How I kept saving even during a job loss

A few months ago, I wrote about a job loss. It was a first for me. To recap, a high-paying client let go of the majority of their freelancers, which included me. I felt rejected, but I quickly came to terms with it: It's business. However, since I'd been focusing 90 percent of my work life on this client for the past couple years, I consequently lost 90 percent of my income when I lost the job.

It sucked. I went from saving a ton of money to only being able to pay my bills after drastically reducing my budget. But something surprising happened. Despite losing so much of my income, I was still meeting my savings goals each month. I thought that was pretty cool, so I figured I'd share how I did it. Yes, this is only what worked for me, and of course, these tips might not work for everyone. But hey, if some of them work for some of you, it's worth sharing, right? Here we go.

I got over my fear of investing

Before the layoff, I'd started educating myself about investing. I invested in index funds. I researched them. I considered their long-term and medium-term return, buying accordingly. Throughout the year, I paid attention to what worked and what didn't — and I tried to understand why they did or didn't work. Sure, there's only so much that's dependable when it comes to investments, and I considered that fact, too.

One of my medium-term money goals is to save for a down payment on a home. For the past few months, I haven't been able to set aside much toward this goal. But in December, I looked at my progress. The two savings accounts I have allocated toward “Home Down Payment” earned $966 in dividends. I thought that was pretty good, considering that, with holiday expenses, I was barely paying my bills that month.

It was my goal last year to learn more about investing, and I seem to be reaching that goal so far. Sure, I know that things could change direction; those funds could lose money too. But there's no arguing that knowledge is better than ignorance. I'm certainly not an expert, so I don't really feel comfortable giving advice on this topic — but here are a few articles that helped me get started:

And, of course, pretty much anything written by former GRS writer Robert Brokamp and current GRS writer Sam the
Financial Samurai
I also find incredibly helpful when it comes to the topic of investing.

Of course, I want to earn more and continue to save more of my income. But in the meantime, it's nice to know that forcing myself to get over my fear of investing is paying off.

I cleaned my closets

The day after Christmas, my boyfriend and I cleaned out the apartment. Turns out, we had a few hundred dollars worth of junk collecting dust in various cabinets and closets. We donated some of that stuff, but we also put some of it up on eBay. Within the first two days, I sold a juicer, an ALF lunchbox and a pair of jeans for a total of $140. After a week, I made a few hundred bucks. And this was just stuff that was hiding — unused and unappreciated — in our closets. I put the money in my savings account.

I saved my ‘mad money'

A while back, I wrote about paying off my student loan in a year. One thing that worked for me was putting “mad money” toward my student loan debt repayment. Any time I earned money from credit card rewards or traditional savings accounts, I'd use the amount, however small, to pay off my loan. Fast forward 10 years, and I'm still using the same tactic to reach my savings goal of buying a home. Here's the “mad money” I had in December, the month I tallied all of my savings:

  • Credit card rewards: $35
  • Interest from emergency fund: $10
  • Refund from lowering my cellphone bill: $20
  • Income from a small, quick, one-time freelance gig: $25

That's $90 in savings, which may not seem like a lot. But I learned from my mom's savings success story that every little bit counts.

I reevaluated my expenses

There are so many resources on this topic — in fact, I wrote about this topic when I discussed my job loss — so I won't go into it in depth. But it's also probably the most effective tactic for saving when you're broke and definitely worth repeating. To summarize, here's how I reevaluated my budget's expenses after I lost a freelance job:

  • I stopped eating out and shopping so much.
  • I downgraded my Internet.
  • I learned how to do my own pedicures and thread my own eyebrows.
  • I called T-mobile and asked for a better deal, reducing my phone bill by $20/month.
  • I stopped driving to places that are within a mile of my house and walked instead. I took the subway more. I don't drive much, anyway, but this still saved at least $10/month.
  • I called my Internet provider and asked if I could buy my own modem to reduce my bill by $5.99 each month; they said yes. They charge a monthly fee to use their stupid modem. So silly. I should've done this a long time ago.

Again, I understand that what works for me isn't necessarily going to work for everyone else. Maybe your budget is as tight as it can be. Maybe you're at a low point with your investing. Maybe you don't have any mad money. I've certainly read my share of practical advice that I didn't necessarily find applicable.

But, to me, it's ultimately about being resourceful. When you want something, you do whatever you can, depending on your situation, to make it happen. (Even if it means selling your beloved ALF collectible lunchbox.) I really, really want to save for the future, whatever it may hold. I'm doing anything I can to make it happen during my financial struggle. Turns out, a little resourcefulness goes a long way.

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Beth
Beth

Great tips! When I was first out of university, part of my “emergency fund” is unused loyalty rewards program points. I have a couple of hundred dollars worth of grocery points, enough travel rewards to make a couple of trips to family, and points to cash in at the drug store. Now that I have a cash reserve, I have been using the points (some have devalued over time) but I keep a buffer. I’ve been thinking about buying a modem. I was naive when I set up my internet and thought that by renting, I would get upgrades and… Read more »

Vanessa
Vanessa

Grocery points…is that a Canadian thing? None of my rewards credit cards offer anything for grocery stores, which I hate.

Rebecca
Rebecca

Safeway, King Soopers (Kroger Brands), Walgreens have point systems for Card users that can be rewards by discounts or gas reduction rewards. Each program has custom digital coupons for additional discounts on specials. I have storage areas and can save 40-60% on groceries and personal items. Also American Express points are doubled on groceries and gasoline…I annually save those points for gift cards I use for my own treats! Chase 5% cash back often lists groceries or gasoline in it’s quarterly promotions to earn $. I hope this helps!

Beth
Beth

Perhaps it is a Canadian thing? Two of our major grocery chains offer rewards points you can redeem on anything in the store (including gift cards to restaurants, iTunes, food, etc.)

Don’t be too jealous of us though 😉 Our food prices are higher than in the U.S.

Kristin Wong
Kristin Wong

Oooh, I really like that you had an “emergency fund” of points for groceries and trips. Great idea.

Gal
Gal

When you loose your job it is so painful it takes really someone special to get up as you describe. For me, I always try to prepare to that dreadful day… so I save! e.g. when shopping Istick to thelist and buy only what I need rather than what I want! I am using a list on my phone which is always with me and also automatically sync with the rest of my family. I use https://play.google.com/store/apps/details?id=com.gal.appshoppinglist

Ingrid
Ingrid

Great inspiration, Kristin — thank you! For a while we’ve been at a plateau with cutting our household expenses, and it was really cool to read about how you’ve kept pushing yourself toward your goals.

I just want to say that I really enjoy all of your articles. Many thanks!

Kristin Wong
Kristin Wong

Thanks, Ingrid. That’s so kind of you to say-er-write! Yeah, a plateau can be a blah place. Years ago, I think something like this would’ve really, really set me back financially. But these days, giving up on my finances and letting them overwhelm me is not an option, so my only choice is to keep going. I’m pretty surprised at how in control I feel about my financial situation during this time of transition. Another thing that’s helped me is focusing on now, today, the present, however grim it may be. I hope and strive for better, but I realize… Read more »

Nick
Nick

Saving when the going gets rough is hard but if you can do it it just goes to show how good you are with money. Great post.

Vanessa
Vanessa

I don’t want to knock cutting expenses, but those $10 and $20 amounts get eaten up pretty quickly after you pay major expenses like rent, health insurance and groceries. No matter how frugal I was, it was still disheartening to see my emergency fund plummet by a thousand dollars each month.

Kristin Wong
Kristin Wong

Yeah, I think that thought somewhat goes along with the saying, ‘penny wise and pound foolish.’ But during a time of struggle, while being frugal might not be enough, it’s still kinda necessary, I think. There’s only so much I can do about my fixed expenses (though, if I ended up having to dip into my emergency fund, I might try to move into a cheaper place), but I can control my variable expenses. Cutting back on $20 bucks might not seem like a lot. Going out to lunch and spending $20 bucks doesn’t seem like a lot, either, but… Read more »

Amanda @ Passionately Simple Life
Amanda @ Passionately Simple Life

Great post! There are always little ways to save money, but being able to realize that with less money coming in, something can’t continue being the same is super savvy. Most people want to hold onto the lifestyle just to make it seem everything is okay. Good for you for looking at everywhere for savings.

Dave @ The New York Budget
Dave @ The New York Budget

Anything you can do to save money on your monthly, repeating bills will do WONDERS for your ability to meet your savings goals.

Luckily, I got into index fund investing as a young, reckless guy, so fear of investing wasn’t a problem (maybe the one time my recklessness served me well!)

Stefanie @ The Broke and Beautiful Life
Stefanie @ The Broke and Beautiful Life

Isn’t the modem “rental” charge ridiculous? I think a lot of people don’t realize they’re paying for that.

It’s amazing how much you can save by cutting out personal care costs. I’ve never been one to get mani/pedis or get my eyebrows done (unless it’s a gift). I’ve gotten all my haircuts at beauty schools or training salons for the last few years. All this coming from someone in an industry who places a great deal of value on appearance (acting). So if I can do it, anyone can.

Kristin Wong
Kristin Wong

It is ridiculous! I didn’t realize I was paying for it until I dissected my bill. So deceptive.

Yeah, the personal care costs do add up–especially haircuts here in LA. I’m sure it’s the same in NYC. I don’t get my hair cut often (sometimes I trim myself…eek), but I think next time I’ll try a beauty school/training salon.

Anne Salter
Anne Salter

I typically get a shoulder-length haircut, with layers. As it grows out, it looks good as long as I maintain the front layers – easy to do with a mirror! I get a good haircut in the Fall, just before school starts (I am a teacher) and perhaps in the spring (depending how well I maintained the layers over the months).
Not hard at all!

Stace
Stace

What do you consider medium term? I hate having so much cash sitting in low interest savings accounts, but I know I have a lot of things coming up (new car, wedding, house down payment) within the next 1-2 years. I don’t want to tie up too much cash in or risk short-term losses. But I think I may have to at least start with a small chunk and see how that goes. Thanks for the reminder I should get started on that.

adult student
adult student

I’d be interested in hearing this as well.

lmoot
lmoot

I can’t speak to investing as I don’t do it actively, but for money I know I won’t be using for 1-2 years I package it into a CD as right now the rate is a little higher than savings accounts.

Ally offers raise your rate CDs. You can do 2 yrs, and you get 1 opportunity to raise your rate anytime during those 2 yrs; for their 5 yr CDs I believe you get 2 opportunities.

Kristin Wong
Kristin Wong

By medium-term, I’m thinking, like, 3-5 years. Yeah, if it was just a year or so, I’d probably consider a CD. The volatility can be nerve-racking sometimes. (But keep in mind–I’m not an investing pro, and I scare easily.) Actually, we (fingers crossed) might be reaching our goal sooner rather than later, so I’ve been thinking about going the CD route with any new savings amounts.

lmoot
lmoot

It’s amazing how creative we can get in the face of adversity. I know I can scoop together at least a guaranteed $1500 if I needed to. I’m ashamed to admit that I haven’t filed taxes for 2 yrs…this year is the year promise! However I did the online filing (I just couldn’t complete it because they needed me to mail it in) so I know I am actually owed money for those 2 yrs, so no penalties. So I’ll have 3 yrs of returns coming to me this year. It won’t be more than $600-700 total though because I… Read more »

lmoot
lmoot

I wanted to add that I recently found out from my dad that he invested in Fredericks of Hollywood 20 years ago and got a decent chunk in return, enough to help pay off the house 20 years early. He is not a risk taker so I was surprised, but I never did get around to asking him what made him think lingerie was a good investment.

PawPrint
PawPrint

Oh, please ask him and post it here. You’ve got me curious!

A Poster
A Poster

Wow, you are going on a 2 year sabbatical? I am quite envious. I simply do not have the courage to attempt such a thing. I am sure I have enough money saved to do a sabbatical. But I just can’t pull the trigger. Well that and I would likely not have a job when I came back.

best of luck on your time off!

EEC
EEC

Great post. I am on target to pay off my car this year and after reading this article I cashed in my credit card points and applied the money to my payoff. A “free” $350! Thanks for the tips.

Kristin Wong
Kristin Wong

That’s so cool! $350 is a pretty big added payment. Congrats!

William Cowie
William Cowie

Great post. When we set our minds to it, it’s amazing how much we can save. The only thing you cannot scrimp on is debt payments. That’s why it’s so important to, when you are getting an income, kill those debt payments as quickly as you can.

Beth
Beth

Can I touchbase on the whole modum rental subject? I too rent a modum at $10 per month. I’ve been doing that for 5 years now. (hides head in shame) What kind of modum did you get? Is it easy to install? What is the average price of a modum? Thank you for any information you can provide!

RandyC
RandyC

Check your internet supplier’s web site – mine lists acceptable modems

Kristin Wong
Kristin Wong

You have nothing to be ashamed of–your Internet company should be the one hanging its head in shame, haha. $10/month is steep!

Ours was $25 on eBay. I think some of the newer ones are $50-$100. If you’re worried about the compatibility, you might wanna go with Best Buy, just in case you need to return it. Thrift stores are a good place to look, too, just make sure it has a built in Wi-Fi option. Hope this helps!

Beth
Beth

The company I deal with will sells the modems. I need a new router anyway, and the modems my provider offers have built-in routers. It makes sense to buy at this point. My modem rental costs $4.50 per month (including HST). That’s over $400 I’ve spent on modem rental costs (gulp!) Buying a modem will pay for itself in less than three years. Don’t be like me and think that renting will mean you get free upgrades. I’m paying the same for a nearly eight year old modem as I was when it was brand new. (Assuming the rising costs… Read more »

Kristin Wong
Kristin Wong

Forgot to add that, yes, it’s relatively easy to install. Just make sure it’s compatible with your computer/operating system (most are), and then it comes with instructions. You probably have to hook up your computer to the modem/router with an ethernet cable to get it set up at first, and then once the wireless is set up, it’s good to go!

adult student
adult student

This is a really helpful post because I hadn’t thought about using investment to make monthly savings goals toward medium/long term goals – quite the opposite, I’ve been keeping an overly large emergency fund (6-12 months, depending on whether it replaces one or two incomes) in preparation for the impending post-graduate-school job search. This is making me wonder whether I should move half of it into more active investments, which would make the inevitable but hopefully temporary income drop less depressing, and help save toward those long term goals. The likelihood of my partner and I both having absolutely zero… Read more »

Tyler Karaszewski
Tyler Karaszewski

If you need to pull money out of your investments, you can have cash in hand in about a week. You don’t need 6 months worth of cash sitting there doing nothing for you. Invest your money. Keep a 30-day buffer in your checking account. If you lose your job (or whatever), sell some of your stocks the next day, you’ll have the cash before you run out of money in your checking account. The notion that you should keep $30,000 (or whatever 12 months expenses is for you) in cash just sitting around is foolish.

imelda
imelda

That’s what I’ve been thinking, but the last time I suggested that in a comment, the idea was vilified. People insisted that an e-fund was about safety, not growth.

I’d be interested in hearing other ideas for how to invest those funds, especially since they can’t really go into a retirement account. The up-my-rate CDs do sound interesting….

Beth
Beth

I think part of the reasons experts say to put the emergency fund in something safe is that you don’t want to be forced to sell at a time when the market is down. (For instance, if you lost your job during the recession and had to cash in your investments while the market was in the toilet). One financial advisor I talked to suggested putting some of my emergency fund money into a RRSP. (But not count it towards my retirement savings). The thinking is that if need to withdraw it I’d be in a dire enough situation (i.e.… Read more »

Ramblin' Ma'am
Ramblin' Ma'am

For me, the concern wouldn’t be whether I could access the money. It would be losing my emergency fund due to fluctuations in the stock market. It’s more important for me to know that the money in my emergency fund will be there when I need it.

Juli
Juli

Can I just say, I think it is awesome that you had an Alf lunch box sitting around. That brings back memories!

Ken
Ken

Many years ago when I lost my job, I didn’t know what we would do. At the time we lived paycheck to paycheck with nothing in savings. I was still in the mindset that I couldn’t save, with as little money we made. Then I lost my job. Even before I got my first unemployment check, I started looking at everything I spent money on and cutting out what wasn’t a 100% necessity. The first month we actually saved a little money. After a couple months or living on bare minimum and still being able to save some $$$, I… Read more »

Kristin Wong
Kristin Wong

That’s awesome! Yeah, amazing things can happen when you toss out those excuses and just take control and decide to do whatever you can. I don’t know how to articulate this very well, but there are many times when life seems unfair, and you don’t have the things you ‘should’ have. So then you plan your finances according to what ‘should’ be, instead of what actually is, and I feel like that’s how a lot of people get in trouble. Like, “I was going to buy X item, and then I loss my job. But I ‘should’ still have a… Read more »

Afi Scruggs
Afi Scruggs

Thanks for the idea about threading. I went on youtube and found several videos. This should save me a few dollars and a lot of time.

Karen Newcombe
Karen Newcombe

The exact same thing happened to me — my main client cut off all their freelancers. Since I’d been with them for ten years I got a two month notice, but 60 – 70 percent of my income every month was just gone. I’d gotten rusty in that ten years of relying on one main client, and had to relearn how to prospect for new work –Yikes! I’ll never depend so much on one client again! And unlike you, I already owned a house. Although I love it, houses soak you for money like you would not believe! If I… Read more »

Simple Money Concept, LLC
Simple Money Concept, LLC

Hi Kristin,

Keep up the keep work!

Talking about free money. Walgreen’s has an app that rewards you up to 1,600 points a month for logging in your walking and weighting yourself. 10,000 points will give you $10 to shop at Walgreen’s!

Stacey Powell
Stacey Powell

Great article and inspiration! I had a client once who had been faithfully putting 10% away for her house downpayment fund. She lost her job and was on unemployment for nearly a year — all the while putting 10% of her unemployment away in her house fund. She could have easily said “well, i’m going to take a break from saving because unemployment isn’t nearly what I need to live,” but she made choices like yours instead.

It’s not easy, but it can be done if that’s your priority.

Karen
Karen

I just went through Dave Ramsey’s Financial Peace University and learned a lot about using cash for the basics (groceries, entertainment, personal care, etc.). But falling for “reward points” or “cash back” is a way to get in trouble. Unless what you buy is an automatic point system and not because you put it on a credit card or financing program…don’t EVER use it! I do a new budget every month, since every month brings different events. I’m currently on several Facebook groups for selling items and doing great in purging those unnecessary items!

Kristin Wong
Kristin Wong

Hi Karen! Yeah, I think most GRS readers have mastered churning credit card points safely (paying the card off each month and then just getting the free money), so we often forget that it CAN be dangerous! Thanks for the reminder. And the FB group thing sounds smart!

William Cowie
William Cowie

Not that it’s going to make a huge difference, but if you can get one of those new myRA accounts the Pres touted in his SOTU address, you’ll be able to get more interest (and tax-free, too) on that savings account…

SavvyFinancialLatina
SavvyFinancialLatina

Great inspiration. It’s a monthly challenge to lower our expenses.

That Career Girl
That Career Girl

Hi Kristin
This is such an informative post, great job about investing. I have been really meaning to learn about investing in shares, having previously just used a mutual fund. It seems so much more daunting than the savings aspect but so necessary!

I think your list of things you did to minimise your expenses is great. The silver lining to facing adversity such as a job loss is that you have come out in a stronger position expense wise!

Jordan
Jordan

Great stuff. I’ve used betterment for my index investing and I’d recommend it. They have a great blog for educating yourself on the topic too.

Jeannine
Jeannine

Great job! Great ideas! With your attitude and discipline you’ll keep yourself in good shape no matter what your income is.

Sheri
Sheri

Kuddos to you for maintaining your goals! I assume you live with your boyfriend sharing expenses. If I were to lose 90% of my income I’d be on the street. It’s easier in a two income household than single. Another good reason not to put all your eggs in one basket per se (one client).

Crystal
Crystal

This sounds like great advice whether you just lost a job, just graduated, or just need to save up fast for something. We seem to really tighten up our belts every few years just to prove to ourselves that we can live on less if needed. It’s nice to know there is a cushion above and beyond what we have if necessary.

Amy Castillo
Amy Castillo

Awesome!! instead of throwing up your hands because you couldn’t do “enough” or save something “big”, you did what you could. Inspiring. Thank you for sharing your story!

Financial Samurai
Financial Samurai

Kristin, great job still maintaining your savings amounts after losing 90% of your income! I didn’t realize that one client loss was that large.

Do you have a savings percentage you have in mind that you are shooting for?

It’s great you tackled your loss full on!

Sam

M Martinez
M Martinez

I would be curious to see how the permanent portfolio has performed in the last five years. With 25% commodities, 25% cash and 25% treasuries it seems like the portfolio would have not performed very well and may not have been such a great choice after all. Has anyone implemented this strategy and if so, what has been your results?

wes@genwisewealth

Great article! Many of these principles can be utilized even when employed…always better to save all that you can to prepare for the times when you might not have income. Live lean and invest the savings!

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