How To Survive Unexpected Income Loss (Again)


I resisted writing this post the first time I survived an unexpected income loss because I didn’t think anyone would read it. But now finding myself surrounded by others who are experiencing an unexpected loss of income meant it was time to type.  I know this may be the first time some of you are going through this incredibly stressful event. There are no magical answers in this post, just an FYI from the beginning. But there are some ideas of how to make it through this tough time.

The Light at the End of a Ridiculously Long Tunnel

In 2018, I was hit by a drunk driver which left me unable to move off the couch, dress myself, or pee unassisted for weeks. What was just as challenging as this physical pain was the emotional toll that came without having an income. Being out of work is never easy to deal with. As an independent contractor who solely earned a full-time income teaching dance and fitness classes, this was completely unsustainable for my family. 

Watching my hard-earned savings quickly disappear as we triaged keeping a roof over our heads, paying for additional childcare (I couldn’t care for myself let alone a busy toddler), and figuring out how to survive on one income overnight was not easy. Forget easy, to me, it was harder than childbirth. There were endless conversations about number crunching that would make my high school math teachers proud. Ultimately, a combination of other unexpected events that same year meant selling our home and moving to an apartment was the best drastic decision for us at the time.

None of this was easy. Every single minute of that year was filled with a level of stress and pressure that I still find hard to put into words. It was a matter of survival and doing what was best for our son. 

I can tell you two years later, we are still picking up the pieces from this challenging time. We are still extremely budget-conscious as there have been long-term ramifications from this accident. But the day to day stress levels are much, much better. Facing an income loss for a second time thanks to the shutdown has me a little on edge. But I know we will find a way through this, just like we did the last time.

Have Serious Budget Conversations

Completely losing or drastically decreasing an income essentially overnight is terrifying, especially if you do not typically keep a monthly budget. Now is the time to start. This may mean brewing a super-strong cup of coffee after the kids are in bed when you have some quiet thinking time. Grab a cookie too, it will be needed.

Figure Out Your Expenses

Every. Single. Penny. Whether it is buying  $54 worth of who-remembers-what at CVS or $2.74 for a single-serve ice cream you consumed before picking the kids up (no judgment!) Here are some options for a quick template you can follow and customize. Start at the 1st of the month and track every single penny that is spent throughout the month by every adult. Then start creating categories that make sense for your household. Mine includes rent, utilities, internet, cell phones, childcare, groceries, eating out, gas/travel expenses, fun stuff (date night, tickets to events, etc.), student loans, pets, and household needs (i.e. pretty much all Amazon purchases).  

Decide which of these categories are absolutely critical and you could not cut out if you were down to your last penny (rent/mortgage, groceries, etc.). These are your new priorities. If there are any ways you can reduce these expenses, great! We changed from primarily shopping at Giant/Whole Foods to Aldi; you will get used to store brand rather than name brand, I promise. We asked for mortgage forbearance. Have honest conversations with these companies to see how they plan to assist anyone struggling during this extreme circumstance. 

Even if you feel like some of these expenses are the same every month, track those numbers. We have a rough idea of what utilities or cell phone bills will be each month. However, there are times those jump up and surprise us. It’s always worth calling to follow up on why there’s a difference in the amount. 

There is one other line item we keep called “Other Expenses.” This only includes things that are one-off or very sporadic expenses such as semi-annual car insurance, additional travel expenses for a family funeral, etc. They need to be tracked to see how this is impacting your budget over a longer set of time. Just separating these out from typical monthly expenses helps me to make notes about what happened during this month that does not typically occur.

Figure Out Your Income

Again, it may seem like you already know this because it’s the same every month, but still, track it. I cannot stress this enough if you are an independent contractor, own your own business, or have a seasonal type of income. Personally, I know when I started a business I needed to reinvest early on, which meant not always paying myself. A few months later, I would analyze my budget and realize I hadn’t paid myself in months. I knew I needed to prioritize myself in order to keep this business running long-term and that meant finding ways to pay myself. This line item will be especially important now that you may have a reduced income, unemployment, or any other type of financial assistance that may appear. 

Now the “Fun” Part

You and your partner/spouse/cat need to have a serious conversation about what you can do to reduce expenses. When you have an income issue, you have to decrease expenses. It sucks, I know, but you will find things that you can cut out temporarily. 

Some of the biggest areas are:

  • Eating out/take out food (If you’re pressured for time during the shutdown, plan quick and cheap meals or crockpot meals.)
  • Any daily habits (think coffee)
  • Cutting cable (Really, changing to Hulu made a huge difference in our budget.)
  • Reducing the type of phone plan you have (You can live with less data, I promise.)
  • Unsubscribing (think subscription boxes or services, memberships)
  • Stopping optional activities (I know you may not be going to dance or soccer right now during this shutdown. As much as I want to support small businesses, you have to make sure there is enough in the bank to support your family.)
  • Don’t buy or don’t buy new. (Really and truly think about every purchase and how this will either contribute as a “need” item for you or someone in your home. This may mean not buying what you previously would have bought without blinking an eye. Check out Craigslist and Facebook groups for like-new items.)

Having fun yet? This may be the first time you have ever done this type of analyzing and planning—which means you should have another cookie. I can promise you that it will help as you figure out life during this difficult time. You can easily put things back into your budget when things go back to normal and your income resumes. 

I will tell you two years later, we have still chosen to cut cable and keep our reduced phone plans. We eat 20/21 meals at home every, single, week. I’ve also learned that buying some items like bikes or puzzles second hand has saved us a ton of money. Saving on items my kid will be done with relatively soon has helped our budget.

And, now, we are facing a loss of income again. I am confident putting these same strategies into place again will help us get through this time. You will make it through mama, just have another cookie and breathe.