On Lost Jobs, Money Troubles, and Borrowing from Parents

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Question

I lost my job a few months ago, and it’s been hard to live on just my husband’s income. We’ve maxed out our credit cards and used up our savings to keep up with the bills. I finally found a job, but I don’t start until mid-September. My parents said they would always help out financially if we needed it. I doubt they know how bad off we are, and I don’t want them to worry, but we’re running out of options. The thought of asking to borrow a few hundred bucks brings me to tears, especially because they’ve been generous already. I’m embarrassed and sad and feel like a failure. What should I do?

Answer

Unless someone has spent time out of work, he can never truly understand the feeling of impotence that often goes along with it. You can deal with your situation. Start by dropping this attitude of failure.

Financial counselor Dave Ramsey often says that while he has been broke, he has never been poor. Poor reflects a state of mind, not finance, and far too many people remain poor long after they acquire enough money to no longer be broke.

Yes, it can be discouraging to lose a job. But millions of people have lost jobs during the latest recession – and later, during the incredibly shallow recovery. As you have since found a job, you appear better off than many. You may be broke, but you’re taking steps to fix the problem. So stop beating yourself up.

If you truly need your parents’ help and they are willing to help, approach them about some cash to tide you over until you collect your first paycheck. Notice my use of the word “need,” because it is an important distinction.

You mentioned that you have borrowed to cover the bills and other expenses. If you’re still taking vacations or buying seasonal shoes or eating out twice a week or slurping down Starbucks coffee every morning, then you have not yet reached the point when you should go to your parents for assistance.

To assess your true financial situation, try these three steps:

See where your money has gone. Look at your expenditures over the last six months and assess whether you have been spending on luxuries. For example: If you have five pairs of shoes and enough clothes to get you through a week to 10 days without doing laundry, then new duds are a luxury. Consider all facets of your spending using a similar approach. Reduce your spending on items you do not need to survive. I’m not saying you can’t order a pizza after a long day. But if you’re scraping to pay the gas bill, you shouldn’t order more than once or twice a month. And you definitely shouldn’t order if you have to charge it. Based on your spending over the last six months, estimate your expenses over the next several months, then compare them to your income. Budget for the necessities, plus a few hundred dollars for emergencies, before you consider any discretionary spending. If you have enough money coming in to cover those necessities and a couple curveballs, grin and bear it. If not, ask your parents for help – and consider making long-term lifestyle changes that will allow you to survive on one income if necessary. Remember that every job, no matter how secure, can become a temp job if something goes wrong with the company.

I’ll close with a caution: After you start your new job, don’t revert back to bad habits. The loss of an income can force a couple to take a hard look at their spending. Most of us waste more money than we realize. Once you’ve tightened your belt, don’t be so quick to let it back out. After all, if you’ve gone to some effort to lose weight, doesn’t it make sense to expend a bit more effort and keep some of that weight off permanently?

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