There comes a time in most people’s life where they’re going to find themselves out of work. Be it a layoff, a move, or something completely different. This might not be as horrible as it seems, it’s likely not going to be permanent and it gives you time to evaluate your situation. I still remember when I was just starting high school my father was without work for close to a year. He had started a business that failed and then he just got stuck without work for a while, if you think about it, it happens to most of us at some point. But this isn’t a post behind the psychology of being out of work. It’s about those situations where you end up finding yourself out of balance financially.
Currently we’re out of balance because I’m out of work, instead of finding the first possible job I took the time to evaluate my options. So what does this actually mean? Simply put our financial situation is currently relying on my wife’s income and our savings; essentially our cash flow is out of kilter because there just isn’t as much money coming in.
What it means is we need to do a few things to manage being out of balance, so things don’t get out of control. There are a few steps that we’ve taken in order to help the situation until things right themselves. Most of these are similar to what you need to do when you’re starting to get out of debt and they’re all important in their own way.
Know your cash flow.
From what I’ve seen, most people don’t really know where there money is going. They’re happy with the status quo and it works for them. We don’t have that luxury, we need to know where our money goes so we don’t waste it unnecessarily. I’ve written in the past about tracking your spending and how there’s any number of ways to track it. Ultimately if your cash flow is positive (you’re making more than you’re spending) then it’s not as critical to track every detail because you’re already covering everything.
When you’re out of balance you need to clearly know what’s coming in and going out. The accuracy helps you plan what to spend your money on, make sure none of your bills get missed and to make sure you’re not spending frivolously.
(Note: this is an important step, in my opinion, if you’re trying to get a hold of your finances)
Limit your spending.
I would like to think that most people are like me and my wife. We don’t always spend our money perfectly and we buy things we just don’t need. It doesn’t have to be overspending; our money is spent on things we just don’t really need (but want). We’re in a situation where expensive fancy cheese’s and nice wine are luxuries we can’t afford. Now that we’ve got a good idea about our cash flow we can reduce spending where we can to limit the financial bleeding.
What we’ve done so far is to cut back on things we know we don’t need, I mentioned a few food items because this is the first place I started to look. Cut back on fancy foods, eating out and alcohol, you don’t need them to survive (or even eat well for that matter). There are alternatives to a lot of spending that a typical household does that can help stretch that almighty dollar further. We’ve done this and will continue to do so.
Make a plan
Now that you know where your money is going and cut out some of the spending fat that existed it’s time to create a plan. You have to come with a plan for your money or before you know it it’ll vanish and the situation will get worse. Initially it doesn’t have to be extreme but to start things off you need to keep bills paid so your credit score doesn’t get damaged. Next you need to know how long you can last before things get dire.
From what I’ve found this has to be ongoing and adjusted as you’re moving forward in time. Be honest with yourself about your spending and how much savings you’re using. You want to prevent a nasty surprise that will leave you scrambling. In our consumer society spending money is almost an expected behaviour and if you’re not careful about it can easily get the best of you.
Find sources of income
You might have a couple years of savings and credit you can lean on till you figure things out, most people don’t. Eventually the money will start to run out. What do you do before then? Well you need to find sources of income, hopefully the reason for being out of balance has been solved before then but that’s not always the case.
Finding sources of income can come in so many different ways that I would be writing for a year and still would only scratch the surface. You have to go through and check for the obvious sources, are you taking advantage of your benefits, are you submitting claims? Are there programs that the government offers that can help? I’m on our version of jobless benefits, this is a source of income to help keep money coming in. You need to look around and take stock, remember you might have large collection of stuff you can get rid of for money too.
For me the term out of balance means our cash flow is negative and this is a situation that a lot of people find themselves in at some point. Like it or not that’s how you get into debt in the first place and you can use these steps to right the financial ship.
Realistically the situation for us isn’t dire and I am working on a longer term solution but that’s another post entirely which I’ll write about soon. I’ve chosen to remain out of balance in order to change things around and I’m glad I have been able to. In the short term we’re going to remain out of balance and we’re going to do what we can to make sure we can last as long as possible.