Thursday, July 28, 2011

Debt Management 1.0

What would you do if you lost your job?

Perhaps a better question is, what did you do when you lost your job? A disturbingly large portion of American workers have lost their jobs in the past three years. Personally, I’m on my second job since October 2008—and I’m grateful to be working at all.

My routine never varies when I lose a job (note the use of the present tense—having also lost a job in the early ‘90s recession, my resume is always at the ready).

I come home with my checks: final paycheck, unused personal time payout, any severance payment. I sit down and run the numbers to see how much is there, total. Then I deposit the checks in the bank and turn to my checkbook. I pay the bills—mortgage, car payment, utilities first, in that order. Credit cards get paid next, as much as I can manage, with a modest amount reserved for groceries, gas, and emergency cash.

I apply for unemployment insurance. The most frequent comments I hear about this handy little cushion are “it’s nothing!” or “how does the government expect you to live on that?” Well, it is something. Unemployment checks have always helped me with monthly bills during the times I’ve been out of work. And the government doesn’t exist to support me. That’s my job. Unemployment insurance payments are supposed to be temporary, although I understand some people today are trapped in them by the lack of gainful employment available in our country due to the debt-exacerbated recession.

But back to the question, how do you handle not having enough money coming in? The answer may not be easy to accept, but it’s a simple, two-step process. You conserve what money you have, and you cut expenses wherever you can. Magazines, exterminator visits, manicures, lunches with friends will all have to go, at least for a while. At least until you have a paycheck coming in again.

At no time during my periods of unemployment have I called Visa or Mastercard to request a higher credit limit so that I could continue to spend as I did while I was employed. I’m guessing that most unemployed Americans wouldn’t make such an irrational request, either. The fact that most of us are on the same page in our common sense approach to too much debt and not enough cash flow is the reason we aren’t quite sympathetic to President Obama’s insistence on more taxes. Especially at a time when so many unemployed Americans have exhausted their unemployment insurance with no sign of a new job on the economic horizon.

It’s time to stop spending money we don’t have, Mr. President. For someone who’s supposed to be so smart, you’re astonishingly dense on this issue. Just ask any American who’s been out of work since you became president. They can tell you there are no more checks in the mail.