Sushi lunches to the tune of $40, eyelash extensions in the ballpark of $300, and Louis Vuitton handbags that cost more than the down payment on my car sound like purchases made by a financially stable individual with a nice emergency fund and extra money to burn. Instead, those purchases could be found on the credit card statement of my best friend who has been unemployed five months and counting.
If she were a stranger on the street I’d likely offer advice but take no direct stock in her decision to accept or reject it. However, knowing that I am one of her financial crutches increases my concern in watching her flush financial security down the porcelain pipes. She already has an estimated additional $300 in monthly costs for credit card and loan repayments that did not exist five months ago. This has put her in a situation where she must find a position that pays considerably more than her previous one to make the same ends meet. She will surely regret the unnecessary added expenses later, but the advice I’ve been asked for is taken less seriously than Jessica Simpson’s career as an actress (love the shoes though!).
On that note, let’s pretend you’re my friend and in need of some blunt advice to snap you back into financial reality and away from credit utilization Hades. Charging certain things on credit during hard times will offer no advantages and I’m here to tell you what those things are. My words may sting, but I only say them because I love you 🙂
Having drinks with your friends every night might help you unwind. However, the unnecessary debt acquired by charging those expenses to a credit card will result in compound interest and compound stress. It is easy to immerse yourself in things that bring temporary relief when the going gets tough while ignoring the long term consequences. Evaluate other forms of stress relief that are more cost effective. For the sake of your finances don’t attempt to drown your sorrows in things that will make you forget they exist. Instead, come up with a plan and face them head on before they become too much for you to handle.
Sushi and unemployment make awkward bedfellows. When you have no cash flow you must ditch the socially accepted idea that we are guaranteed a specific level of quality in life. Scale back on expensive items when there are cheaper alternatives available. Yes, you have to eat, but a loaf of bread and a jar of PB&J will last longer than a meal from a five-star restaurant. If you can’t afford a posh apartment by yourself and a fancy new ride, get some roommates and invest in a bus pass or cash car. Instead of charging high-end clothing to retail credit cards, consider thrift store apparel as a trendy yet affordable option. Don’t let your pride put you in the poor house. Instead, stick to what you can afford.
Who says you have to spend money to do something other than twiddle your thumbs? For the low low price of $free.99 you can do the following activities:
- Rent books, movies, and cd’s from your local library
- Watch your favorite movies on Hulu
- Take a walk in the park
- Volunteer for a good cause
- Check out free attractions in your city/state
Get the point? There are plenty of things to do with your time that don’t involve spending a dime. You may have to start slacking on your goal to be crowned Mr. or Ms. Social Butterfly 2009 but your credit cards will thank you for the reduced wear and tear.
It may be reasonable to splurge on service when you work 10 hour days and run around like a chicken with its head cut off. However, after a job loss you will likely re-coup some time you did not previously have. This is an opportunity to take full advantage of your skills and what you are capable of doing on your own. Wash your own car, cook your own meals, and clean your own house. Spare time will become your new money and like normal money, you should make it work for you. If there is a task you enjoy doing for yourself, and you have lots of time, consider charging others to do it for them as well. Do I smell an entrepreneur in the works?!
My bottom line is that you aren’t the first person to find themselves unemployed and you won’t be the last. While it’s no fun to face the instability that unemployment brings, it often gives people the chance to get in touch with what they really want in life. Oftentimes it results in a career move that makes them much happier and more content. Your willingness to see both the positive and negative sides to your situation will play a large factor in how quickly the situation turns around. When that occurs you don’t want to find yourself much deeper in the hole than when you began.