Tips for Living on One Income During Unemployment
On September 28, 2012 (yes, I have that date memorized), my husband unexpectedly lost his sales job. With no warning, with no severance, and with no vacation pay-out. He told me at ten that night after our daughter had gone to bed, and we stood there in silence for a few minutes, our expressions mirroring each other: utter shock.
As would be expected, my first concern was money. After a year at his traveling sales job, we'd racked up a lot of his travel expenses and needed to save his last expense check for bills. The credit cards would have to ride, and ride at a nearly maxed level. Our savings account was less than $2,000. We knew we should have six months of expenses saved up, but since the recession hit, it's been tough all over, Ponyboy, and we'd been making paying down credit cards our priority (the irony!). It seemed like a cruel joke that he would leave that credit-card-slamming job with $4,000 of work expenses we'd have to eat so we could continue to, you know, eat.
As we re-enter the land of dual-income families with my husband's new job, I wanted to share what I learned during those three months of balancing a two-income life on one income + $320/week in unemployment. If this happens to you, take heart. You can make it through. Friend after friend called me and told me their unemployment stories -- one friend's husband (who was the breadwinner) was out for six weeks, and one friend (who was the breadwinner) was out for eight months. It helped immeasurably to hear their stories, because it convinced me that even if we had to take some desperate measures, I thought we could squeak by for about six months before things got really ugly. I tried not to think about what would happen when the unemployment ran out. 'Cause it does, eventually.
Run, Don't Walk, to Sign Up for Unemployment Benefits
Unemployment benefits vary state to state and individual to individual. In Missouri where I live, you can be eligible for up to twenty weeks of unemployment benefits, depending on myriad factors. It's nearly impossible, despite the calculators, to figure out what a person will qualify for, so just go register. In many states like Missouri, you can do it online. It takes two-to-four weeks for the benefits to kick in. Ours came on a debit card, which didn't arrive for three white-knuckled weeks on one income.
Unemployment benefits also have a maximum. It's not like you're going to get some percentage of your salary -- no matter what you earned before, in Missouri, your weekly benefit maxes out at $320/week.
You should absolutely get unemployment benefits if you qualify. It's not a hand-out -- it's taxed, and you paid in. There is no shame in collecting unemployment -- it's more like collecting on your car insurance if you get in a wreck. You paid in on the off-chance something bad would happen, and because you were required to by law. Now it's time to withdraw.
You have to record your job searches and do weekly check-ins. My husband and I joked it was like the government version of making your teenager kiss you goodnight so you could smell her breath. My guess is that they want to get a visual on you once a week to make sure you still exist.
What happens after the 20 weeks? I'm not sure. It seems to be different for everyone. In 2009, President Obama signed the American Recovery and Reinvestment Act, which extended unemployment benefits after state benefits ran out for some people. It's not guaranteed, and I find the whole affair really confusing. Apparently, your state unemployment agency is supposed to tell you if you qualify or not, and for how long.
It's crucial the unemployed person apply for way more jobs than he or she will be required to in order to collect unemployment. My husband spent six hours a day for three months rewriting his resume, applying for positions, searching for jobs, networking with ex-coworkers, taking webinars on Excel, PowerPoint, you name it. I've never seen a more organized unemployed person, and I respect him so much for getting up every day, getting dressed, and hitting it. I know his unemployment could've lasted a lot longer were he not so dedicated to his search.
Take Stock of Money In & Money Out
A few months before we found out about my husband's job, I found a Google doc template for personal monthly budgets. Luckily for us, I'd been using it for about three months before he lost his job, so we had a general understanding of where our money was going. What we didn't know was how low we could go. A few things worked in our favor: he lost his job after my daughter went back to school, and so we weren't in full-time childcare season; thanks to a tornado in March that totaled our car, we owned both our cars outright and we'd already cut cable and dropped long distance on our home phone -- our utilities were about as low as they could go with me working on the Internet for a living.
Without boring you too much, using the spreadsheet really helped me focus on fixed vs. variable expenses. The fixed ones are the ones you have to pay if you want to keep living where you live and driving what you drive and not having a collection agency calling you. These are things like rent/mortgage, car payments, credit card minimums, utilities, health insurance, car/house insurance -- you know, the stuff over which you don't have a ton of control without a massive life upheaval (and in this market, even if we wanted to sell our house, we probably couldn't without taking a loss -- aren't I cheery?). Those get figured in first. Then you look at your take-home and you look at your fixed expenses and you understand what you have left for things like food, clothes, gifts, classes, gasoline, haircuts, investments -- basically everything fun. Then you think about how you could supplement your income -- do you have savings? Do you have investment income? Could you pick up some extra hours at work/mow lawns/babysit/sell stuff/barter/borrow money? Don't put this in your spreadsheet unless you're positive you can get it, but that's the right mindset to be in.
Then you look at the spread and make some tough decisions. We were accustomed to living a middle-class life using two incomes. We live in the Kansas City metro area, which is pretty affordable, especially compared to the coasts. We weren't floating in cash before this happened, but we weren't paycheck-to-paycheck, either. After the lay-off, we were worse than paycheck-to-paycheck, we were operating in the red. And this can happen -- even if you scrimp and save, there might still not be enough. We figured out we had about a $1,000 a month gap between what I brought home and what we needed to exist without frivolities. Fortunately for us, unemployment covered the gap. Some people supplement with credit cards. Some people supplement with savings. Some people borrow money. Without doing this step, without knowing your gap, you have no idea how to stop yourself from spiraling out of control. If you mind the gap, you can make it through.
Change the Way You Eat
Everyone knows it's cheaper to eat at home than to eat out, but guess what: It's mindblowingly cheaper. And what is even cheaper is to buy everything whole and cut it up yourself and cook it. I know, I know, you knew that already. But it is a CRAZY DIFFERENCE. And listen, if you're going to be eating every single meal at home, don't you want it to taste good? Whoever lost their job is now Head Cook. If it's you and you didn't know how to cook before? Guess what! You're going to learn a new skill.
I was couponing before this happened thanks to Denise and her Extreme Couponing series on BlogHer, but I was pretty loosey-goosey about it. The good thing was that I had so much shampoo/conditioner/Swiffer wipes/toothpaste, etc. from couponing that we didn't have to buy any of those things during my husband's unemployment. I wasn't that good at food couponing, though, and that was a big part of our new strategy. We started planning our meals on Sundays according to what was on sale and what we had in our deep freezer. Twice we bought meat in bulk at Costco, but mostly we avoided Costco because we couldn't afford to bulk up on much. Instead it was a lot of whole vegetables, pasta, rice, cheese, milk, that sort of thing, and there are coupons and store brands for pretty much everything but the vegetables. We'd make sure we were using the entire thing of celery, buying just two apples, whatever, so nothing ever went bad. I did the couponing and the meal planning, and then my husband was in charge of chopping/cooking/storing what we were going to eat. I'm actually going to miss those meals when he's back to getting home late and traveling for work, because they were the best meals I've had in years. He had time to experiment and get creative with what we had, and he was a good cook to begin with. We started making a lot more fun stuff, too, like corn muffins and other sides that take some preplanning. And then we ate the leftovers, all of them, always, for lunch until they were gone. We made huge Dutch ovens of soups and chilis and froze whatever was left. We ate eggs for lunch sometimes. We made a lot of cookies. We ate less meat than usual.
Give Your Kids a Budget
The hardest part, for me, was having so little disposable income during the holiday season. I wanted to make the crafts and make the sugar cookies and participate in the gift exchanges and go to the holiday dinners and all the things we normally did, but we just didn't have the money for it. And we didn't have the money for a lot of stuff we usually do with my daughter. I lucked out -- my parents gifted us tickets to the Kansas City Ballet's performance of The Nutcracker. We have a free-will offering light show in Kansas City. I have a huge craft stash that we were able to use. I already had reams of gift wrap and cards and nametags from previous years. We had plenty of holiday decorations and had replaced our artificial tree the year before. But still I wanted to give my girl a little leeway when it came to enjoying Halloween, Thanksgiving and Christmas, so I gave her opportunities to do extra chores for money and paid her immediately in cash. She has always had $2/week in allowance, but you can't buy much with that, so she relished the chance to save up faster and buy herself a holiday Build-a-Bear for $10 after a few weeks of saving. The look on her face on the way out of that store was priceless, and it was a great teaching opportunity, too.
Defer, Don't Dismiss
One of the hardest things about unexpected unemployment is that you're bummed out and pissed off, and you can't even afford the little luxuries in life that take your mind off your woes. Since we had to put all our resources into the holiday situation, there was no way we were going to be able to continue the house projects we'd started or throw the parties we'd talked about, etc. I started making a list of things I would do when my husband got a different job. Whether I do them or not wasn't really the point, the point was daydreaming about tomorrow and reassuring myself this was a temporary situation that would not last forever. Whether you're the unemployed person or the unemployed partner, staying focused on the day you're no longer in this situation is pretty important. The unemployed person needs motivation and the partner needs the strength to be a cheerleader. Remind yourself it's temporary and daydream.
I know I'm not the only one who has been here -- which tips did I miss? Tell me your unemployment tales!