Pat and James Houston of East Orange, New Jersey, earned a joint household income of $160,000 before Pat lost her job last December at a financial services firm in New York City.Â After Pat was handed a pink slip, the coupleâ€™s household income was cut in half. Pat, 38, remains one of the 14.5 million unemployed, according to the July 2009 report from the Bureau of Labor Statistics.
Despite the loss of income, the Houstons kept up with paying their bills, never missing one payment. Staying afloat during a crisis requires planning and a lot of discipline. If you or your spouse has lost a job or if you suspect a job loss is in your future, here are some tips to help you survive.
Negotiate a severance. â€śMy employer gave me 90 daysâ€™ notice, so I was still on the headcount and getting full pay until March,â€ť explains Pat, who also received a four- month severance package. Despite their recent cost-cutting, many companies have either maintained their severance policies (65%) or made them more generous (19%), according to the 2008â€“2009 Lee Hecht Harrison Severance & Separation Practices Benchmark Study.
Shave your budget. â€śThis is the time to look at areas where you can start shaving instead of cutting, because you donâ€™t want to go into deprivation,â€ť advises Barbara Stanny, author of Secrets of Six-Figure Women (HarperBusiness; $13.95). Stanny warns against going to extremes when cutting back. â€śDeprivation leads to the binge and purge cycle. Some may go on spending binges because things seem so bad, and that leads to a downward spiral of debt.â€ť To shave, Stanny advises writing down in separate categories where money is spent; then, look for places to shave back. The Houstons are taking the shaving approach. They used to eat out at least twice a week, but now they cook at home more and shop at Samâ€™s Club where they can buy groceries in bulk. The couple still visit their favorite restaurants occasionally, â€śjust not nearly as much,â€ť adds Pat.