Navigating reduction or loss of income
Have your recently been notified of a pay reduction, maybe possibly an up coming lay off? Maybe you've just found out today will be your last day or may something else is happing in your life.
What ever your situation is recognizing human emotion is real, namely fear being the normal offender in this case begins to run rampant in the face of uncertainty. But you don't need to live in fear.
With 78% of Americans living paycheck to paycheck, the potential for missing a paycheck or a few paychecks could be devastating.
This is the time to (calmly) regroup and put something in place, basically, we need a plan.
The thought of being without a paycheck can be overwhelming. But we don’t want to scare you. We want to give you sensible, level-headed actions to take. But first, step back and take a big, deep breath.
-Did you pause and take a deep breath?
-Now that you're thinking a little more clearly, let’s look at a few things you can implement to your head above water—even without a paycheck.
7 Things to Do When You Miss a Paycheck
1. Make a spending plan.
If you're not living on a functional budget, this is the time, RIGHT NOW to start. Creating and sticking to a monthly spending plan will show you exactly where your money is going.
Unless you know where your money is going you can't effectively stretch it. There is a good chance you don't really know how much you have to work with either, In addition, working the budget properly you'll find other places you can cut and realize you're not spending as much in some categories as you had thought.
If you don’t have any income right now, then make a budget based on the amount of money you do have. If you have $600 left to your name, budget out exactly where each of those dollars will go. It’s time to squeeze every last penny out of what you’ve got.
If you still have cash coming in from your spouse’s job or some other source, then adjust your budget to reflect that. Maybe the two of you usually bring in a combined $5,000 a month. But with the loss of one income, you’re down to $2,500 a month.
Adjust your budget to live off of that one income for the time being. It might be tough to switch up your lifestyle, but you’ve got to make temporary sacrifices to get through this.
2. Take care of the Four Walls.
When the going gets rough—like it is right now—you need to focus on the things you really need to survive. We call these the Four Walls. Forget the credit cards, personal loans, student loan payment, vet bill and other none essentials. The Four Walls are your priority, so pay for these things in this order before anything else:
Utilities (electric, water, propane/gas, basic phone plan)
These are the basics you need to keep going so you can live to fight another day.
It’s really hard to fight when your family doesn’t have food. So if there’s no money for food, don't pay utilities, shelter or your car payment. (reminder, your car payment is LAST on the essentials list.
If there’s any money left over after you take care of the Four Walls, make a list of what else you need to pay and tackle that in order of importance. When you run out of money—that’s it. Someone on the list isn’t getting paid, and that’s just how it goes. But it sure as heck isn’t going to be the checkout lady at the grocery store. Remember, that’s priority number one!
If you’re renting and having trouble coming up with cash right now, don’t stress out. Reach out to your landlord and be honest with them about what’s going on. They might be able to work something out with you for the time being, but they can’t help if they don’t know. Be up front with them, they could have some capacity to work you.
3. Pause your debt snowball.
When you’re just trying to make it to another day, you don’t need to pay extra on your debt. Instead, focus on piling up cash as high as you can. This will help with peace of mind until you have income again. Once life gets back to normal and everything is okay, you can pick up where you left off with your debt snowball
If you’ve been chipping away at your debt, you probably don’t want to see all your progress come to a screeching halt. But the reality is, if you’re not getting paid, then you’re in the middle of a crisis. So pause your debt snowball. If it’s within your budget to keep paying the minimum payments on your debt, go for it. But remember, the Four Walls come first. Don’t let your family go hungry for the sake of your FICO Score. - Dave Ramsey
4. Sell stuff.
Get radical. Take stock of the things you own, I'm pretty sure you have things you haven't used and don't need, they need to go. Maybe that’s some jewelry, clothes, baby items or even the extra car sitting in your garage. If you know you can part with something and get extra cash in your hands—do it! Well... within reason.
5. Get a temporary job or start a side hustle.
If you’re out of a paycheck you don’t need to freak about it, you need a plan, replacement income. So get some part-time work- Something a little cash coming in is better then nothing.
Look into driving for Amazon, picking up takeout food for Uber, Favor, DoorDash, Postmates or dropping off grocery orders with Shipt. Wal-Mart is almost always hiring, UPS, FedEx.
Check out Apps, Steady offers freelance working at home options for many industries.
Even if one of those doesn’t work out, you can still take up odd jobs around your neighborhood (think cutting the grass, picking up leaves, babysitting, or dog walking). Be on the lookout for opportunities that will add a few extra bucks to your pocket. In this situation, every little bit helps.
6. Look for things to cut.
This is the time to cut back on any unnecessary expenses that you can. Tighten it up. Stop or pause your subscriptions (think Netflix, Hulu, meal delivery kits, specialty makeup boxes).
They aren’t going anywhere, and you can easily pick them back up once your situation improves and you have extra cash to spend again.
Don’t forget to call your cable, internet and cellular providers to see if there’s anything they’ll do to work with you during this time. Be open and honest, and let them know your situation. You’ll never know if you don’t ask! Since you already have them on the line, go ahead and downgrade or pause your service for now too if you can. TV services and internet don't fall into the Four Walls, remember?
Your close friends probably know about your income situation so they shouldn't pressure you to go hit the town. That’s good news for your budget.
We know making sacrifices like this can feel like adding insult to injury when you’re already hurting. But keep reminding yourself: This is not forever. You're going to make it through this! You’re making temporary sacrifices to tread water until this storm passes and you’re back on your feet again.
7. Connect with your church or local community groups.
Let’s be clear here: Try to do everything in your power first before you seek help like this. Make sure you cut back where you can and take any temporary jobs to work hard and get back up on your own two feet.
But, in times of real need, don’t be too prideful to ask for a helping hand. Many churches and community groups in your area exist for situations like this. They want to help you! If going to a food bank means your family is fed, then do it.
Don’t Lose Your Hope
This time might be a difficult one at the moment, don't lose hope, hang in there, this too will pass! If you're losing an income and don't have an emergency fund in place we're not here to make you feel bad, once the storm has passed and income starts to return to normal you need to make getting out of debt and building a storm fund (emergency fund) a priority.
If you need guidance we're here for you, everything from a quick 15 min question to a 1:1 coaching. You got this!