately to live within your means.
If you’re facing a loss of income or an influx of higher than normal expenses, there are several steps you can take:
Pretend This Change is Permanent
Although the change in your financial situation may be temporary, treat it like it’s permanent. Too often, people are lulled into dipping into savings because they think the situation is only temporary. If you’re lucky, it may just be temporary. If it’s not, you’ll be glad that adjusted your lifestyle as soon as you had a dip in income or more expenses so that you could minimize the financial damage.
Cut All Unnecessary Expenses
Take a hard look at your budget. What can you get rid of? When my husband and I faced higher than normal medical bills, we went through the budget and tightened our grocery budget to begin with. Next, no line item went without serious analysis. Almost every line item was reduced, and some were cut all together.
Bring in Extra Income
If you have the ability, bring in extra income. There are many ways to do this. You could start by selling extra stuff around your house that you no longer use like bikes your kids have outgrown or the exercise equipment you no longer use. If you can work overtime at work, do it. Try to make a bit of extra cash with sites like Swagbucks or Ebates. Every extra bit you can bring in matters.
Remember, most of life’s difficulties pass quicker than we think that they will, but to make it through in strong financial shape, you must take immediate action at the first sign of a financial storm.
What steps do you take when facing reduced income or higher than normal expenses?