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Dealing With Lost or Reduced Income

By Michael Haltman

In the current economic environment, with the quoted unemployment rate above 10% and the real unemployment rate closer to 18%, more and more people have either lost their total household income, their spouse’s income or had their income cut down due to reduced hours.

At the same time that income is dropping, expenses either stay the same, or may even increase due to things such as a child heading off to college, unforeseen medical expenses or the need to help a parent as they age.

On top of that, as it gets more difficult to make ends meet, a late payment on a credit card can cause the interest rate that you pay on your outstanding balances to double or even triple.

They say that when life hands you lemons, you make lemonade, but when the postman delivers more bad news in the form of bills, catchy phrases are of little help.

How Do I Make Ends Meet?

Being short money is the bad news. But there are ways to deal with it that can help to stabilize the ship, and provide some breathing room to think of ways to handle the problems going forward. That said, what are some of the best ways to go about raising cash?

Rainy Day Fund

Naturally, if you had money stashed to use if a crisis ever occurred, then that would be the first place that you would look, although some people will hesitate to do it.

It reminds me of the story of a man that went to his psychiatrist, and told him that he had lost his job and that bills were piling up. The psychiatrist asked him if he had put any money away, and he said that he did, but that it was for a rainy day. To which the psychiatrist said, it’s raining now, go use it. If money is there and you need it, use it.

Ebay, Craigslist, Tag Sale

Nobody wants to sell prized or valuable possessions if they don’t have to, but looking around the house there may be items that could fetch good dollars in an online auction house such as Ebay, or the online classifieds such as Craigslist. If you have the ability and merchandise to run a tag sale yourself, that can be a good method as well.

Savings Bonds

I recently went to the vault where I store valuable papers, and found a stack of savings bonds from long ago that I forgot were there, and that had stopped earning interest long ago. Many of us through the years have been given these as gifts, put them away and forgotten about them. Look, and you may find.

Take Part-Time Jobs

It’s going to hurt, but delivering pizzas at night or serving tables is a great way to quickly make extra cash. No one wants you to be working 2 or 3 jobs long term doing menial work, but it might be necessary while you are looking for a new career or getting your income back up at a commission based job.

Gold, Diamonds and Precious Stones

As kind of a last resort, with the run-up in precious metals and other commodities, there may be quite a bit of untapped money either sitting on a shelf in the closet, or possibly in a bank vault. While you would probably not want to part with your wedding ring (although some might), you remember the jewelry that your Aunt Bertha gave to you that you would never think about wearing. Or perhaps some other item that you don’t like or use that you feel may have value. Make sure to get the item appraised or bring it to several dealers to get a better idea of what it is worth.

These are only some of the methods that are available. Do you have any other good ideas for replacing lost income?

Michael Haltman
Former fixed income analyst/trader and institutional salesman for some of the largest firms on Wall Street, some of which no longer exist. Was a proprietary equity trader for Opus Trading for fifteen years until opening my own commercial lending firm, and mortgage title insurance firm. Contribute articles to many publications including Money Crashers, and have had articles picked up by The Wall Street Journal, Chicago Sun-Times and Houston Chronicle to name a few. Also created and write The Political Commentator which examines the world from the right.

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  • Karmella

    I would go to selling gold/jewelry/expensive possessions as more of a last resort, just because of the low returns you get.

    If you have a skill, or even unskilled labor, you might be able to barter for something else that you do need.

    A lot of tips that I’ve run across really center around the concept of more of a community driven approach – bartering, sharing with neighbors, that type of thing.

  • jeccica simpson

    Well this post hit home for me. My husband has been in construction for 20 years, I havent had to wrk, his was bringing in a six figure income for the last 7 years. We have 3 kids,I am a stay home mom, he was laid off back in May 2009, as of today still unemployed in CA. We had to foreclose on our home, living off unemployment sucks, I have had to go on state benefits, we recycle now anything tokeep us a float! So its difficult. We are relocating to Las Vegas, where the cost of living is cheaper, I am going back to my old job thier to help us survive, We have been directly affected! But thanks to our family and friends support, as long as we got that, everything will be ok, and hopefully we will get back to where we were for us our kids sake!!!

  • http://www.ncyathletics.org Nicole Reilly

    We’ve been through our fair share of hardship and lost income. I cannot say enough about taking part time jobs, even mystery shopping and learning how to make extra income on-line. I have done all of that this past year and have found ways to save money, get free products, win giveaways anything and everything that could help. We even had a wonderful Christmas through all of the efforts I put in saving money and earning money any way I could. It was an accomplishment in itself being able to give my girls a wonderful Christmas!

  • JuliaA

    since becoming disabled i’ve had to completely reevaluate how i deal with finances.

    bartering helps.

  • http://www.insweb.com Robert

    I’d definitely rather do with reduced income than none. I think the best way to deal with it is to not give up. Find other ways to make money, like working online, having a yard sale, etc. Also, cutting back is great too, and not that difficult. I used to buy energy drinks until I realized that they’re really just vitamin b with caffeine, so I saved money by getting the vitamin b directly! Simple and effective.

  • http://life-with-less.blogspot.com Julie

    We’ve been working on limited income off and on for over two years now so I can totally relate to this post. Another suggestion is to see what you can do around your house to cut expenses. Small things like unplugging appliances, shutting vents in unused rooms, making food from scratch, clipping coupons, etc can help stretch the little money coming in a little further.

  • Laure

    I really appreciate your recognition that the official “11%” unemployment statistice that is constantly cited is not the true unemployment rate, and that it is actually much, much higher.

    Also, for the above poster who commented on selling gold… I’d recommend doing thorough research before selling any, but that the prices can be decent. I sold some – including single earrings that had lost their match, and so had no value to me; a thin chain bracelet that had been repaired many times and had worn through; and a pair of heftier gold earrings that simply were so out of style I had no interest in wearing them again. Since it all had no value to me in its current state, it was truly “found” $.

    I researched and found VAST differences in how much different places would pay. I looked over about a month and found a place that would work with individuals and consistently paid the highest. Based on the $/ounce paid, I wish I had sent in my high school ring (still wear my college ring). Think my h.s. ring would have fetched $30-$50 at the going rate, and I know the retail price (in the early 90s) was about $250. I thought that was fabulous.

  • DG

    ebay selling is so helpful. sold a few schoolbooks that I had no need for so it was nice getting a little cash back. as for gold, I would sell it because I’m not big on gold but my other jewelry I would not hawk it.

  • http://www.artificialrobot.com Sean

    Great summary of ideas and really great stuff in the comments too. The bartering stuff made me think of something I’ve been hearing on a lot of podcasts and reading about in articles in the last year. The concept is called a time bank. Basically, you build up credits for doing something that you have a skill in and you can spend your credits on someone else’s time. This way if you are good at computer work you can get 3 credit hours helping someone clean viruses off their computer and then you can cash in those hours for a handyman to help you around the house. I think the concept is really great, and you can probably find one in your area. Just google around, the first site that came up for me was http://www.timebanks.org/ but do your own research and see what you can find.

    I’d also say, not to discount Amazon for selling old books and video games. The level of effort is pretty low and if you add up the paypal and ebay fees you pay about the same, but you get to set your own price on Amazon. Good luck out there everyone.

    • Karmella

      That’s really interesting, the time bank. I’m curious to see what’s in my area- I might be able to use that! That’s especially good for bigger cities, I would think, but really for small ones too.

  • http://zegiquiltbug.blogspot.com zegi

    My husband and I have had to deal both with job loss and lowered wages in the past few years. And you didn’t mention what I think is most obvious: stop spending as much. Take the fancy features off your land line, drop your cell phone, stop eating out or buying yourself little perks like books and CDs. In other words, it is the time to use a budget wisely *and* try to find a new income stream.

  • http://madsaver.com Mac

    Fortunately, I haven’t had to deal with a job loss as of yet. Though we’ve had a wage freeze for the past 2 years, so times are still tough. My wife also does not work, so I couldn’t imagine what would happen if I did lose my job! I’m trying to build up a rainy day fund, but there’s not a lot of extra money to do so…but we’re going the ebay route with a bunch of old stuff too, anything like that will help!

  • Elizabeth I

    People forget but there is always donating plasma. It may not be for everyone, but I think it is around $25 for your first donation for the week and $30 for your second donation. You can only donate twice per week.

    People have to be realistic. Some job aren’t coming back. Some jobs in some locations are not coming back. Some fields are not coming back. Some jobs will always be around. Having a less prestigious job, but having a steady paycheck may be much better in the long run.

    • Karmella

      I feel so weak after donating blood, does plasma feel the same and take the same amount of time? I kind of thought that was an urban legend!

      • Elizabeth I

        I have not done it. I am sure if you google it or call a location, you can find out more.

  • Audra

    Something I’ve personally tried to do to replace lost income (since my business is really slow due to the economy), is look for ways to cut back on my monthly bills. We cut off our home phone. We never used it much anyway. The only calls we received were from telemarketers. We use our cell phones instead. That choice may not be for everyone. I did have some hesitation about the 911 issue. Do your own research of course, but from what I understand, 911 works from a cell phone. I believe the difference is you have to tell them where you are (instead of them being able to automatically tell from the phone number.) Another thing I started doing a few months ago was using coupons. It’s been shocking to see just how a stack of coupons can really add up at the register. We also have started eating more at home instead of going out to restaurants. That one has been hard, but it’s worth it!

  • http://blog.taxresource.ca Tax Guy

    I agree with Audra, the phone is a start but what about Cable TV? We realized we only used a few of the channels we were subscribed to.

  • Elizabeth I

    Take advantage of government programs if you can/or need to. The income limit for pregnant women to take advantage of Medicaid is really high, I think it is around $60,000 for a family of four in Connecticut. Other states will vary. If your insurance does not cover 100% hospitalization and you can apply for Medicaid (you are under the income limit), do so, you never know what will happen. My uncomplicated delivery was supposed to cost $600. It turned into an emergency c-section with a $15,000 hospital bill. Our co-payment was $3000.

    I learned from this to get insurance with 100% hospitalization. Baby #2 was in the neonatal intensive care unit for 26 days….price tag, $150K. Our cost $100 co-payment.

  • Elizabeth I

    Many local farms will trade produce for work hours. If 4 hours a shift gives you a box of vegetable, then you are reducing your grocery bill.

  • http://www.greenandchic.com/blog Carla

    For me, tracking literally every penny is what helped me. I lost a certain percentage of my income due to going on disability (I couldn’t work at my day-job so delivering pizzas was not an option :) ) Negotiating certain expenses like monthly medical bills and cell phone plans make a huge difference. I also sold certain items that I want using to pad my pocket a bit. I really didn’t do anything new, just found what worked for me in my situation.

  • LilKim

    We cut out the cable tv for a while – and just use services like hulu to find the new episodes – SO MANY stations are rebroadcasting some of the most popular shows right from their webpages, that paying for tv isn’t really necessary for us :)

  • http://madsaver.com Mac

    The first thing to do is cut all non-essentials. Drop cable/landline/netflix/tivo/lawn services, etc. If you can do it yourself, do it. Stop wasting money on habits as well…cut out drinking and smoking. All that will save a lot of money immediately. Of course, these can be added back when the money is available again, but you may find that you don’t need them anyway.

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