When the paycheck stops, life takes a sudden turn. Especially when you did not see it coming. If you are employed by a small business, know that the owners are the last ones paid. Payroll and bills take precedence and a hurting economy can leave little or nothing left some months, such as those winter months when consumers have nothing left to spend after Christmas. As for unemployment, it goes without saying that you are faced with a huge challenge, especially when you aim to get through it independent of government assistance.
What steps should you take when faced without a paycheck?
1. Stop spending
It goes without saying, but it has to stop. Some of us may have the urge to throw our hands up and use what is left on dining out and maybe a little retail therapy. Not good. You gotta hold onto each dollar and stretch it like it has never been stretched before- challenge yourself to spend as close to $0 as possible.
2. Go to your stockpile
I hope you have one. Systematically go through each cabinet, shelf, and drawer in the pantry, fridge, and freezer. Make an inventory list and menu, googling ingredients for recipes if necessary, and have a plan that uses what foods you have on hand. Get creative in the kitchen.
3. Cancel services
After I left full-time work outside the home, we cancelled home phones, satellite TV, and trash service (to use my husband’s dumpster at his business.) Try leaving service providers for now and they will want you back later: when we turned satellite TV on again, they gave us months for free (we are now using a digital antenna for no monthly bills.)
4. Find money
Gather loose change and roll it (or use the free coin machine at your credit union), contact service providers to lower monthly bills, and call your credit card companies to reduce rates. Try not to cash out your 401K early, but accept that you may have to use your savings, bit by bit. Find more hidden money ideas here.
5. Sell stuff
This one may sound extreme, but everyone has a little clutter, right? Clear out each room and storage space in your home to have a mega yard sale. But first, list large items on Craigslist and research what sells well on eBay by searching for “Sold” items, sorted by highest price. You may even need to go to one vehicle for both the cash and the reduction in insurance- you can make it work.
6. Have a family meeting
Gently explain that everyone will have to work together to help the family budget, and, so as not to frighten the littles, consider leaving out the part about having no paycheck. If your children do not already do so, have them pay for extracurricular activity fees, uniforms, yearbooks, club t-shirts, and such with their own savings. Suggest to grandparents that these would make excellent gifts at birthdays and Christmas.
Consider leaving expensive activities if your child is ready to try something new: we left behind both ballet and horses- and I miss them more than my child! She is happy with her new activities! Our oldest is OK with leaving overpriced challenge soccer since it drained his savings, not to mention our gas tank.
7. Change your ways
Cook from scratch, lower the thermostat, switch to cloth napkins and rags for cleaning, make your own cleaners, mend clothing, make gifts and cards. Yes, it is a lot of work to be frugal, but it makes a tremendous impact in the long run.
Please do share in the comments your thoughts on dealing with a sudden stop in income.