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How We’re Handling A Sudden Loss Of Income

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In the United States many individuals are currently out of work because the government considers their job or business non-essential, or impossible to carry out while maintaining social distancing. 

My husband works for a local university and has been home working for weeks now.  I honestly didn’t look ahead enough to see how much universities would be impacted, but that became very obvious to me when my husband's employer sent an email that he would have to take 39 furlough days over the next year.  Essentially, he is losing two months’ income over the next year. 

While I’m still very thankful that he has a job, we had to do some scrambling to make our budget work.  Here’s how we’re handling a sudden loss of income.

dealer with a sudden loss of income

How We’re Handling A Sudden Loss Of Income

We're using a number of strategies to handle our income loss.

Refinance The House

We bought our house 5.5 years ago, and when the mortgage interest rates dropped last month, we contacted our mortgage broker and started the refinance process.  Our refinance will be complete this month and will save us $250 a month on our mortgage.  That will be a relief during the next year when our income takes a hit.

Cut Expenses

The next thing we did was carefully go through our budget to cut any unnecessary expenses.  Our budget was already pretty lean, but we told the kids that over the next year, there would be no unnecessary expenses.  No going out to eat (something we did rarely anyway), no extra expenses for school.  We’re on a beans and rice budget for now.

Save The Money From Temporary Relief Bills

We are blessed that the federal government has instituted a number of measures to protect people during this time.  We put our stimulus check in our long-term emergency fund. 

Also, while my student loans have been paid off for years, we’re still paying on my husband’s student loans.  Rather than continuing to make those payments during the six-month suspension that the president implemented, we’re taking the money that would normally go for payments and also funneling that money into our long-term emergency fund.

Paying The Minimum On All Other Expenses

A few years ago, one of our children had a sudden medical crisis. Unfortunately, some of the bills were not paid by insurance.  We also discovered mold in our house and had to have that remediated.  We still have credit card debt from that time, but we’ve been slowly whittling away at it. However, currently, we have reduced our credit card to the minimum payment due rather than paying extra on it as we had been doing. 

We are funneling all of the extra money into our emergency fund.

Continuing To Grow Our Emergency Fund Is Priority

Prior to this global health and economic crisis, we had been in debt pay down mode, eager to pay off our credit card and remaining student loans.  We had a small, one-month-of-expenses emergency fund.

However, my husband and I are both concerned that in another year, we may not be looking at a two-month loss of income but no income at all.  To that end, we’re saving as much as we can. Hopefully we can grow our emergency fund to at least three months by next year, ideally six months.

A Sudden Loss Of Income Can Be Tough

No matter your position, this pandemic is likely to affect your finances in some way, as it has ours.  We’re on emergency fund building mode.  I wish we were in a better financial position when this crisis hit. However, there’s nothing we can do about that now. 

Instead, we’re working on shoring up our financial position so that we’re better prepared next year if the worst happens and my husband loses his job.

How has this current crisis affected you and your finances?

Looking For A Job? Don’t Forget The Tax Deductions!

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In this tough economy, a lot of people are looking for jobs, or for one reason or another have just quit their job. If you've spent some time and effort — and money — on your job search this year, you might be eligible for a few tax breaks.

Indeed, many of the expenses that you are likely to incur during a job search are tax-deductible.

Job Search Tax Deduction

Can You Deduct That Job Search Expense?

Before you get excited, though, you need to be aware of the caveats. First of all, you can't deduct job search expenses if you have had a long break since your last job. So, if you were laid off, and then unemployed until your benefits ran out, you aren't going to be able to take the tax breaks. You need to be actively looking for a job within a short period of time after leaving your last job if you want the tax deductions.

Also, you can't deduct expenses if you are looking for your first job, or if you are changing careers. You have to be searching for a job in the same field, and you can't be fresh out of college.

If you meet the qualifications, you can start adding up the expenses related to your job search. Some of the qualifying expenses include:

  • Travel: If you fly or drive to another city to look for a job, you can count those expenses. Travel expenses include flight, mileage, hotel costs, and even a portion of networking meal costs. However, if you take a day trip somewhere fun, those expenses aren't deductible. Make sure that you only deduct the travel expenses directly related to your job search and the interviews you participate in.
  • Fees paid to employment agencies: If you pay a head hunter, career coach or employment agency a fee to help you find a job, you can deduct those costs. However, you do need to be careful. If your employer reimburses you for your employment agency expenses, you can't take the deduction. If you take a deduction in one tax year, and your employer reimburses you in another tax year, you are supposed to report the reimbursement, up to the amount you deducted, as part of gross income.
  • Resume services: If you pay fees to have a professional help you with your resume, that is tax deductible.
  • Printing and mailing costs: Costs associated with printing your resume and mailing it out, or mailing other application materials (such as cover letters and letters of recommendation), can be deducted when you prepare your tax return.
  • Calls: If you make phone calls to potential employers, and you incur costs to call them, you can deduct those expenses.
Remember, though, to keep good records. Make sure you save receipts, and make notes of the job search activities you engaged in. You will need to keep copies of your records with your tax return so that they are handy if the IRS decides to audit you. It can help to talk to a tax professional or an accountant before you deduct your job search expenses. You want to make sure you are on the right track, and deducting appropriate expenses.

What To Do If You’re Underemployed

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One of the realities afflicting many in the current job market is the fact that underemployment is a big issue.

While it's true that unemployment is still something that weighs on many, there are also plenty of workers who are underemployed. The underemployed are usually over-qualified for their jobs, since they can't find work in their chosen fields, at pay rates that reflect their skills and expertise.

My husband is currently underemployed. He's an adjunct professor, but he should have a full-time job. In fact, he does the work of a full-time instructor, but is only paid about 1/3 of what a beginning professor should make. He helps students with their projects and he spends more time with them than many full-time professors. He also teaches between nine and 12 credits a semester.

Others are underemployed as well. There are those with advanced degrees working in coffee shops, and people with years of experience in their fields doing seasonal retail work.

So, if you are underemployed, what can you do?

Start a Side Hustle

One of the best things you can do is start a side hustle.

If you are mostly worried about the money, a side hustle can help you earn a little bit more so that you have what you need to move forward with your finances.

Depending on the way you are underemployed, this can be a great way to fill your time as well. In many cases, if you're underemployed, you probably aren't working 40 hours a week. You can use some of that downtime to start a side hustle.

Keep a Hand in with an Internship or Volunteer Work

If you are concerned about the impact your underemployment is going to have on your resume, consider doing an internship or volunteer work. No, you aren't going to get paid for this work, but you do have something for your resume. This something shows that you have been making efforts to remain marketable, and that you are still active in worthwhile endeavors. Having a little extra something to show on your resume can be a great way to remain an attractive candidate.

My husband volunteers his time helping students prepare papers for presentation at conferences and for publication. As a result, he is listed as an author, and it helps his vitae. It also shows that he is still active in his field, which is important when looking for a job in academia.

Continue Applying for Other Jobs

Don't give up on applying for jobs if you are underemployed. You need to stay on top of the situation as much as possible.

Keep networking and keep putting in applications for jobs that you are interested in. My husband has been reluctant to apply for many jobs, since he likes where we live now, and he keeps hoping that the university will hire him on as more than an adjunct. However, he's starting to see that might not happen, and he's started updating his info and leveraging contacts for the application process.

It's not fun to be underemployed, but if you want to chance the circumstances, you need to keep working hard, and looking for networking opportunities that can lead to a new job.

What Do You Think About Telecommuting?

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Recently, Marissa Mayer, Yahoo's CEO, instituted a new plan to bring telecommuters back into the office. Following suit, Best Buy just announced that it, too, will rein in telecommuting.

In recent years, technology has given rise to more flexibility in the workplace. The ability to work from home — at least some of the time — has led to something of a revolution. More companies offer the telecommuting option, and the flexible hours option, as perks to workers who want to be able to plan their lives around what works for them.

However, this move for Yahoo seems to be paving the way for a bit of a throwback. Job seekers might find that companies aren't as willing to accommodate them, especially if this move manages to re-energize Yahoo and help the company.

How Much Abuse Goes On With Telecommuting?

What Do You Think About Telecommuting?The big question that many are asking is whether or not there has been abuse with telecommuting. While there are some studies that indicate telecommuting can increase productivity, the fact remains that some workers are going to abuse the privilege.

For some, working from home is an ideal solution. I like working from home, and I have found that I am much more productive here at home than I ever was in an office. But there are some differences. For one, I am self-employed now, so it's up to me to make sure that I get my “paycheck.” In the office, I was working for someone else, and sometimes just did the minimum required for my minimal pay.

How much abuse actually goes on with telecommuting is hard to measure since there isn't someone there to see what is happening. Yahoo claims that there was some abuse happening with the policy, and some Yahoo employees seem to back up that view. Bringing more employees back into the office, under the eye of managers, seems like a solution in cases of abuse.

Does It Matter If You Get Your Work Done?

In my case, it doesn't really matter when I do my work, as long as I get it done (by the deadline). With many companies, the situation is similar. As long as telecommuters are getting their work done on time, does it really matter if they spend half the day in their pajamas, surfing the web? Does it matter that they are working on side businesses at home?

Where you fall on this subject might depend on what you think about how workers are paid. Those who are paid a salary, and expected to just fulfill project requirements, might get away with a little more. But what about hourly telecommuters who charge for their time — although they might be doing something else with it?

It's a sticky situation that can't really be resolved without adding software to personal computers that some might think an invasion of privacy. But what you do on company time still matters, even if you aren't on company property.

Personally, I think telecommuting can be a great thing. Providing a flexible schedule where workers can telecommute one to three days a week could allow workers to still come into the office for “team building” while still having the ability to work from home as needed.

What do you think? Is telecommuting a good idea?

Do You Have To Quit Your Job To Be Financially Successful?

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One of the themes that seems to circulate is that in order to find true financial success, you have to start your own business with the idea of eventually quitting your day job.

While many of us like the idea of working from home (often in our pajamas), a home business isn't for everyone. Indeed, there are plenty of people who are just fine working for “the man” — and that's ok.

Do You Really Want to Quit Your Job?

Do You Have To Quit Your Job To Get Ahead?My husband teaches a couple of online courses for a local university each semester. The reality is that, if he wanted to, he could teach all online courses. He could work from home, and make decent money doing it. However, while he enjoys teaching the online classes, he doesn't actually want to work from home. My husband enjoys interacting with others, and he likes going in to work. He wouldn't be happy going in from 9-5, but he likes his four-day workweek, and the flexibility in his schedule.

I also know others who like more traditional work hours. They like going in for eight hours a day, and clocking out at night. They like that they can forget about their jobs while they are at home, and they don't have to worry about whether or not they have enough freelance clients to cover all the bills each month. Other perks that people like from their jobs include health benefits, paid time off, bonuses, and other advantages, like on-site fitness and daycare.

There's nothing wrong with enjoying your job, and there's nothing wrong with climbing the career ladder for 20 to 30 years until you retire. As long as you live within your means, and contribute to your retirement accounts, you can become financially successful, and still live the lifestyle you want. There's no rule that says you have to work toward quitting your job in favor of a home business.

What about a Side Hustle?

If you like your job, but want extra money, though, there are options. You can start a side hustle and earn money on the side. Plenty of people start side hustles as a way to fund vacations and other fun activities, as well as a way to pay down debt faster, or build up retirement savings. But starting a side hustle doesn't mean that you have to let it take over your life, or replace your day job.

Indeed, for some, the idea of turning a side hustle into a full-fledged business is repellant. After all, it's one thing to make a little money off a hobby you enjoy, doing it when you want, and taking the extra cash as it comes. It's quite another thing to be required to make money from your hobby. For some, turning a side hustle into a business means the death of a fun hobby. Is it really fun anymore when you have to force yourself to do it, and when it has to be profitable?

For many, a home business is a great thing. I love working from home, and I love the control and flexibility it usually gives me. But not everyone likes to work from home, and not everyone is happy running a business. Figure out what works for you, and work toward your financial success in a way that makes you happy.

Boost Your Job Prospects For The New Year

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A new year is coming, and with it a certain amount of hope. Many of us look forward to a new year as a fresh beginning. A way to make a new start that results in a better situation in life and in finances. One way that you can improve your quality of life, as well as your finances, is to work to improve your job prospects for the new year.

According Money magazine, 2013 will offer the best chance for you to get a new job — or a raise — since 2007. That means that next year could be a good one for you, as long as you are poised to take advantage of the potential opportunities provided for the climate.

Brush Up on Your Skills

Look at your skills. What do you have to offer an employer? Do you have marketable skills that others value? Evaluate your current skills, and see where you can brush up. Is there a certification that you can achieve in order to make yourself more desirable? Could you finish a degree that would qualify you for a new job, promotion, or raise?

It's not just about developing hard skills that are easily recognized, either. You should also make an effort to develop your soft skills. More and more, employers value someone who can communicate well in writing and in speech. Additionally, good leadership qualities and problem solving skills can go a long way. If it is clear that you are adding something to the company, you are more likely to be valued. Or hired on at a new company that values what you can bring to the table.

Find ways to build upon what you already know, and show that you are capable and that you add value. Brush up on all your skills so that you are ready to take things to the next level. Often, that's all it takes to get a better job that you like more than your current position, or land the raise you have been looking for.

Prepare Your Job Hunt Materials

Don't go into the new year unprepared. Now is a good time to prepare your job hunt materials. Even if you want to try for a promotion or a raise at your current work, it doesn't hurt to update your resume, cover letter, and network contacts. If you don't get what you had hoped for from your current employer, being ready for the job hunt can go a long way toward helping you land a new position in 2013.

If you are refreshing your networking contacts, make sure that you reach out now, and re-establish those old ties before you decide to look for work. You want to have a solid relationship in place before you start calling for help. And remember to return the favor if you can. Get everything up to date, and maybe even think about creating an online resume that's easy for others to find. Don't forget to clean up your social media profiles and make an effort to appear attractive to employers through the Internet. More and more, that matters.

This could be the year that you turn your career around. Prepare now to make those changes in 2013.