Preparedness

Blunt Money wrote a great post on how to deal with a lay off. A number of points are ones I feel everyone can benefit from whether a lay off is on the horizon or not. I see it as levels of preparedness.

First there is everyday frugality. It is important to know how much your life as it is, dreams and all cost. When everything is just hunky dory, it is easy to live a great life. But as most of you know, there is room for fine tuning that does not affect life as is.

What happens when you do not get that raise or bonus or your business brings in 10% less? The cost of everything else tends to inch up each year whether we pay attention or not. How do you make up the difference?

These are good questions to answer now, in the comfort of your own home when you are not being forced to decide. Will you then, cut out/delay a trip, a purchase, allowance, entertainment? I would think that most people would be able to still maintain most if not all of current life relatively unscathed. The changes may bite a bit.

Next level. How would you make up 25% - 50% shift down in income? This may mean one half of a couple has lost their job or someone is choosing not to work. Would your life even look the same as it does right now?

How would you feel about that? Would that scare you? I like thinking in terms of emotions as it motivates me into planning. This is the level where a lot of people I know would start squirming.

All of a sudden, living too close to the edge becomes running off the highway. Payments may become delayed. Panic may set in. The lack of savings very apparent. Can anything significant be sold quickly to increase cash flow?

All of a sudden, all the "toys" and stuff in your life can seem so worthless, meaning they wouldn't sell for enough to help, even though you may still be paying for them. How long can things be sustained now?

At this stage, cutting cable or a trip isn't going to cut it. If your current life only costs 70% or less of what you make, this scenario may not phase you. It may mean no money left over at the end of the month but you can manage fine.

If you are able to find your peace at any level, then nothing will really threaten.

Live for the best. Prepare for the rest. Attach to nothing. That's how I view things.