You Gotta Do What You Gotta Do

I recently wrote a post about how I felt about the phrase “in today’s economy”. Well, Mr Credit Card read that post and decided to chime in with his thoughts about the fact that you gotta do what you gotta do based on your circumstances. He will take a break from talking about Visa credit cards or Mastercard and rant over here. So let’s hear what he has to say.

I really enjoyed Jeff’s take on “in today’s economy”. He has demonstrated (in his example) that if you are looking for a job, you can find one. You just have can’t be picky. But recently, I have seen a few people who been laid off and are doing part time jobs or faced certain bad circumstances. Some of them have reacted well. Some, in my opinion, have not.

Case 1 – I know of a friend who had a stroke a few years ago. He had been a CFO before. But after his stroke, he is unable to ever work again. His wife had been a housewife (Jeff’s Note: My wife is the Excutive House Manager) throughout their marriage. They have 2 kids, one in college, and the other will be going to college soon. Without any income coming from the sole bread winner, my friends had to make some adjustments. These are some of the things they have done.

His wife got a job – By hook or by crook, my friend’s wife managed to secure a full time job as an assistant to a couple of financial advisors. It pays the bills and mortgage. She is good at it. And she has survived the financial crisis.

They downsized their home – My friends lived in a single family home with at least half an acre of land. They sold their home and moved into an apartment that is much smaller. They savde on their mortgage payment and probably took out some cash.

He got social security disability benefits – My friend went through the process of getting social security benefits. It was a real hassle (according to him – and I believe him). But he went through the process and got the benefit.

He got scholarships for his daughters college education – My friend went through the whole process of getting a scholarship for their daughter. He showed me the stack of forms he had to fill out! The deadlines! It was a nightmare to say the least. But his daughter did get partial scholarship and that has eased his financial burden.

The Family occasionally dog sits – To earn some extra money, my friend’s wife occasionally dog sits.

Case 2 – I know of a friend who has lost his job for a while. But he is still living the same lifestyle he has had before. I still see him regularly at starbucks (I guess occasionally is ok). I see his family out at dinners often. And they are still taking vacations. They probably have some savings, but I would expect some cut backs in the event of a loss of income. But there does not appear to be any cutbacks. He is not contemplating moving to a smaller place and cut back on eating out. What can I say? As much as we try to help him, my friends and I feel that he has to help himself. (Jeff’s note: You are the only one who can make a change.  You can’t buy a change, you can’t earn a change — YOU must make the change)

Case 3 – The third case involves me! Yes, I have lost my job before. When that happened, Mrs Credit Card turned Mrs Frugal. Our lifestyle changed.

We almost never ate out (maybe once every 6 weeks) – We certainly cut back on a lot of this.

We were extremely conscious of our electricity bills – We became very conscious of not leaking pennies and were very careful about things like that

We did not do the starbucks – as a matter of fact, we’ve stopped since I got my fine coffee machine!

We cut back on our cable bills – We actually contemplated totally canceling our cable subscription. But Mrs Credit Card loves watching the 10pm shows that decided to just stick to their basic offerings

We found cheap ways to take vacations – For example, we never rented a house of apartment by the shore. We simply took day trips and packed our own lunch. Ice-cream was a treat for the kids. But no expensive boardwalk lunches.

When our financial situation became much better, we were able to take it much easier on ourselves.

Some takeaways – From my own personal experience, I can say that cutting back on your lifestyle and standard of living sucks. But from my personal experience, as well as observations from friends who have fallen hard financially, here is what I’ve learned.

Cut Backs Are Difficult – What is more difficult is the cut backs you may have to make that affect your kids. You really have to set your priorities right. For example, we made a deliberate decision not to cut back on our kids sports program. We continued to subscribe to cable because that was a form of entertainment for us (especially after the kids are in bed). But we stopped eating out and were very careful about buying new clothes.

But cutbacks Are Necessary – As tough as cut backs in spending are, they are necessary when you face financial difficulties. Whether it be living in a smaller place, moving, canceling your cable TV, bringing your own lunch to work, you have to do what is needed to bring your expenses below your income.

Emergency Funds Are Crucial – I had a big emergency fund when I lost my job. So did my friend who had a stroke (used to be a CFO). That certainly helped us when times were tough. All I can say is that saving up for a hugh emergency fund is one of the most important things you have to do in your financial life.

You Gotta Do What You Gotta Do

Life throws us lots of curveballs. We have lose our jobs, even our houses. We may fall ill. Our spouse, kids or parents may fall ill and need our care. Shit happens. But when your financial circumstances change, you have to change as well. The worst thing you could do is to deny what is happening and live as usual. Taking action and planning for the worse case scenario is the best and most prudent route to take. Our circumstances are all different. For some like Jeff, it may mean getting a second job as a pizza delivery person. For some, the lifestyle adjustments may not be so drastic. Perhaps giving up on your TV, eating out less often, being more frugal in general will suffice. For others, perhaps more drastic steps are needed. For some it’s  to consider filing for bankruptcy (consult an attorney on that). If you cannot afford your monthly mortgage, you may have to default on your mortgage and rent. If you have lots of credit card debt, you may negotiate a debt settlement with your credit card company if you cannot do the old 0% balance transfer game. Your spouse may have to get a job. Or you may simply have to take more time (and money) to care for your parents. You might have to change jobs. But whatever it is, you gotta do what you gotta do for yourself and your family when you face financial difficulties.

Jeff’s Note:  Last year I had a chance do and interview with Mr. Credit Card.  If you are so inclined to listen here it is –

photo credit:  smemon87