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What to do if the economy knocks you down

Living on the financial edge is tough, but it also makes you tougher.

By Karen Datko Sep 30, 2009 12:57AM

Many of you are wondering when the huge wave of economic woes will come crashing down on your head. For some of you, it already has.  

I crossed a financial minefield of my own in recent years -- sudden unemployment followed by working for near minimum wage -- and I'm prepared to do it again if I have to. Hopefully what I learned about getting by in difficult times can help you too. 

My story in brief: I lost a great job I had thought I'd enjoy for life when the ownership of my company changed. After six months of searching, I found a comparable job on the other side of the country. I lost that one too, sold off most of my things, and drove home with my computer, some clothes, a few dishes, keepsakes, and my three dogs.

It was time to get real. I could try to find another job in the shrinking newspaper industry or stay at home and try to rebuild from there. While I mulled the possibilities, I took steps to make sure my finances didn't backslide.

I started to make money. Good jobs are hard to come by here, so I got part-time work that paid $6.50 an hour.

I looked for additional income. I hatched the idea to start a pet-sitting business.

I severely limited my spending so that I could live within my means. That means taking care of needs -- mortgage, utilities, telephone, vehicle expenses, Internet access and food. I bought nothing unless I absolutely needed it. It helped my resolve to think about how many hours of work any purchase would cost.

I learned frugal hacks, like reusing plastic bags and stretching shampoo. (I've learned tons more -- like the many uses for vinegar -- since I've started blogging here at Smart Spending.) I set my programmable thermostat at 63 degrees and, weather permitting, stopped using my clothes dryer.

I donated my free time. Helping others is a good way not to focus on oneself. I increased my volunteer hours at the local soup kitchen and joined other community projects. (Incidentally, these sometimes have the added benefit of free meals.)

I also decided I would not harm my future. While I didn't have extra income to save for retirement, I also didn't withdraw from my retirement accounts. What sense would it have made to reduce my future security in order to maintain a lifestyle I really didn't need?

I'm here to tell you that my blogging partner, Donna Freedman, was right when she wrote that life can get better if you're open to new possibilities. I made it through (although I sometimes look back and wonder where I found the grit). I'm doing what I love -- and make a decent income -- writing and editing at home.

But just like everyone else, I'm worried about the future. Many people won't be immune from the fallout as the U.S. succumbs to what's likely to be a deep recession.

I'm worried, but I've also learned that I can take care of myself. I have no debt, other than my mortgage, and I don't buy anything unless I have the money to pay for it. I continue to live a frugal life. I know that I can make do with very little and that many of the things that make me happy -- friendships, crisp autumn mornings, rooting for my favorite football team -- don't cost anything.

Other things I know:

  • An emergency fund is essential. In these tough times, I plan to build mine to cover necessary expenses for two years.

  • You can create opportunities to make extra income. I'm still pet sitting, and I've learned about lots of other ways to increase my earnings if I need to.

  • I'm easily -- and cheaply -- entertained. Who needs to pay for TV? You can find plenty of free entertainment on National Public Radio -- or watch TV online for free.

  • You can eat on $25 or so a week. That means buying and cooking in bulk and seeing food as fuel. In better times, it can again become a regular source of entertainment and pleasure.
  • Help is available. In addition to the soup kitchen and a food bank, my community has a health care clinic for low-income people.

 Another thing I know: There's no sense hiding your situation from others. How often do we hear about people who max out their credit cards to maintain the illusion that they're still doing well? When times are tough, people you know -- and even some you don't -- will arrive at your door to help you when you least expect it.

Do you have a story to share? What other ideas can you add to the mix?

Published Oct. 8, 2008



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