The unemployment diet: How we cut our spending by $1, 000 a month

The unemployment diet

This post is by Deborah Dunham and comes from our partner site LearnVest,  a site that helps people take control of their finances.

One Tuesday morning last November my husband called from work and told me to sit down—and not get mad. Whenever a phone call starts that way, you just know it’s not going to end well.

“(Insert jerk-of-a-boss’s name here) just called and said they were laying me off, ” he said grimly. It was two weeks before Thanksgiving.

“What?!” I yelled. Oh, right: Don’t get mad.

Fired, ” he clarified. Something about his employer’s (an insurance company) bottom line, in the red, downsizing, bad economy. But I wasn’t really listening anymore.

In a matter of minutes, I went from shocked to angry to petrified. How could they do this to him? To us? With no warning? He had been a good, loyal employee there for eight years, and in five minutes, he was gone.

They can’t do that, I thought. Can they? We should demand an explanation. We should get more of a severance payout (because conveniently for them, this was three weeks before end-of-the-year bonuses were due). We should sue. We should … Ah, hell, what’s the point, I finally rationalized. What’s done is done.

Now I had to figure out where we could go from there.

Re-evaluating Our Wants vs. Needs

I moved into “fix it” mode, which is something I’m really good at. “Well, we’re just going to have to cut back on a lot of things, ” I said, already making a mental list (starting with that Caribbean cruise over Christmas break. And that yoga retreat with the girls. And my Starbucks addiction).

By the time we hung up, we were part of the millions of other American families who were newly unemployed and in a personal financial crisis, brought on by the larger societal one at hand. It was a scary position that I didn’t dream would happen to us, and it certainly wasn’t something we were prepared for financially.

While we had been working on beefing up our emergency savings, we were less than halfway towards our goal of having enough to survive for eight months (ironically enough, in case something like a layoff ever happened). But with me being a freelance writer, I certainly did not make enough to solely support our family of four (have you ever seen the grocery bill for two teenage boys?). In fact, I only brought in about 25% of our total income, so you can probably see why panic was setting in.

One thing I had learned in my personal finance travels was the importance of addressing your “needs” versus your “wants.” And when it comes times to saving money, you must cut those “wants” from your budget without a backward glance. Only the line can, admittedly, get blurry and emotional: I clearly needed those adorable new yoga pants, my Kombucha fix and my HGTV.

But with 75% of our income gone, there was no time for whining—from me or the kids, who were told upfront and honestly about the situation (I don’t believe in hiding things from them). They quickly learned that they needed to scale back too—everything from taking shorter showers to save on water, to holding off on new clothes to using their own money if they wanted extras (like a trip to the drive-thru).

I pulled up our online bank account and analyzed every single dime we spent over the course of the last year. After feeling completely nauseated over some of our wasteful habits and the fact that we didn’t have more in savings, I started slashing. Away went every “want.” Everything I truly loved and enjoyed, it seemed. But what choice did we have?

How We Saved Over $1, 000 Each Month

Getting there wasn’t pretty, but in the end, we were able to reduce our expenses by over $1, 000 a month for the four months that my husband was out of work last year.

Here’s how we did it:

Eating Out. This, it turned out, was the biggest factor in our lack-of-savings woes. We went out for least one lunch and one dinner each week, along with another night of takeout, which added up to hundreds of dollars a month. I attempted to rationalize this at first (I work from home! I need to get out!). But once I was really honest with myself, I realized eating out was mainly due to laziness and my disinterest in cooking. Amount saved: $475

Movies. We love catching a good movie every weekend, but with soaring ticket costs and the ridiculous prices at the concession stand ($5.25 for a Coke, really?), renting a Netflix movie from the vending machine for $1 a week became the more economical way to go. Amount saved: $81

Coffee. So long Starbucks, hello coffee machine. I discovered Starbucks beans at the grocery store, so for $10 now I could get at least a week’s worth of coffee instead of my multiple tall non-fat mocha lattes each week. Yeah. Amazing, huh?Amount saved: $60

Books. Have you heard of this thing called the library? Where you can get books? For free? It’s a marvelous invention that I never made good use of before. So instead of spending $20 or $30 on a new book at the bookstore, I lowered my gotta-have-the-latest-release-right-now standards and started getting my nonfiction for free. Amount saved: $48

Cable. OK, this was a tough one because I am a closet HGTV fanatic. But cable is a “want.” And besides, I needed more time to read all those library books. Amount saved:$66

Groceries. Being on a limited budget forces you to become a savvy shopper. I started clipping coupons, snatching up two-for-ones, buying generics, making use of our freezer, ditching junk food and eating the bazillion boxes of pasta that had somehow appeared in our pantry. Feeding a family of four is expensive, but that didn’t mean we had to feast on prime rib or pricey pre-made crab cakes. And our wine selection could easily be whittled down to $8 bottles. Amount saved: $220

Insurance. I called our insurance company, requested higher deductibles and even inquired about “good driver discounts, ” since my slew of speeding tickets from my younger and irresponsible years had to be off my record by now. It worked—they knocked my payments down. Amount saved: $43

Phones. Two adults and two teenagers equals four cell phones. First, I cancelled our home phone line (because who needs a fifth line that was mostly for people asking for “Mrs. Durham, ” not Dunham). Then I called our cell phone provider and asked how we could lower the price of our family plan. They were more than happy to oblige once I threatened to switch carriers. Amount saved: $68

Yoga. This may have been the toughest of all. I love yoga. I adore it. I need it. Really. It helps keep me functioning like somewhat of a sane person. So, we compromised here. Instead of going to class three times a week, I started going twice. Amount saved: $20

Total monthly savings: $1, 081

And here I thought we were already fairly conservative with our spending. Clearly, I was clueless. But once the guilt over wasting so much money was gone, we learned to happily live on less.

Luckily for us, my husband found a new job four months later—but it came with a 20 percent salary cut. Nonetheless, he accepted immediately, as we were thrilled that he found employment at all. For the most part, continuing with our new-found savings tactics made it possible to accommodate his reduced salary.

In the end, we have learned to live on less, continue to build our savings and not take our incomes for granted.

Although I must confess: I still miss my HGTV fix.

13 Responses to “The unemployment diet: How we cut our spending by $1, 000 a month”

  1. Anonymous

    Fantastic ideas! Sometimes budget cuts necessitated by economic reality really open eyes. I’ve just blogged about the high cost of cable. I love the cable remote control and all the options it provides. But cutting back on cable — I don’t have 24 hour news channel access any more, but I also have read that many more books and gone on that many more bike rides with my kids now!

  2. Anonymous

    How about upping your share of the income and getting a real job! Freelance writing is a hobby, and the pressure you put on your husband to accept whatever job came up (at -20% of his former salary) is unfair. We are supposed to live in an equal society, so why not take some responsibility yourself?

  3. Anonymous

    I just cancelled my cable (and landline)to save money and it is an adjustment. Did you know you can watch episodes of HGTV online? I found a great website, that has all kinds of tips on accessing shows online.

  4. Anonymous

    I am now on an unemployment diet (I like that term) for the second time in four years. Both times, after adjusting to the lower income, I wondered “where was I spending all that money? And why?!”. It’s really amazing how easy it is to spend less money and not sacrifice too much. Now if I can just discipline myself to continue some of these practices after returning to work, I will be better prepared for any future setbacks or emergencies.

  5. Anonymous

    Great approach and good that you moved so quickly!
    I have actually done for ourselves an “emergency budget” – what we would cut in a similar situation. We already track what we spend through Mint, so it’s just a matter to thinking through some scenarios. It’s actually 50% of the regular one, some of it easy because we are saving and overpaying on mortgage. But I am also projecting some increases – right now company pays for my cell, and we don’t need to pay for insurance.
    I am the sole breadwinner in the family and if something happens to my job, having plans in place will help a bit with the shell shock.

  6. Anonymous

    Wow. I am sorry to hear that but you took the appropriate approach. When someone loses their job the wants and needs become extremely crucial and are more black and white. If my wife or I lost our job, I do not think we could come up to $1,000 in savings. We have already eliminated a lot of things on your list just to try and get out of debt quicker. Thank you for sharing your story. And keep up the great work with the savings, that is incredible.

  7. Anonymous

    I love your very honest account of how you did it and am amazed by the savings you made just by cutting out the small things like coffee and movies. When these are your regular treats you just don’t realise how much it adds up.

    I think what is key is you didn’t stop doing these, you just changed HOW you did them so that it didn’t feel like a huge sacrifice.

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