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Episode 232 - Essential Steps to Prepare for Sudden Unemployment

What would you do if your boss called you into their office today and let you go without any notice? That just happened to several of my friends recently and we discussed kind of obviously the panic that sets in, but we put together three steps and some tips that you can do now to prepare for an emergency or unexpected job loss.  

 

Building Emergency Savings: 

Discuss the first crucial step of having savings for emergencies, with advice on how much to aim for and the importance of building a financial safety net. 

Analyzing Spending Habits 

Dive into the second step of assessing where your money is going by examining bank statements, credit card usage, and identifying areas where spending can be cut back.   

Managing Credit Card Usage 

Explore the third step of evaluating credit card usage compared to income, emphasizing the need to avoid spending more than what is earned and tips on curbing impulse purchases. 

Differentiating Wants vs. Needs: 

Touch on the importance of distinguishing between wants and needs, sharing personal experiences and practical tips to avoid unnecessary spending. 

Shopping Smart: 

Discuss the significance of smart shopping decisions, such as comparing prices, unsubscribing from tempting emails, and making conscious choices when purchasing items like on Amazon. 

Resources Mentioned

Get better results with your finances in 30-60 days - GUARANTEED. Watch this video to learn how! - https://www.debtfreedad.com/payoff-debt-in-60-to-90-days 

Free Tools and Downloads at www.debtfreedad.com

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Episode Transcript: 

Kati:  

What would you do if your boss called you into their office today and let you go with no notice? That just happened to several of my friends recently and we discussed, kind of obviously, the panic that sets in. But we put together three crucial steps that you want to do now to prepare for an emergency like that and some helpful hints if that would happen to you. Hi everyone, this is the Debt-Free Dad podcast, where we help you take control of your finances so you can live a happier, less stressful life. My name is Kati Hatfield and I will be your host for today's episode.

Kati:  

So a couple of weeks ago, several of my coworker friends at work were let go very suddenly, and one of them reached out to me because she knew that I've paid off a lot of debt and kind of had this budgeting thing pretty well down, and so she's like can you help me, can you walk me through like what are some things I can do right now that I can, you know, not be in a complete panic mode? So first of all, we talked about, of course, savings. Do you have savings? And she did have a savings account. We here at the Debt Free Dad usually suggest having at least a thousand dollars. But in this kind of situation you want to build up to having one to three months of income in savings and kind of once you get in a good place, especially if you are out of debt, trying to get more of like a six month income in amount in your savings account. So that will kind of vary depending on everyone's situation.

Kati:  

The second thing we talked about is where is your money going that you're spending right now? So the tasks that we always say and it's usually a little bit of you know work up front - is printing off your bank statements, your credit card statements. Where does your money go? Do you use PayPal? Do you use Venmo to send money to other people? Do you have your receipts, your cash receipts that you spend your money on throughout the week, whether it's eating out, the gas station, anything like that, your utility bills and all of those things. So definitely getting the last three to six months and just kind of see, okay, where is my money going, and kind of put together an idea of a budget and what you might want to try and cut out. So a third step that I wanted her to look over was how much are you actually spending on credit cards every month and how does that compare overall your bills, your bank statements and your credit cards? How does that compare to the money that you are actually bringing in as far as income goes? That was my issue when I was getting into debt. So that habit has to be nixed right away. You have to cut that out immediately and, if at all possible, just stop using credit cards period, like just you have to cut that out.

Kati:  

Cold turkey she was actually pretty good. She didn't have that much on a credit card. She had a trip that she has planned that's non-refundable and she was going to a family wedding. So we were looking at different things that she could cut out that weren't necessarily, you know, kind of a big once in a lifetime thing like that. We have to look at subscriptions, like your cable bill, your Internet, your cell phone, your insurance, all the different things that you could actually call and ask about negotiating a new rate, any discounts that they might offer, working with an independent insurance broker to make sure you're getting the best deal, the most benefits for the least amount of money.

Kati:  

So we were looking at spending and we kind of discussed what is a want versus a need, and this was my habit all the time before the debt-free dad was emotional impulse spending wandering the aisles of Target every other day, if not every day, and just you know, things fall into your cart and you just are spending a little bit here and there and it all adds up very, very quickly, I believe. How do you waste ten thousand dollars in a year? Just spend twenty seven dollars and ten cents a day? It's, it's really. It doesn't seem like a lot, but it all adds up in the long run. Wait 24 hours before making a purchase, just if it's in your cart online, just don't hit submit, don't hit place order, go and like shut your laptop, put your phone down and walk away and then the next day, if you're still like this burning desire, even then, still evaluate do I really need this or do I just want it? Another helpful hint is unsubscribing from all of those emails. Do you notice like how many emails and text messages with oh we have this on sale today, oh, we have this deal going on, you really wanted to buy these socks, and? And you get those messages literally every day or every other day, at least once a week. Start going through your inbox and hitting unsubscribe and deleting those emails.

Kati:  

Another pro tip is remove your payment information if you have it saved or you have that card memorized, which I know some people do. I used to have my card memorized and so I didn't have to have it saved online. If you call your bank and say, hey, just, I want to replace my credit card or my debit card, get their new card that has a different number and don't save it anywhere. Don't let Google remember it, don't let your online browsers remember it. Just get away from that habit and you will be amazed at how annoying it is just to get up and cross the room to find your wallet or your purse and try and find that card with the little three digit code on the back. If I'm like, oh, I have to go get my credit card information, it's not even worth getting up off the couch. So those are some tips.

Kati:  

One of the things that my friend was looking at like where was a lot of her money going, was Amazon. She shopped on Amazon a bit and looking through it, she's like well, these are all things that we need and use, like toiletries and personal items, and she talked about a certain kind of water that they would ship, or it was for electrolytes and healthy something or other. So I said, well, is that a need, a want? And it was helping them drink more water. But I also asked is Amazon the best price? Have you shopped around or was it just the most convenient to get it on Amazon? So she was going to shop around and see if she could find it either at her local grocery store or a local store for cheaper and things like that.

Kati:  

So again, the three steps are going to be do you have a savings account and how much is in there? How long will that cover you if you are not bringing an income? Two is where is your money going? And looking through your spending, your bank statements and credit cards and all of that. And three, do you spend more using your credit cards or you know spending more than you're bringing in? Now that has to stop and try to stop using your credit cards if at all possible. Take those points to heart and maybe start creating a plan. If you have been listening to the podcast or following Debt Free Dad on Facebook or on the website, maybe just putting it into action when you haven't so far. We also have our Life Without Payments free workshop coming up and you can jump in and get some more tips and get started on planning your finances and getting out from under debt and a lot less stress in your life. So until next time, take care.

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