Frugal Confessions — Live a VIP Life on an Average Paycheck

We’ve officially ended our five-month stint of unemployment.

That was five months of quality time together, free first-Tuesday-of-the-month zoo trips, and total flexibility to do crazy things like check out Duck Dynasty’s headquarters on the way back from our Thanksgiving road trip last year…but it also meant five months without the steady flow of income we’d been used to and a big “what’s-going-to-happen” cloud looming over our heads.

Did I  mention all of the crazy paperwork formally separating from your employer takes?

Having freshly come off of a stint of unemployment in our household, I’d like to share with you how we were able to survive financially.

**And you’ll want to stick around, because I’ve got a free gift for you at the end (here’s a sneak peek)!

The Layoff Empowerment Kit graphic

We Got a Health Insurance Plan

It may sound counter-intuitive to buy health insurance as a way to survive in unemployment, except that life happens whether you are banking money or not (such as when I ended up needing to go to Urgent Care with an infection due to a deep cat bite after our cat was attacked by a dog several months in). The fact is, you have to make room for health insurance while unemployed because things happen out of nowhere and the costs can add up rather quickly.

We were offered COBRA by Paul’s old employer…but it would have cost us a staggering $1,837.82 per month for the same coverage we had before. In other words, it really wasn’t an option for us.

Fortunately, we were able to find a very affordable plan through USAA thanks to Paul’s service in the Navy. In fact, when Paul began his new job in March we found out it would cost us $600 per month for health insurance, so instead we kept our USAA plan ($193.80 per month for both of us). The deductible is high — $5,000 for each of us, and nothing kicks in until we meet this — but we knew we could cover it in emergency savings if need be. Now that open enrollment is here, we’re going to switch plans.

We Received Severance Pay, Unemployment Compensation and a GI Basic Allowance Housing

While I cannot talk about the specifics of the severance package we received (one of the fine print clauses in the contract Paul signed–gotta read that fine print!), I want to stress the importance of getting a good one. Full disclosure: our severance pay definitely did not cover even close to the salary we would have received over five months.

But we did have three other things going for us: unemployment compensation, my business (you’re reading it now!), and Paul’s GI Basic Allowance Housing (BAH). Since Paul started school full-time last Fall, we’ve been receiving a BAH each month he is in classes thanks to his service in the Navy. His unemployment straddled two semesters, and he made sure to schedule them at night so that he could actively seek new employment.

We Immediately Slashed Our Spending, Some by Default

If Day 1 is when he was let go, then Day 5 is when we slashed our ‘Mad Money’ spending in half. And that wasn’t all. Take a look at how we slashed our other spending categories:

  • Gas Bill Halved: My car is much more gas-efficient than his, so each time we traveled to see his family (about an hour away) I drove. Since I work for myself and he was no longer working, our gas bill was slashed in half (he still had to commute to classes, on the other side of Houston).
  • ‘Mad Money’ Halved: As mentioned above, we slashed our individual weekly spending money in half. We also worked together to pay for some of the “extras” such as cat litter and medication from these budgets instead of taking more from our account.
  • Audited our Monthly Spending: We were able to add $201.34 back into our monthly cash flow without much sacrifice at all. This is by negotiating our homeowner’s insurance, car insurance, finding better (and cheaper) cell phone plans, and getting rid of a few things we no longer used.
  • Holiday Celebrations: Part of our 5 months of unemployment was over the holidays, but this didn’t mean we couldn’t celebrate with out-of-state family. Thanks to some frugal decadence, we scored free flights from Southwest Rapid Rewards by leveraging our credit score, and stayed with family over both Christmas and Thanksgiving. Since we had the time + flexibility, we were able to extend both trips!

We Took Advantage of Freebies

I’m always a fan of taking advantage of freebies (not all of them, but the ones that make sense), and especially when you are unemployed. Once again, we leveraged our credit scores and got a $200 cash back bonus from signing up for a credit card offer (no annual fee, spending amount just $500 over 3 months).

When we needed things, I got creative, such as using a $10/$10 JCP coupon + clearance to get Paul a really nice new belt he very much needed. We also enjoyed free things like a day on the beach (just gas + packed lunch from home) and free museum days here in Houston.

        We had many blessings during our  stint of unemployment, probably the biggest one being that it ended in a reasonable amount of time. What really held us up was working together, having an emergency savings fund in place to fall back on, and our previous experience with being unemployed to help get us through all that paperwork. Because the fact is, not knowing what to do immediately after getting the “pink slip”, two weeks after getting the pink slip, and within that first month can mess up your financial future.

Which leads me to….

That Juicy Offer I’ve Created Just for You:

I’ve created The Layoff Empowerment Kit, and I’m giving the checklist away to you for FREE. All you have to do is subscribe by clicking the graphic below!

The Layoff Empowerment Kit graphic

In the full Layoff Empowerment Kit I answer questions like…

  • Can I collect unemployment compensation at the same time as I’m receiving severance pay?
  • What happens to any 401(k) loans I have out?
  • About how much can I expect to receive in Unemployment Compensation in the event of a layoff?
  • What other options do I have besides COBRA for health insurance (especially with all the recent health insurance changes)?
  • And many, many more

The printable checklist of action steps is organized by the deadline in which you need to complete each item (immediately, within 1-2 weeks, and within 1 month). It would be a super great idea for you to print it out and keep in your personal/private file at work.

Hey, you never know when you might be pulled into a “meeting”.

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