My family’s finances changed dramatically earlier this month when both my husband and I filed for unemployment. We were both furloughed within 24 hours of each other, joining the tens of millions of other Americans who have lost their jobs due to the COVID-19 pandemic. This also means we lost 100% of our income starting July 1, 2020.
We’d considered the possibility that one of us might lose our job, and I’d made a scenario budget just in case. But I hadn’t seriously considered that both of us could lose our jobs. When we got the news, I immediately went into “fix it” mode and started working on our unemployment budget. Because fixing things, finding answers and solutions, is how I cope in the face of difficulty.
Right-sizing our budget to fit within our newly reduced income meant making significant cuts. I was able to reduce our monthly expenses by more than half. It wasn’t easy or fun, but it’s what was necessary for us in this season of life.
How Much Does Unemployment Pay
Before I could make an unemployment budget, I needed to know how much our weekly benefit would be. This can be tricky to figure out. Each state has a different maximum unemployment insurance benefit, and a different way of calculating how much you’ll get based on how much you earned before filing.
In Michigan, the maximum weekly benefit is $362. Thankfully, both my husband and I qualified for the maximum benefit, which means we receive $724 per week, minus taxes which we opted to have withheld.
At the time I’m writing this, the Federal Pandemic Unemployment compensation program (the extra $600) has lapsed, and the federal government hasn’t passed legislation to replace it.
So for now, I’m basing our budget off of our standard weekly benefit. To do this, I had to take a hard look at our spending, make some phone calls and make some difficult decisions to reduce our expenses as much as possible.
How I Cut Our Spending
Before diving in, I wanted to say that everyone’s financial situations — our debts, obligations, savings, assets — are different, as are the things we need to survive on a daily basis. Below is a list of the ways I was able to cut our expenses in half, in a way that’s livable for us in this moment. Take what is useful to you and feel free to leave the rest. I hope you find a few ideas to help you reduce your expenses and breathe a little easier through a difficult situation.
Evaluating Our Wants vs Needs
I took a look through my pre-unemployment budget line-by-line: mortgage, utilities, streaming services, car expenses, groceries, entertainment, personal spending, kids’ needs, daycare, travel savings, education savings, etc. I noted ways to cut back, drawing a mental circle around only the things we truly needed to survive and for the boys to thrive. Everything else was on the chopping block — it was a gut wrenching exercise, but a necessary one.
In the end, many of the things I was struggling to let go of just didn’t fit into our COVID reality. I was holding on because having those lines in my budget felt like a tether to a past life I wanted to return to.
Once I let go, our expenses started to decrease rapidly.
Negotiating Our Bills
Because of the pandemic and resulting economic crisis, many companies are helping people who have had a reduction in their income. But they won’t help unless you ask. I went through all of our bills and worked to reduce them where I could.
This resulted in some pretty big savings in these areas:
- Mortgage forbearance: We contacted our mortgage lender, explained our situation and were approved for forbearance for three months at a time, up to a year. This means our principal and interest payments are paused until after the forbearance term. We’re still paying into escrow for taxes and insurance, but this frees a significant amount of money from our budget.
- Daycare: We pulled our kids out of daycare at the start of the pandemic, but were continuing to pay their full-time tuition, to do whatever we could to help keep the doors open and to hold their spots for a hopeful return. Daycare was by far our largest monthly expense, one that we just couldn’t afford anymore. This was also by far the hardest cut for me to make — doing so felt like finally accepting the enormity of what’s happening and acknowledging that we’re not going back to life as we knew it anytime soon.
I was also able to reduce our internet bill by half, by reducing speed — we haven’t noticed much of a difference in performance, thankfully.
Other areas where you could ask about reducing or pausing your payments: credit cards, rent / landlord, cell phone plan, cable / cutting the cord, student loan forbearance / deferment, auto loans / leases. Every little bit helps. If you can save $25 here, $50 there, it adds up.
Other Notable Savings Areas
- Groceries: I reduced our grocery spending by 20%, mainly cutting back on meat, choosing generic brands and non-organic, and reducing the amount of alcohol I buy / opting for the $7 bottle of wine. Also cooking batch meals and freezing. And my amazing mom has been bringing us a meal each week, which has helped immeasurably.
- Savings Goals — We’ve put a couple of our savings goals on hold for now, including travel (can’t go anywhere anyway) and college education. (We were also aggressively saving for retirement, and that’s been put on pause during unemployment. Since this money was set aside from our paychecks before they hit our checking accounts, it didn’t affect our budget / expenses and isn’t included in the totals outlined below.)
- Takeout — We definitely reduced our “eating out” budget overall while social distancing, and we haven’t actually eaten at a restaurant (inside or out) since early March. But we’re being much more careful about takeout now too, sticking to $25 per week or $50 every two weeks if we want to splurge a bit.
Where I Didn’t Cut
- Boys’ Expenses: I didn’t cut our budget for the boys’ needs. They’re with us full-time for the foreseeable future, and they’re learning and growing at an alarming rate (slow down, please!). I wanted to make sure we had the funds available to support them and help them thrive through this chapter in our lives.
- Streaming Services: We only have two right now, Netflix and Disney+, and consider them *well* worth the $20-ish dollars they cost each month. And we don’t have cable, so this is our only tv entertainment source.
- Amazon Prime: Membership averages out to about $10 per month ($119 for a year), which I figured pays for itself after just a couple orders and keeps us from making too many trips to physical stores. We also stream movies and shows through our membership.
Our Unemployment Budget Savings Breakdown
I create four-week budgets, covering roughly one month or two pay periods (when we were receiving a salary). This helps me to account for and cover bills that occur monthly, and even annually in the case of certain subscriptions.
My budgets are pretty simple and include four main areas — Home, Car, Daily Living, and Other — with line items under each.
When building our unemployment budget, I took the same approach. Below is a summary of the cuts I was able to make in each area (and the things I left untouched), which ultimately reduced our expenses by 57%.
|Expenses||Reduction in Spending|
Cuts: Mortgage, utilities, repairs
No Cuts: Streaming services, cell phone
Cuts: Gas / repairs
No Cuts: Insurance
Cuts: Groceries, takeout, daycare
No Cuts: Personal $, boys’ needs, dog’s needs
Cuts: Travel saving, college saving, gifts
No Cuts: Amazon Prime
How Our Unemployment Budget is Working for Us
Our unemployment budget is pretty much the bare minimum, just what we need to get by until *hopefully* one of us gets a job. We’ve been living within it for a month and have been doing well so far. And it actually fits within our standard weekly unemployment benefit. Three relieved cheers for that ! ! !
Living through a pandemic, we’d already adjusted to a completely different, slower, homebody lifestyle that naturally cut a few expenses. But I can say that, being unemployed, we are that much more thoughtful about what we’re spending and when we’re spending it, and look for ways to keep from spending money we don’t truly need to — like cutting my own hair, making my own skin care, and making DIY toys / activities for the boys.
Cutting our expenses in half was hard. So hard. But I’m hopeful these sacrifices will be temporary.
Are you experiencing unemployment? How are you managing your budget? What are the things you just can’t live without and where are you making sacrifices? Let me know in the comments below.