How We Changed Our Finances Forever (Part 2)
I've been fired and laid-off. No matter how you cut it, losing your job is scary. Even if it's an awful job that you're relieved to never have to deal with again, losing all or half of your income sources is usually scary. What are you going to do? How long will it take to find work again? How will you pay your bills in the mean time? I'd like to talk about how you can budget in a way that will not only boost your savings potential but it will make you less dependent on your job so should that ax drop or that pink slip come, you won't need to worry nearly as much, if at all. For the scenario of this article, I'll be talking about what my wife and I did to our finances to protect ourselves from the event of losing a job.
We didn't do all of these things proactively. We did it when I lost my job back in the Spring. Like any other problem, we get through it, figure out why it happened and take measures to ensure it doesn't happen again. Some of these items are ongoing, such as going back to school or taking advantage of any training materials you have access to. Others can be more one-and-done like trimming bills.
My wife and I both work so we're a 2 income household. When we're both in our career fields, I typically make more than her. I don't mean that in a bragging sense. When I got fired, we'd found out that my wife's paycheck covers nearly all of our monthly fixed expenses (rent, car payment, internet, insurance, etc.). We worked on paying off our car and trimming our other bills back to a point where if I lose my job again (knock on wood), we can still survive with just her income. Likewise, if she lost her job (knock on wood again) then we'd be fine living on my income alone. Outside of protecting us financially from job loss, this also means that we can put aside more money for paying down debt, building up our savings, and for investments.
My wife and I both are good at our jobs, hold current industry certifications in our field, have strong work histories, and have our own respective professional networks. I'm actively working on finishing school. I don't believe that college is for everybody but there's no denying that the unemployment rate for college educated individuals is significantly below the national unemployment average. I'm an IT professional with management goals going for my MBA.
This one can work better for some more than others but losing a job isn't nearly as scary if it's not your only source of income. My wife and I both have 8-5 weekday jobs during the week but I have a second job and my wife is currently looking for one. It's not hard to find part-time gigs with flexible hours or even just have a side job where you can relatively choose your own hours. Aside from my day-job, I work weekend shifts as a stock clerk at a local grocery store, though I'm angling for a job at a movie theater. None of it is glamorous work and we try to balance work and life, but the more we work now, the more it can pay off in the future, within reason.
My ultimate goal is to get to a point where our monthly bills can be covered by passive income, such as returns from investments, or semi-passive incomes, such as income from rental properties. That way, my wife and I won't ever have to fear what will happen if we lost our jobs. I'd like to work because I WANT the job, not because I NEED the job.
However in the meantime, keeping your monthly bills as low as possible and not being afraid to hustle with some side work can go a long way. I'm doing it to protect us from the event of losing a job. However, if we're both working, then keeping our bills low and getting some money on the side, it increases our savings potential.
Budgeting in the first place was largely my wife's idea. This part is all mine and it felt like a huge wake up call when it hit me that the reason I was so scared about losing my awful job was because I felt like I needed that job. I knew right then that I never wanted to feel that way again. Hopefully this helped somebody.
We didn't do all of these things proactively. We did it when I lost my job back in the Spring. Like any other problem, we get through it, figure out why it happened and take measures to ensure it doesn't happen again. Some of these items are ongoing, such as going back to school or taking advantage of any training materials you have access to. Others can be more one-and-done like trimming bills.
Keep our Expenses as Low as Possible
My wife and I both work so we're a 2 income household. When we're both in our career fields, I typically make more than her. I don't mean that in a bragging sense. When I got fired, we'd found out that my wife's paycheck covers nearly all of our monthly fixed expenses (rent, car payment, internet, insurance, etc.). We worked on paying off our car and trimming our other bills back to a point where if I lose my job again (knock on wood), we can still survive with just her income. Likewise, if she lost her job (knock on wood again) then we'd be fine living on my income alone. Outside of protecting us financially from job loss, this also means that we can put aside more money for paying down debt, building up our savings, and for investments.
Invest in your career
My wife and I both are good at our jobs, hold current industry certifications in our field, have strong work histories, and have our own respective professional networks. I'm actively working on finishing school. I don't believe that college is for everybody but there's no denying that the unemployment rate for college educated individuals is significantly below the national unemployment average. I'm an IT professional with management goals going for my MBA.
Have multiple incomes
This one can work better for some more than others but losing a job isn't nearly as scary if it's not your only source of income. My wife and I both have 8-5 weekday jobs during the week but I have a second job and my wife is currently looking for one. It's not hard to find part-time gigs with flexible hours or even just have a side job where you can relatively choose your own hours. Aside from my day-job, I work weekend shifts as a stock clerk at a local grocery store, though I'm angling for a job at a movie theater. None of it is glamorous work and we try to balance work and life, but the more we work now, the more it can pay off in the future, within reason.
My ultimate goal is to get to a point where our monthly bills can be covered by passive income, such as returns from investments, or semi-passive incomes, such as income from rental properties. That way, my wife and I won't ever have to fear what will happen if we lost our jobs. I'd like to work because I WANT the job, not because I NEED the job.
However in the meantime, keeping your monthly bills as low as possible and not being afraid to hustle with some side work can go a long way. I'm doing it to protect us from the event of losing a job. However, if we're both working, then keeping our bills low and getting some money on the side, it increases our savings potential.
Budgeting in the first place was largely my wife's idea. This part is all mine and it felt like a huge wake up call when it hit me that the reason I was so scared about losing my awful job was because I felt like I needed that job. I knew right then that I never wanted to feel that way again. Hopefully this helped somebody.
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