I have lost my Job

How to create a Budget
for Financial Survival
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Executive Openings!

The Pages that will Help You Cope with and Handle the Loss of Your Job
Lost the Job: The First Steps to Recovery

After You Lost the Job: Assessing your Financial Position

Self Assessment of your Abilities when you are looking for a new Job

Lost your Job:
How do I find a new one? -
Some Rules to Help you
Lost the Job: What income (unemployment benefit) can I expect
Lost the Job: Saving your Home - A Survival Guide when Foreclosure Looms

Lost the Job: Some Tips for coping with a Job Loss and avoiding Depression

Lost the Job: What will further Education bring me?

How to write a Resume
How to master an Interview

The Ten Rules you should not break, when looking for a Job

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1. Creating a Weekly/Monthly Survival Budget


To live on a budget requires discipline and regular work. It is no use, if you make up an elaborate budget and then, when it comes to spending the money, you do not record where and when you spent it. In a family, especially when it goes through hard times, the cooperation and discipline of all family members is essential. This is often not an easy task, but it is of the utmost importance if the budgeting process is to work. At the start, it is therefore essential to make a few rules, however painful these are:

The goal of the budget is the survival of the family or group for which it is created.
There has to be total honesty within the family or group for which the budget is created. There are no secret expenses which other members may not know about.
No expenditure is too precious to be touched or cut. Social status or consideration of such and expenses associated with them (the "what will the neighbors or my peers think" syndrome), are all open to question.
Cooperation from all family or group members is the key.
There has to be continued discipline.

You would think, that all the above is common sense, but most of us have become accustomed, in the times of plenty, to live and spend with a vague relationship to what we earn. There was always the Credit Card! That is finished!

The budget will be structured on the basis of essential and non-essential expenditure. The former are those that we require for survival and are therefore inflexible, the latter those that have some flexibility.

Essential Expenditure Non Essential Expenditure
Housing (mortgage, rent, property taxes, home insurance) Clothing and shoes
Utilities (Gas, Electricity, Water, Garbage fees) and Phone Line Club Fees (sports and Gold Clubs)
Food, cleaning and laundry detergent Eating in Restaurants (including fast food places)
Essential Health care, Medical Insurance and essential Medication School Fees for private schools
Car Payment for one car, Gas and Car Insurance Secondary Cars for family members

Each person's list will differ and you have to create your own depending on your particular circumstances. But there should be little discussion about the housing costs. Now, if you have a very expensive house, you might initiate changes that would lower your expenditure (even if foreclosure is not looming, see our foreclosure page for suggestions on how to do that). Apart from variations, you might be able to negotiate your mortgage payments, there are few items that you can vary. The property tax is fixed and home insurance will also be fixed by the mortgage company, apart from your deductible amount. But beware of making that too large, since your finances are under stress and any incident could wipe you out financially.

Utility costs can be reduced by switching off non essential electricity uses, such as the TV or lights in rooms that are not occupied. Similarly, reducing the temperature when heating a house by two degrees less (say to 68 degrees instead of 70) and wearing some pullover inside the house will create significant savings. The same, in the other direction, applies for air conditioning. Phone usage via phone lines and cell phones can usually be cut significantly. A mix of renegotiating your phone plan for the fixed line/DSL internet access, and maybe buying prepaid phones, such as those from tracfone could reduce costs.

Food, cleaning and laundry costs are also highly variable and with some effort can be reduced:

About Food, Cleaning and Laundry Costs
Plan your meals one week ahead of time and then make a shopping list. Stick to it and don't buy things you do not need!
Don't buy semi prepared foods!
Buy meats in bulk (for instance at Sam's), then take it home and cut it up to the size of portions you use for one, or maybe two, family meals! The rest pack in portions and put into sealed bags and freeze them! One of these little machines that seal freezer food now costs around $40.00 and they are well worth it!
Buy fresh vegetables rather than tinned ones.
If you cannot cook, learn to cook. Start with simple things and do not try elaborate cook books.
Buy washing detergents in bulk and wash and iron clothes in a planned manner. Try to air dry them, rather then use to electric dryer. It is not only cheaper but your clothes will last longer.
Stop using dry cleaners if at all possible. Obviously, you cannot wash a suit, but shirts can be washed and ironed at home! If you do not know how, learn it!

Health Care costs are always part of your life. But try to keep them within reach. Eating good food with vegetables (don't overcook them!) and fresh fruits will help to keep little stomach ailments, heartburn, your cholesterol and your sugar levels in check. Try to keep your health insurance as long as possible. Maybe you can rearrange the coverage with your former employer to lower your costs (for instance by increasing your deductible amounts).

Car Payments, and with it the associated insurance premiums, are only to some extent variable. But if you have several cars, try to make do with one. Yes, your precious little offspring might have to take the school bus (what a let down!), and you might have to bring your wife to and from work. But you have to make hard choices and other family members have to help in that as well!

So once you have settled all that, you can start to make up a budget. Some people prefer to do it on a weekly basis, others on a monthly. The principles stay the same, but a monthly budget needs more care and control in spending. Here is an example of a monthly budget.


Checking your credit report does not hurt


The easiest way to create a budget is to use a program like Microsoft's Excel, or another spreadsheet. If your computer has inadequate memory, cheap memory is available to boost it's performance. If you do not have Excel or another spreadsheet, you can also do it manually, by buying accounting paper that has a number of columns. Before you create your budget, you should calculate your you should calculate your Networth as we show here on Tables 1.1.1. to Table 1.4. Even, if your financial life is not half as complicated as "Walli's", writing things explicitly down will help you create a better budget. The tables below are also numbered for ease of navigation and, are following the ones from the Networth calculation


2.1. The Essential Monthly Expenditure Budget

(an Example)
(Sample Family:"Walli" who has lost his job - see his net worth and opening finances here;
Two adults, two kids aged 10 and 14 - lives in Illinois - all in US Dollars)


Walli's essential monthly expenditure includes all items that he and his family require for living. For the budget, we have assumed that, despite efforts and a real estates agents listing and a "For Sale" sign in the garden, he is not able to sell his house within a year. Which, if the economy is under stress, is a reasonable assumption. His wife's income, after tax and all deductions is $28,284, which means she has an approximate Gross Income of $37,700.

Walli's income tax refunds, which given his former income level, he no doubt gets, have not been included in this budget, but obviously, if their amount is known, should be added. You can make these budget tables weekly or monthly. We have, because of the page size available on the internet, made the tables only monthly. Weekly budgets are better, since it will be much easier to control. Often you will not know the exact future amount, say for your income estimates. But be very conservative and do not over estimate what you could earn. We all know you are at the "top of your professions", but will potential clients of yours see it that way? Remember the budget does not become invalid, if you earn more and spend less!

Items January February March April May June July August Sept Oct Nov Dec Total
Opening Balance in Checking
Add fr. Saving (A)
-

750
724

-
298

-
1,328

-
1,527

-
1,726

-
1,925

1,000
927

1,500
429

1,700
131

2,000
133

2,000
135

2,000
-

10,950
Income *)
Unemployment
Wife's Income
Casual Income

***)

2,197
2,357
625

2,197
2,357
75

2,197
2,357
1,230

2,197
2,357
300

2,197
2,357
300

2,197
2,357
300

-
2,357
300

-
2,357
300

-
2,357
300

-
2,357
300

-
2,357
300

-
2,357
300

13,182
28,284
4,630
Primary Mortgage (incl., Tax and Insurance) 2,185 2,185 2,185 2,185 2,185 2,185 2,185 2,185 2,185 2,185 2,185 2,185 26,220
Gas, Electricity, Water, Garbage 375 375 375 375 375 375 375 375 375 375 375 375 4,500
Phone, Internet 350 200 200 200 200 200 200 200 200 200 200 200 2,550
Food, Laundry, Dry Cleaning 950 950 950 950 950 950 950 950 950 950 950 950 11,400
Children's Allowance, Lunch Money 120 120 120 120 120 120 120 120 120 120 120 120 1,440
Entertainment 50 50 50 50 50 50 50 50 50 50 50 50 600
Car Payment **) 750 750 350 350 350 350 350 350 350 350 350 350 5,000
Gas and Car Repair and Insurance 200 200 200 200 200 200 200 200 200 200 200 200 2,400
Medication, Doctor, Dentist 25 25 125 25 25 25 25 25 125 25 25 25 500
Misc. 200 200 200 200 200 200 200 200 200 200 200 200 2,400
Total Expenditure 5,205 5,055 4,755 4,655 4,655 4,655 4,655 4,655 4,655 4,655 4,655 4,655 56,910
Closing Balance (Carried Forward) 724 298 1,328 1,527 1,726 1,925 927 429 131 133 135 137 137
*) Income is from unemployment benefits in Illinois $511 per week, time 4.3 per month. Since unemployment benefits vary from State to State, a specific State had to be chosen.
**) We assume that "Walli's" car leases can be closed except for the lowest cost car reducing his outflow in the third month from $750 to $350 a month
***) Walli's casual income work comes from consultancy, or from grass cutting. The higher income at the beginning is assumed because Walli "knows" that he gets specific consultants work.

2.2.The Non-Essential Monthly Expenditure


The non essential expenditure here, are all expenses that "Walli" has for items which will not immediately affect his day to day life. We have included his boat and condo and all his expenses on credit cards, revolving credit lines and other financial debt instruments. We have made the assumptions that "Walli" will be able to get out of the boat leasing contract, and therefore will end all costs associated with the boat, within three months. On the other hand, we have not assumed, that he will be able to sell his condo within a year. He also cancels his relatively expensive and high cost life insurance. It is possible to switch to a cheaper term life insurance, where the expenses (probably about $75 a month) would then come out of Misc. expenses.

"Walli's" debts to credit cards, revolving credit lines and bank loans are all being paid normally and by the end of the year, he should have reduced his debt by $47,116. At the starting date of his budget (Dec 31 of the previous year) and when he lost his job, his total debt outstanding, excluding mortgages, car and boat loans was $132,910.00. His repayments this year amount to 35.4% of his total debt. You could argue that the $47,116 could have been better used by saving it for future use and defaulting on the credit lines and cards. We would not recommend that, but closing down the cards and trying to renegotiate repayments with lower interest rates is something you should seriously consider.

Walli could get some help to renegotiate the credit cards and revolving credit lines. This is possible, but good companies are not easy to find and, in general, it is not as easy as some of the professional debt renegotiations companies (the ones from which you get e-mails and letters) make you believe. You should also be aware that there are many rogues out there, who offer to renegotiate and pay off your credit, only to extend a more expensive credit line to you. So beware!

Items January February March April May June July August Sept Oct Nov Dec Total
Credit Cards
Walo Bank
IB Bank

AMEXCO

625
900
1,660

625
900
-

625
900
-

625
900

625
900
-

625
900
-

625
900
-

625
900
-

625
900
-

625
900
-

625
900
-

625
900
-

7,500
10,800
1,660
Mortgage on Secondary Home (incl., Tax and Insurance) 1,212 1,212 1,212 1,212 1,212 1,212 1,212 1,212 1,212 1,212 1,212 1,212 14,544
Gas, Electricity, Water, Garbage, on 2nd Home 150 150 150 150 150 150 150 150 150 150 150 150 1,800
Revolving Credit 1,520 1,520 1,520 1,520 1,520 1,520 1,520 1,520 1,520 1,520 1,520 1,520 18,240
General Bank Loan 743 743 743 743 743 743 743 743 743 743 743 743 8,916
Car and Boat Leases (list individually) 1,350 1,350 1,350 - - - - - - - - - 4,050
Condo Fee 725 725 725 725 725 725 725 725 725 725 725 725 8,700
Boat Storage 659 659 659 - - - - - - - - - 1,977
Boat Insurance - - 120 - - - - - - - - - 120
Life Insurance 300 300 - - - - - - - - - - 600
School Fees 950 - -   - - - - - - - - 950
Misc. 100 100 100 100 100 100 100 100 100 100 100 100 1,200
Total Non Essential Expenditure (B) 10,894 8,284 8,104 5,975 5,975 5,975 5,975 5,975 5,975 5,975 5,975 5,975 81,057

2.3.1. Projected use of the Liquid Short Term Assets

(Not including Retirement Assets)


The $90,468 of short term savings will last Walli, without him getting a job or obtaining a major income again, just about a year, without defaulting on anything. At the end, he will still own his major assets (his house and his condo) and he did not have to liquidate any of his long term retirement assets. But the next year will be different. Therefore, in the middle of the budgeting year, in June and maybe again at the beginning of October, he will have to make some major decisions, if things do not change.
Items January February March April May June July August Sept Oct Nov Dec Total
Opening Balance Short Term Liquid Assets 90,468 78,824 70,540 62,436 56,461 50,486 44,511 37,536 30,061 22,386 14,411 6,436 90,468
To Essential Expenditure to (A) (750) - - - - - (1,000) (1,500) (1,700) (2000) (2000) (2000) (10,950)
To cover non essential Expenditure from (B) (10,894) (8,284) (8,104) (5,975) (5,975) (5,975) (5.975) (5,975) (5,975) (5,975) (5,975) (5,975) (81,057)
Gain or (Loss) from Sale of Assets - - - - - - - - - - - - -
Closing Balance Short Term Liquid Assets 78,824 70,540 62,436 56,461 50,486 44,511 37,536 30,061 22,386 14,411 6,436 (1,539) (1,539)


2.3.2. The Use of your Non-Liquid and your Retirement Resources

If you are using your "non-liquid" (Table 1.1.3) and "retirement resources" (table 1.1.2.), you have to make up the same table as above (2.3.1.) for them, calling it 2.3.2. and 2.3.3.. If market conditions permit, you can naturally sell the non liquid assets. What kind of loss you can accept, will depend on your individual circumstances. You want to keep control over the depletion of resources and know, when decision time arrives.Because you want to know the situation, before you have used up everything you have. The real key is to be, as the "Wall Street yokels" call it, ahead of the curve, in other words, relatively speaking, in charge of events, rather than reacting to them. This is an important aspect!

Walli is in the lucky position not to have to touch his retirement savings. If at all possible, you should try to avoid that as well. But, when "the wolves are at the door", there might be little choice. If you do, then you should take some tax accountants advice, because it could have tax implications. Don't rely on what people tell you in the Sports or the Gold Club!

You might also have some legitimate choices, like Walli: Should you default on your secondary home and let it go into foreclosure, rather than touch your "nest-egg"? Remember, a foreclosure has serious financial consequences for your future, but so has not having anything to eat! We are not recommending to default on payments, but when things are "down to the wire", you have to look after "number one", and that is yourself and your family! Whatever you do, consult some legal counsel before you do it!


The Control of your Expenses using the Budget you have created

Now, you have a budget and you start spending the money. You have to control that you live within your budget. The best way to do this is, as we have mentioned above, to create the budget from the start on a weekly basis and to control it on a weekly basis. Again, having a spreadsheet like Microsoft's Excel is a great help and makes things a lot easier. But if you don't, you can just use accountants sheets divided into columns. You need three columns for every week:
  • Budget Expenditure
  • Actual Expenditure
  • Variance (or difference between the two).

You have to enter the actual expenditure each week and calculate how far you have strayed from your expenditure. Easy, you think, but most people fall down on this part, since they do not have the diligence to follow up on their own expenses. They will do it for a week or two, and then stop. Now, that defeats the purpose.


2.4. Example Weekly Control Sheets for your Budgeted Expenses

Items Week 1 Week 2 Week 3
Items Budget Actual Variance [+/(-)] Budget Actual Variance [+/(-)] Budget Actual Variance [+/(-)]
Opening Balance in Checking
Add fr. Saving (A)
-

750


750


(2,015)

-
(1,701)

-


-
(2,395)

-
(2,076)

-

Income *)
Unemployment
Wife's Income
Casual Income



100



250



150



250



150



(100)

1.021
1,099

100

1,021
1,099

150

0
0
50
Primary Mortgage (incl., Tax and Insurance) 2,185 2,185 0 - - - - - -
Gas, Electricity, Water, Garbage 150 120 (30) 100 125 25 50 50 -
Phone, Internet 0 0 0 200 150 (50) 150 180 30
Food, Laundry, Dry Cleaning 350 280 (70) 250 180 (70) 150 180 30
Children's Allowance, Lunch Money 30 30 - 30 30 - 30 30 -
Entertainment 50 10 (40) - 20 20 - 10 10
Car Payment **) - - - - - - 750 750 -
Gas and Car Repair and Insurance 50 46 (4) 50 20 (30) 30 30 -
Medication, Doctor, Dentist - 20 20 0 0 0 25 10 (15)
Misc. 50 10 (40) 0 0 0 50 30 (20)
Total Expenditure 2,865 2,701 (164) 630 525 (105) 1,235 1,270 35
Closing Balance (Carried Forward) (2,015) (1,701) 314 (2,395) (2,076) 319 (1,410) (1,076) 334
( ) stand for minus, in other words, if you spend more than you budgeted it will be in (brackets). He has also had a slightly lower income.The same, if you have less income than you budgeted, it will be in (brackets). If you have an "overdraft" it will also be in (brackets).

The convention is Opening Balance plus Income less Total Expenditure equals Closing Balance which in turn is the Opening Balance for the next week.

The above shows that "Walli" does slightly better than budgeted, by spending less. Since the timing between income and outgoing funds is a bit "off", Walli will have to supplement his checking account, temporarily with funds from his savings. It is important that this remains temporary and, that its use is disciplined. But, the last thing he would want to do, is go into an overdraft, since it is expensive.

Make up the above table by week for the whole of the year. It is really important and will give you a lot more confidence, since you know where you stand.



That concludes our budget session. Work through it, and review it several times to make sure you have not forgotten anything. And then talk it over with your spouse and other members of your family. This might not be the way you do things in your family, but you are in a serious "jam" and, maybe this is a time to change in order to survive.

We might create a low cost help and review line, if there is a demand for it. So if you have any suggestions,
e-mail us, mentioning "Survival Budget" in the subject line. If you do not have anything in the subject line, the e-mail will be rejected as spam.

Below are some books that could help you. Buy the cheapest version (2nd hand)!

Good Luck!


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