Yesterday as Cassie and I were walking to the park, we came across a neighbor in his front yard, putting the finishing touches on a new sprinkling system. He said his father-in-law had installed it, the old man having been laid off and needing work. Then he started to count off all the people he knew who were out of work, including the guy across the street who owns a big house on a half-acre of land fronting on the park. At least, we agreed, the father-in-law had developed a way to keep a little cash flowing into his pocket. The homeowner gave me his phone number, since our house downtown needs a watering system.
You can’t really make yourself layoff-proof these days. Even if the economy doesn’t land you in the can, an injury or illness may put you out of work. A friend who’s a nurse—supposedly a recession-proof trade—was hurt when a second-floor balcony at her rented home gave way under her feet. Memory impairment from the resulting head injury has put her out of commission for the nursing business. So, you’re smart to develop a few strategies, preferably well in advance of the fact, that will blunt the worst of the damage.
1. Establish a budget and keep track of your spending.
Knowing how much you spend and what you spend it onallows you to figure, quickly, what your expenses will be, where you might cut costs, and how much you will need for bare survival.
2. Develop at least one side income stream, and preferably more than one.
Each adult in the household should have a second income stream, no matter how modest. A second job or a skill that creates occasional paying gigs brings in extra cash while you have a job and can at least help if you suddenly find yourself out of work. Responsible teens may also be encouraged to build income streams, to the extent that these don’t interfere with schooling and healthy activities. Examples include blogging, selling crafts, mowing lawns, pet-sitting, babysitting, organizing yard sales, bagging groceries.
3. Keep your résumé up to date.
Goes without saying, doesn’t it?
4. Identify job boards and bookmark HR sites of companies or agencies where you might apply for work.
Do this even if you don’t expect to be laid off. It’s always a wise idea to think about where you might turn if you need a new job or want a better-paying one. Having thought this through in advance gives you a head start if the worst should happen.
5. Join and become active in trade groups.
Maintain a presence in the business community where you work, so that people will know you and you will know them. This, too, will give you a leg up if you have to seek new employment leads.
6. Build an emergency fund.
A second income stream will help with this. You probably should stash enough to live for at least six months. Given the current economic conditions, it might be wise to make this a higher priority than paying down debt.
7. But to the extent that you can, do pay down that debt.
The fewer payments you have to make, the longer you can get by on a reduced income.
8. Don’t rack up any new debt if you can possibly avoid it.
Make it do, use it up, wear it out: this is the time to kick on every frugal habit you know. If you don’t have a budget, start one now, and don’t buy any junk that you don’t absolutely need.
A good freezer can be had for a couple hundred bucks. The one I bought a few weeks ago is the best buy I’ve made in years. It’s already cutting my costs, just by keeping me out of grocery stores. More to the point, though, by the time my job ends in December, I intend to have at least six months of food stored in the house, perishables in the freezer and staples such as rice, beans, and canned goods in the pantry. With any luck, it’ll be quite a while before I go hungry.
10. Plant a garden, even if it’s only in a few pots on the apartment balcony.
Thanks to the veggies that have grown in my yard all winter, it’s been months since I’ve had to buy lettuce. And the produce has been wonderful: fresh from the garden to the table. Freezing and canning these goodies results in a better product than I can buy at the supermarket and extends the garden’s value way beyond the growing season.
Taken together, these steps represent a strategy to prepare yourself for an unexpected job loss. Or for an expected one: they can ease your way into retirement, too.