Monthly Expenses and Budgets
Welcome back! The last time we met we discussed various ways of generating immediate income while experiencing layoffs. Continue reading part two to collect even more positive and doable suggestions. There are three different expense categories that most monthly bills fall into: fixed, variable and periodic. To re-think your “new, leaner budget” you may need to temporarily adjust spending habits as well.
- Fixed expenses occur on the same date; same amount, and rarely offer surprises. Examples include rent, mortgage, car payments, and secured loans. These legal obligations should be addressed immediately and are considered a top priority.
- Periodic expenses are expected but usually have an irregular payment schedule; quarterly, semi-annually, and annually. Plan for hardship “surprises” by including extra money within monthly expenses, ensuring they won’t be overlooked. Examples of periodic expenses include insurance premiums, school taxes, automobile maintenance costs, and membership fees.
- Variable expenses are “discretionary” varying from day to day and month to month. Unlike both fixed and periodic expenses, we absolutely DO have control over our spending habits. And, if creating more cash flow is the goal, this category is a great place to start. Examples of variable expenses include food, clothing, and entertainment. Cut back as much as possible while job searching. You can always re-establish most if not all these expenses once employed.
Track (each individual) expense from your current spending habits continuously for one month straight. That is, 24-hours a day, Monday through Sunday without fail. Include all cash, check, credit card and automatic debit transactions. You may be shocked by what you find!
One of the worst mistakes job seekers make is closing lines of communications with creditors by refusing to reach out to them after a layoff. Be proactive and consider contacting creditors. Though fixed and periodic expenses are considered mandatory expenses, their exact terms may be negotiated during a layoff. If up to that point your credit has been arguably pristine, the potential to temporarily lower payments or readjust due dates is always possible. However, creditors need to know what you are going through and how you plan to keep your credibility in good standing. This is when your adjusted budget becomes an invaluable tool. Once created you will see exactly which bills are first and which may require possible negotiations with creditors.
Let’s say you owe $3000.00 on a credit card. Until now you have faithfully paid your monthly bill on time and well over the minimum amount due. To keep your credit in good standing, try to maintain at least the minimum amount due. If you find this impossible, contact the creditor with an “honest” explanation. Document the representative’s name, title, date, time frame, address or email and a brief, but detailed summary of the conversation. State that you will also follow up with a “letter of documentation” to confirm all verbal agreements just made by both of you via phone. Mail and/or email it the same day. Keep a copy. Honor your commitment. Now it’s about your integrity.
The same suggestion may apply to automatic bank drafts for mortgages, insurance, and car payments. These organizations don’t necessarily want your car back, or your home for that matter. However, they do respect “honesty” and specific plans of action during this difficult time.
Unfortunately, layoffs are an inconvenient part of life. How you manage finances now will determine and be a part of your credit history later. Use this time to access immediate financial needs and locate funds that may get you through this stressful moment in time. Proactive thinking is key to remaining calm and eliminating anxiety while pursuing your next opportunity.
Wishing you the very best in achieving both financial and employment goals, going forward!
Frieda Carmouche is a member of the Regional Facilitator team specializing in training, educating and assisting students, job seekers, employers and career center staff throughout the Gulf Coast region, regardless of abilities. She obtained her BFA in Graphic Communications and minored in Psychology from The University of Houston. Frieda, a native Houstonian with a love of training and development, and has been employed by Workforce Solutions for over 10 years.