finance

How to save money while you're down and out

So, you've been laid off. No doubt, it happened just days after you made grand plans to start actually saving money, maybe right after you made a contribution to your long-neglected IRA. But now, instead of socking money away, you've got to figure out how to get by on your final paycheck.

First, don't kick yourself for dropping that load of cash at the bar on the day you got the boot. You deserved that last hurrah, and the hangover you woke up with the next afternoon was punishment enough.

Indeed, the main thing isn't to get down on yourself at all. Freaking out about your lack of an income and dwindling cash reserves will steal energy from the two things you should be focusing on: one, getting a new job, and two -- the focus of this article -- stretching your limited dollars. Most of the following savings strategies are obvious, but it helps to see them all in one place.

1. Slash your budget
The first thing on your agenda should be to cut as many extraneous expenses as possible. That's what Nelson Taylor did, much to the chagrin of his wife, right after the Internet company he worked for laid him off.

"I went over our monthly budget and cut some things off. I cut down on weekly spending money, cut down someone doing our laundry, fired the maid and got rid of the newspaper and magazine subscriptions," said Taylor. "I just started hacking because I knew the more I saved, the more I'd have available."

One other big-ticket item that you might be able to cut is the cable bill.

Hint: Get your employed friends to tape "Project Runway" for you.

2. Trim the unavoidable bills

  • Phone bill: Your impulse will be to call your best friends and family members to gripe about your situation. Make sure to call when you're paying the cheapest per-minute prices for long distance. Or, do the really smart thing and make your calls when you know people aren't going to be home. That way, people will return your calls and you'll escape long distance charges altogether.
  • Utility bill: Turn off lights in unused rooms and cut back on your shower time. You're not going to save tons of cash with even overzealous energy bill squeezing, but for the unemployed, no sum saved is too small.
  • Groceries: Convenience is no longer buying the higher-priced, smaller-volume goods from your corner store. It is actually being able to pay for food. Visit the supermarket and shop with a well-prepared list. Oh, and avoid the cookie aisle.

3. Check rates and fees

  • Interest rate: If you've already got credit card debt, or you think you soon will, seek out a new credit card with a lower interest rate and transfer your outstanding balances immediately. No doubt you regularly receive offers for credit cards with great introductory offerings. Instead of sending those invitations to the trash can, like you usually do, carefully review the offers and pick the best one.
  • Bank fees: Not that you should be going to an ATM very often, but when you do, make sure you use your own bank's cash dispenser. Go to any other ATM, and you'll run the risk of getting charged not once, but twice, for the transaction. And given your current income level, you can't afford to pay for access to your money.

4. Recognize you're time-rich and money-poor
There's nothing better than jumping into a cab at the end of a long night to get home, especially when it's really cold outside. But for the jobless, cab fare is just too big a chunk of change.

Natalia Lincoln, who was unemployed after the dot-com implosion, perfectly sums up the rationale behind the cab-free, cost-saving measure: "The main thing to realize when unemployed is that you're very time-rich and money-poor. If you get home a half-hour later on the train than in a cab, it really doesn't matter as much."

5. Stay entertained
It's important to get out of the house. Staying inside is a great way to save dollars, but it will do some serious damage to your mental health. And given that you're in the midst of a very serious job search, you really need to be on the top of your game. So go out. Go out often. Just budget your dollars, be tight with the cash you've got on hand and keep your wits about you.

  • Happy hour: Happy hours are a good time to meet your friends for a cheap drink or two, but remember that this is much more about socializing than about consuming alcohol. Forget that simple premise and you'll spend a lot more money than you planned. If you hear yourself saying, "This round is on me," but don't remember thinking the thought before you spoke, you've had too much to drink and it's time to go.
  • Matinee movies: Even these bargains are pretty expensive, but they're cheaper than the regular price.
  • Museums: Perfect for dates. The good news is that most museums have "pay what you want" nights. Go on these special nights and do exactly that: Pay nothing.
  • Dining out: This is perhaps the most common form of entertainment -- and the most expensive. Again, it's important to get out of the house, but do your best to scale back on eating out. When meeting friends at a restaurant, even a cheap meal usually ends up costing $20 per person (especially if you go out with people who always have to order appetizers). Lincoln points out that when she was unemployed, "I cut way down on eating out -- it was really expensive, and no leftovers. I did a LOT of cooking, and it was pretty fun." Remember: $20 can feed you for a week if you shop at the right store and prepare your meals at home. That's the kind of attitude you need to have while you're down and out and looking for a new job.
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-- Updated: March 23, 2008

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