Your Income Decreased. Now what? – Part 3: Eliminate expenses

If trimming your budget as described in Your Income Decreased. Now what? – Part 2 isn’t enough, then it’s time to make some tough decisions. What can you live without? It’s not something any of us want to consider, but unemployment or a drop in income may mean cutting some current expenses entirely.

 

Realistically, there are some things you can’t get rid of completely. You need shelter. You need food. You need heat and electricity. You may need a car. But what about all the other perks of modern life? Below are some common services to consider dropping:

 

  • TV: Watch over-the-air TV instead of paying for cable or satellite service. Although it’s free, you will need a converter box (if your TV doesn’t have a digital tuner) and an antenna. The size of the antenna is determined by your location relative to the TV station antennas. If you live in an apartment, condo, or townhome, you may not be allowed to install an antenna or may be restricted to a certain size which may or may not have the range you need to pick up over-the-air signals.
     
  • Internet: Access the Internet from the public library or other free access points like WiFi hotspots. Perhaps a neighbor will allow you to use their wireless network. Check if your cell phone service includes web access. Lack of Internet service will, however, make it more difficult to apply for many jobs.
     
  • Phone: Drop your landline and become a cell phone-only home (or do the opposite). Keep in mind that during natural or man-made disasters (tornadoes, earthquakes, terrorism, etc.), cell phone service may be disrupted or even preempted for emergency communication. And a cell phone is useless if you can’t recharge it. However, cell service may be restored faster than damaged phone lines.

Carefully weigh the pros and cons when cutting services entirely. It helps if you write them down and discuss them with others. Also, if you signed up for a multi-year contract or bundle your services, you could be hit with large penalty fees for breaking the contract or changing your services. Review the fine print before making changes.

 

If you’re having trouble paying bills, contact the company to try to work out a modified payment plan BEFORE you miss a payment. It’s in the company’s best interest to work with you to get paid something rather than nothing at all.

 

For more information on services tailored to the unemployed, visit Minnesota Unemployed. This site also provides useful information on what to do when you're running out of money.

 

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6 thoughts on “Your Income Decreased. Now what? – Part 3: Eliminate expenses

  1. A sudden change in income can be a difficult adjustment.  Although my partner and I had been managing our finances carefully, we needed to make some changes to our budget when he had lost his job in 2009.  It can certainly be an eye opening experience to reconsider what is a "want" and what is truly a "need."

    • Anna: For a number of years, I worked with a college early awareness program for elementary through high school students, and one of the things they taught was money management. A key part of that was helping them understand the difference between a “need” and a “want” so they could make smart, informed decisions. Clearly, that’s a valuable lesson for all of us in today’s economy.

  2. I read the other two parts to this 3-part series and found all the information really helpful.  Although I seem to do a lot of these already,  I still found a few that I hadn't thought of yet.  No one wants to cut TV, Phone or internet serivies but they are not as essential as most people think they are.  I really enjoyed the second blog and how it emphasized cutting back on the things that you don't absolutely need while still keeping some of the luxuries we all like to enjoy.  Overall, very helpful information!!

    • Darci: Glad this was helpful. Having gotten laid off like so many other people last year, I went through all my finances with a fine-toothed comb, determined what was truly necessary (needs vs. wants), and weighed all the pros and cons. Thankfully, I already lived within my means and frugally. Although I ended up not having to do everything I mentioned in my articles (in part because I’m now employed), they’re still on the table. I’m glad I could share what I learned with others.

  3. Thankfully, my husband and I both have steady jobs but in spite of this, we have worked to cut our unnecessary expenses.  In an effort to not only live debt free, we are planning for the unexpected (loss of job or another major expense).  In our planning, we have developed several goals (living with an emergency fund , vowing to pay with only cash for any expense…. including the car we just bought etc.).  We have found Dave Ramsey's book Total Money Makeover to be helpful and the success stories within are more than motivational.  In our effort to establish ourselves, we have eliminated our cable, and developed a very precise budget.  Although it hasn't always been fun — I believe it is in our best interest.  Eliminated things such as the TV has not only decreased our monthly payments, we find other more engaging and stimulating activities to occupy our time.  It may not be easy to say no to the "necessities" (TV, new car with payments) in our society, but  in we are proof that it works!  Good luck!

    • Jennifer: When I lost my job last year, I was so happy I was already tracking my expenses using a database I designed (rather than purchasing one). It made it that much easier to figure out how much I spent for X each month or each year. Setting up a budget and sticking to it is sound advice for anyone. As you consider cutting back or eliminating things, you learn what you truly need and value. It’s not about having everything that everyone else has; it’s about having what you need (which differs for everyone) and using it wisely.

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