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| Robin Rocky Mountain Stroke Survivor |
There’s this myth out there that some people are immune to poverty. It just isn’t so. What if your primary breadwinner had a medical problem like mine… Not enough to be totally disabled but not enough to earn as much? Or worse? But you aren’t collecting on life insurance yet (thankfully!)
What if more economic craziness happened? What if your industry moved overseas or was completely dependent on another industry that crashed? My step dad lost his job due to defense department cuts because his company was hired to do work for them. A lot of my patients do work like painting, concrete, electrical, or real estate and all of them suffered with the housing crash. Entire cities can suffer when a major industry in the area takes a hit.
After what we’ve been through in the last few years, I will never ever let myself get in a position where our core expenses are more than the federal poverty level. I pick that number because it’s an easy, predetermined amount that the government recalculates for us. And I’m pretty confident that unless one of us becomes really badly disabled, we can always manage to earn that much. A friend recently asked for suggestions as she just found out that her husband is going to be downsized and his prospects for finding another job aren’t as good as they once were. This gave me an opportunity to really think about what we did to prepare when I had my stroke and we knew we’d have only a couple more paychecks and what we would do in addition.
If you are preparing for an impending income loss (due to stroke, illness, job loss, a parent quitting in order to care for a child, etc), here are some things I’d recommend you do right now. And since life is so unpredictable, I’d honestly recommend it for everyone who isn’t sitting on a trust fund or a nice retirement account:
- Cancel everything that’s not a necessity. TV springs to mind… If you must have screen time get Netflix streaming instead for $15 a month. Or just use YouTube for free. Gym memberships…You can get your exercise without the gym. Decide if you really, truly need a home phone; if not, cancel it. We haven’t had one for years and haven’t missed it (and couldn’t afford it anyway). We’ll probably be getting our son a cell phone younger than his friends because of this but at $10 a month, it’s a lot cheaper than a home phone.
- $10 a month phone? Yes. At the suggestion of one of my patients (and Mr. Money Moustache) we use Republic Wireless. For the data it runs over WiFi when WiFi is available so is a lot cheaper than the competition ($25 a month). And for voice and text only on cell, and data just when WiFi is available, is $10 a month. You have to buy your phones up front… But you’re getting prepared to not have much money so you would’ve done that anyway, right?
- Cancel anything that has a contract and replace it with something with no contract. If you find yourself unable to pay your bills, you won’t be able to pay the termination fee either. For internet we use Clear. You can buy the spot or hub on Amazon and then just call to sign up. I do recommend calling them to make sure you can start a new account in your area before doing this. We appreciate that it’s month to month. If we ever can’t pay it, we can just go to the library for internet and use our phones for talk and text only.
- Pay off everything you want to keep (except your house… Unless you happen to have $100k lying around). Pay off your car. Pay off anything else that can be repossessed. If you don’t mind it being repossessed or don’t have the money to pay it off, return it now and figure out how to live without it now. Or get a cheaper alternative. Pay off all credit cards starting with the one with the highest interest rate. The whole concept of “leveraging credit” is stupid. That’s banks and credit card companies taking advantage of you. We have a credit card balance with a great interest rate… 4%. But I still wish we’d paid it off before all this happened. We’re still paying $40 a month minimum payment for the next twenty years and I can think of a lot of things I’d rather do with $40!
- Clean out all the crap that you’ll never eat from your freezer and pantry and replace it with foods you enjoy. I discovered I had to be pretty desperate to eat the foods we wouldn’t eat before and I still didn’t like them. (Remember that next time you donate to a food pantry too.) Include foods that make life good. Chocolate really helps make life seem more luxurious (hide it in the back of the fridge or freezer if you think your family will eat it all).
- Come up with an energy use plan. Turn off and unplug everything possible. Buy a Kill-a-watt and go crazy. It something is costing $5 a month to run, that’s $60 a year. That’s $60 you could spend on shoes or other necessities. If you live in a cold climate, weather proof now. Buy heated mattress pads so you can keep the house cold at night. Turn down the temperature on your water heater and install a water heater blanket. Install a clothesline and practice using it. Turn off the pilot light on appliances you don’t use regularly (such as the heat in warm weather). Have a rule that everything is turned off at dinnertime except the light in the room you’re in.
- Question every single bill. Do you really need that? Can you find it less expensively elsewhere? Can you make it yourself?
- Learn to make bone stock and yogurt and bread. Learn to meal plan. Look up the current amount for the USDA Thrifty Food Plan and make sure you can feed your family for that amount or less. That’s how much you’ll get maximum on food stamps (usually half to two thirds that). If you don’t want or qualify for food stamps, it’s a good budget to shoot for initially. Be warned… The USDA has really horrible recommendations for living on this food budget. Things like a slice of white bread OR a glass of lemonade for a snack. (Neither is adequate and both are unhealthy.) And their recipes require about 2 hours a day of prep time. There are better ways of living on a tight food budget. But also don’t beat yourself up if it’s a struggle to get there. If we ever get to a better place financially, we are definitely increasing our food budget. I am so grateful for what I have but fantasize about CSA fruit shares and Costco shopping sprees. :-)
- Plan ahead for upcoming clothing expenses. Do you have next winter’s coats for everyone? The next size shoes for your kid who needs special shoes? Buy yourself some good shoes that will last a few years but not if you already have a bunch. I have slippers, winter shoes, summer shoes, sneakers, and sandals.
- Figure out how to buy clothes inexpensively or not at all and make sure everyone has what they need for the coming months. First off, no one needs more than a handful of outfits. Having a different top every day for two weeks is completely unnecessary. We find it’s cheapest to have a “uniform”. For my son it’s jeans and something on top. For me it’s slacks and sweaters in the winter and a flowered skirt and solid top in the summer. Start asking around about hand-me-downs. We receive big bags of clothes for my daughter and pass them on to one of my patients, a little girl a couple sizes behind.
- Stock up on things you use regularly. Printer paper, toilet paper, sanitary pads. Seriously consider reusable since you can buy once and use forever.
- Pay ahead on anything extra you can that you absolutely don’t want to lose. Can you buy three years of museum memberships? A lifetime membership to your homeschooling forum? I paid for a dozen massages ahead when I saw what was going to happen because they were the only thing managing my migraines. This gave us a year to figure out an alternative.
- Start stashing money and gift cards. I kept a cash stash for small emergencies, an emergency fund in the bank for larger emergencies, and I have a tin in which I stash every gift card we receive to use for either necessities or those extras that make such a difference.
Graduate level prepping:
- Grow a garden. I recommend Square Foot Gardening for a beginner who needs it to succeed for financial reasons. This year we finally grew a ton of food after I read the book last winter. Instead of Mel’s Mix, use straight compost that you make yourself (cheaper). And bury logs at the bottom of the compost. They will hold water and rot in place to improve your bed. Maybe I’ll write a whole post on cheap gardening.
- Learn to do your own plumbing repairs. And electrical. And HVAC. And everything else.
- Sell your stuff on Craigslist
- Join Paperback Swap and bank a bunch of credits. I try to buy most of our books for homeschooling from the thrift store but there are some that are just hard to find that way. The library is a good option for some people. I use the library for myself but the kids like to hear the same book until it falls apart so owning a copy works best for us.
- Learn to repair clothes.
- Learn to do any skilled services you receive. My husband learned to do massages and we bought a portable massage table cheap on Craigslist. I learned to cut everyone’s hair. All with thanks to YouTube University.
- Diversify income and/or find sources of passive income. We haven’t gotten this far but I’m told this is the next step. Life is too complicated as it is, so this will have to wait for the time being.
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