Surviving When Your Income Takes a Hit

Posted on 11/04/2009

Layoffs, downsizing, and furloughs, oh my! Millions of Americans have seen their incomes cut, slashed and even eliminated. In fact, the median income fell from $52,163 to $50,303 last year, which shows that plenty of people must learn to live on less. So how do you survive when your income takes a hit? (Hint: don’t pull out the plastic.)

Don’t Panic, Plan - Finding out your income is going to take a plunge can throw you into a panic. Don’t let it! Instead of worrying, start planning. Revise your budget, or if you don’t have one now is the time to get to work. Use a guideline like this free Family Balance Sheet courtesy of Military Finance. It will help you see where your finances stand.

Eliminate the Extras - As soon as you find out your income is taking a hit, start eliminating the extras. Cable TV, satellite radio, and gym memberships are all things that may fall into this category. The sooner you can do this the less stress you will have down the road when you realize that your income doesn’t cover all of your expenses.

Negotiate Lower Bills - Get on the phone and start negotiating for lower bills. Call up your insurance providers and utility companies. Be honest about your situation and tell them you need to lower your expenses. They should be much more willing to be proactive with you now to prevent late payments or defaulting on bills.

Research Community Resources - You don’t have to go through this alone. There are plenty of resources in your community to help. Contact non-profits or government agencies that may be able to assist with food and utility costs. Find out if you’re eligible for unemployment or social security benefits.

Enjoy the Simple Things - Living life on a lower income may mean cutting out some of the things you thought you needed like weekly manicures and morning lattes, but it doesn’t mean life can’t be just as full and happy. Focus on the simple things like family and friends and home cooked meals. Then you won’t feel like you’re missing out on anything at all.

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