One common theme I am getting from my clients as of late is that they have lost their job and now cannot meet their bills. As you read this you may be in the same situation.
Businesses are cutting back on their expenses and even though the employee is what I consider to be one of the biggest assets of a company, it is also one of their biggest expenses as well. I have seen employers release individuals who have been with them for 20 years so staff loyalty is not a consideration in these economic times. Basically if you are working for someone else, there is really no job security.
Consider this, on average it takes one month of job searching for each $10k you make. So if you make $60,0000/year, it just may take you 6 months or more to find a job.
Here is another consistent fact I see in my coaching, most, not all, but most people are living beyond their means. So if you make $60,000/year chances are you are living like you are making $65, $70, maybe even $80k or more per year because of the use of credit cards, home equality lines of credit, etc.
What would you do right if you lost your job? This is a question that very few people ask themselves. Be serious with yourself and your spouse if married. What would you do if you lost your job today? Could you meet your mortgage payments? Car payments? Remember, even though you income stops your bills don’t. You have obligations to continue to meet.
Please don’t sit back and say “I won’t be let go, losing my job could never happen to me.” The people who have lost their job most likely said the same thing, that it couldn’t happen to them, and it did. Now is the time to make changes so you can financially function if you lost your job.
Let’s keep focused on the $60,000/year job. Chances are you have credit cards, home equity loan or line of credit. Now is the time to stop spending and start paying off that debt. If you say you can’t cut back on anything now, how on earth will you live if your income is cut off? Folks, I see this every day, my clients are devastated with the loss of a job because they didn’t plan for a loss of income.
What I recommend is start living like you make $20,000 less per year than you actually make. This can be a huge lifestyle change if you are living $20,000 or more over what you currently make. Think about it, if you make $60,000 but are living like you make $80,000, I am asking you to live like you are making $40,000, that is a $40,000 change in lifestyle. Oh I know, you think I am being unreasonable, but remember, you will have to make these changes if you lose your job. It is much easier to adjust when you still have income coming in.
The loss of a job affects more than your income, it is an emotion hit to your self esteem and confidence. Make these tough financial decisions now when you are emotionally strong rather than after a job loss when you are emotionally torn down from the job loss.
Please don’t procrastinate; it is easy to put these changes off now because the income is still coming in. But now is really already too late, it will take most people reading this two years to get to a point where you are living below your means.
Today is the day to start living like you lost your job.
Tomorrow I will write about some of the steps you can take now to begin to live below your means.
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