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What if You Were Laid Off Today?

Posted by idawrites on January 12, 2010 in Budgeting, Finance, Financial Peace University, Money |

Since Mark’s layoff in 2007 and starting this blog in 2008, I have spent what amounts to actual weeks of my life budgeting and cutting expenses. I’ve clipped coupons, made our own laundry detergent, replaced our old light bulbs with CFLs, worn layers and used extra blankets in the winter, and kept windows open and ceiling fans running in the summer.

In the past, when we’ve talked about cutting costs more, Mark points all of those out and says “What more can we cut?”. All of this has been churning in my brain since Friday when I got the news that Mark’s company was considering a layoff.

I was thinking back to our Financial Peace University classes and got straight to work on our prioritized budget and figuring our our “cut off line”. For those uninitiated to the wonder that is FPU, this is how you determine your cut off line:

  • Write down your expenses from top down in priority, always in this order:
    • Food
    • Utilities
    • Shelter
    • Transportation (car payment, insurance, gas)
    • Everything else – If you have money left at this point, you prioritize the rest of the things you owe line by line.
  • Determine how much money you have coming in and spend it (ON PAPER) according to this priority level.
  • Draw a line under where your money runs out.
  • THIS is your cut off line and nobody under this line gets paid until you have more money.

When I pulled out the spreadsheet and put down our prioritized list, I was surprised by a couple of things.

First, I was surprised at how many things that are below the line aren’t nearly as important to our family as they were a week ago. The teenagers are (shockingly) just fine with losing their cell phones and cable tv in their room. Mark is (MORE shockingly) fine with losing the HBO and the HD programming on our cable.

Second, I was surprised to find that our lifestyle had inflated to match our income. I get that this isn’t a shock to just about everyone else. It happens to almost everyone. I just thought that since we were making progress toward getting out of debt, we couldn’t be succumbing to Lifestyle Inflation. We were living on less than we made and making ground on other things. It just didn’t occur to me that we could have been making so much more progress toward a debt free life.

SO! Now that we’ve found out the layoffs aren’t happening, we’ve got a far better idea of where we need to be working to keep any future job loss from being an emergency in our lives. It’s time to roll up our sleeves and get back to the basics.

I’m going to keep on saving a ton of money by couponing and shopping wisely, and continue to work on my other side projects to boost our income.  All of the savings and extra income is going to be divided between getting our debts paid off and building our savings.

What about you? Where would your cut off line be if you lost your job today? What would you do to make ends meet? How much can you cut today to build your cushion for that possibility later?

4 Comments

  • Clayton says:

    talk about lifestyle inflation, I’m at my first great job that I plan to keep and the money my wife and I spend has definitely gone up. We sat down and wrote out our expenses for the last month and it blew our minds how much money we spent(yes i counted christmas gifts too). the debt snowball is what we used to get out of our debt and that made a huge difference too. my cutoff line would just have to be whatever I can make at the time for barebones living.

    • Momma says:

      I didn’t really have any lifestyle inflation going on with Christmas, since we’d been saving for it for months. My challenge with the Christmas spending was trying not to be upset because we were just spending money like mad. Every penny of it was in our budget. But when you work so long to change that, it feels like things are sliding out of control again when you do planned Big Spends. 🙂

      Great job with sitting down and facing the numbers head on. That takes guts and self awareness that too many folks don’t have.

  • Carmen says:

    This is exactly what I needed to read right now. Thanks so much!!!

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