One Tuesday morning last November my husband called from work and told me to sit down—and not get mad. Whenever a phone call starts that way, you just know it’s not going to end well.
“(Insert jerk-of-a-boss’s name here) just called and said they were laying me off,” he said grimly. It was two weeks before Thanksgiving.
“What?!” I yelled. Oh, right: Don’t get mad.
“Fired,” he clarified. Something about his employer’s (an insurance company) bottom line, in the red, downsizing, bad economy. But I wasn’t really listening anymore.
In a matter of minutes, I went from shocked to angry to petrified. How could they do this to him? To us? With no warning? He had been a good, loyal employee there for eight years, and in five minutes, he was gone.
They can’t do that, I thought. Can they? We should demand an explanation. We should get more of a severance payout (because conveniently for them, this was three weeks before end-of-the-year bonuses were due). We should sue. We should … Ah, hell, what’s the point, I finally rationalized. What’s done is done.
Now I had to figure out where we could go from there.
Re-evaluating Our Wants vs. Needs
I moved into “fix it” mode, which is something I’m really good at. “Well, we’re just going to have to cut back on a lot of things,” I said, already making a mental list (starting with that Caribbean cruise over Christmas break. And that yoga retreat with the girls. And my Starbucks addiction).
By the time we hung up, we were part of the millions of other American families who were newly unemployed and in a personal financial crisis, brought on by the larger societal one at hand. It was a scary position that I didn’t dream would happen to us, and it certainly wasn’t something we were prepared for financially.
While we had been working on beefing up our emergency savings, we were less than halfway towards our goal of having enough to survive for eight months (ironically enough, in case something like a layoff ever happened). But with me being a freelance writer, I certainly did not make enough to solely support our family of four (have you ever seen the grocery bill for two teenage boys?). In fact, I only brought in about 25% of our total income, so you can probably see why panic was setting in.
One thing I had learned in my personal finance travels was the importance of addressing your “needs” versus your “wants.” And when it comes times to saving money, you must cut those “wants” from your budget without a backward glance. Only the line can, admittedly, get blurry and emotional: I clearly needed those adorable new yoga pants, my Kombucha fix and my HGTV.
But with 75% of our income gone, there was no time for whining—from me or the kids, who were told upfront and honestly about the situation (I don’t believe in hiding things from them). They quickly learned that they needed to scale back too—everything from taking shorter showers to save on water, to holding off on new clothes to using their own money if they wanted extras (like a trip to the drive-thru).
I pulled up our online bank account and analyzed every single dime we spent over the course of the last year. After feeling completely nauseated over some of our wasteful habits and the fact that we didn’t have more in savings, I started slashing. Away went every “want.” Everything I truly loved and enjoyed, it seemed. But what choice did we have?
How We Saved Over $1,000 Each Month
Getting there wasn’t pretty, but in the end, we were able to reduce our expenses by over $1,000 a month for the four months that my husband was out of work last year.
Here’s how we did it: