Getting by without a job, part 3--cut spending


[Editor's note:  If you recently lost your job, take a look at Wise Bread's collection of tips and resources for the recently laid off.]

With the economy tanking, more and more people will be not just losing their job, but will be finding themselves without one for an extended period. When that happens it's not good enough to just cut back a little and use debt to make ends meet until the economy recovers. Getting by without a job is possible, even for an extended period--but it requires taking drastic measures to cut spending, and it requires taking them early, while you've still got some cash.

This is part three of a four-part series. Part 1 was on the first things to do if you lose your job and part 2 was on boosting your income. Part 4 is on getting what you need without money.

Despite the fact that it's kind of hiding here as number 3 in a four-part series, this is really the kernel of how to get by without a job--you need to get your expenses low enough that you can cover them with just the money you can earn though casual labor plus whatever you can realize from whatever assets you've managed to hang on to (interest, dividends, rents, etc.).

Last year, when I suggested that it was possible to get by on a minimum wage job, I drew a considerable bit of mockery, so I'm expecting much the same when I suggest ways to get by without a job at all. Let me restate what I said then: We have a name for the standard of living that results from living on a minimum wage income. We call it "Living in poverty." Getting by with no job at all does not result in a higher standard of living--it is though, to my mind, an improvement. Minimum wage work is often difficult or dull (or both), and is too often dangerous as well. Eking out a meager existence on what you can earn through casual labor has the huge advantage of allowing you much greater choice in just what that labor is.

The biggest problem when it comes to surviving without a regular job is that most households have a terribly inflexible cost structure: Their bare minimum fixed expenses exceed any income that could be earned with casual labor. There is no getting around this except to completely change the cost structure of the household.

Most people resist this step until they've done permanent damage to their finances--run up debts that they'll never be able to pay back, had the heat and power turned off, or even been evicted.

It's a hard step, but you're way ahead of the game if you do this early rather than late.

Cutting fixed expenses

Most of the fixed costs for a household are tied up with housing. There's the rent or mortgage, there's the utilities, and there's the insurance. If you own a house free and clear with no mortgage (or if the payments are very low), then it may make sense to stay there (even though just utilities and insurance can add up to as much as the cost of a cheap apartment). If you're renting or have a mortgage, you need to look seriously at moving to the lowest-cost housing you can find--and start looking the instant you begin to suspect that this period of unemployment won't be the sort of brief sojourn that people can generally expect during good economic times.

The most obvious thing to do is to move in with relatives. Many people view this as the sort of ignominious defeat that's little better than ending up living in their car, but it's a step that can turn a catastrophe into just a bump in the road--if you do it early enough. If you wait until your savings are exhausted and you've run up a bunch of credit card debt, you can put yourself into a hole that you may not be able to get out of short of bankruptcy. One thing to keep in mind is that it is temporary. You're not moving in with relatives forever, just until the economy improves enough that you can find steady work again.

If you don't have relatives (or they won't take you in), other sorts of house-sharing arrangements are possible, such as splitting costs with a roommate or renting a room in someone else's house. Last year Myscha suggested twelve ways to house yourself for free.

The other really large expense for a lot of people is transportation. Owning a car costs thousands of dollars a year--and only about half the expense is the purchase price and financing; the rest is just fuel, maintenance, taxes, and so on.

If your car is paid off, it may make sense to keep it; it would put some opportunities to earn money within reach that wouldn't be if you had to rely on public transport or a bicycle or walking. But owing money on a car is just about untenable for someone without a job.  (Owing money on anything is just about untenable for someone without a job; a car is simply one thing that many people buy on credit.)

Those are the big ones. If you can reduce your cost of housing enough (and you don't have other debt that you have to make payments on), you can cover your other living expenses at some level, even with a very low income. In fact, if you live in a rich country and can find a place to live for free, you can very possibly reduce your other expenses almost to zero as well, at least temporarily.

Cutting variable expenses

My recent emergency belt-tightening post covered cutting variable expenses on an emergency basis, and that's a good place to start. If you're at the point of getting by without a job for an extended period, though, you actually need to ease up from those drastic measures. In an emergency you sometimes have to defer necessary expenses simply because you don't have the cash. Doing that, though, often costs more in the long run. If this isn't an emergency, but rather is the way you're going to be living for a while, you need to start taking the long view.

Figure out what you absolutely have to have. Then figure out the absolute cheapest way to get it. Things like buying in bulk and stocking up during sales can yield large returns. Wise Bread is full of tactical ideas for satisfying your needs as cheaply as possible.

Even if you don't have a regular job, if you have some income and really cheap housing, you can fund all your needs, and still have a little left over to satisfy a few of your wants. The key is to draw the line before your spending exceeds your income. That may mean that you don't satisfy very many wants at all, but "more than none" is really pretty good, in the grand scheme of things.

Don't screw up

When you're getting by without a job, you have much less margin for error.

For one thing, especially in the year after you lose a job, you have to be careful about taxes. If you don't have a regular job, you probably don't have any money being withheld. Looking on the bright side, if you're not making much money, you probably don't owe a lot. However, if you get any severance pay (especially if you get it late in the year), it can make the year in which you lose your job the highest-paid year of your life. Be sure that enough gets set aside to cover the taxes. If you dip into a tax-advantaged plan like a 401(k) or an IRA, be sure you know what the tax consequences are. If getting out of a house you can't afford involves giving it back to the bank, be aware that the IRS can treat any loan balance that the bank forgives as income.

For another thing, you probably have a lot less stuff. Some things you sold to raise cash. Other things you gave away or donated or simply tossed when you moved into much smaller housing. Little things like breaking a dish, that used to mean that you had an eleven place setting instead of twelve, now mean that someone has to eat out of a bowl until you can scrounge up a free replacement.

A minor car accident that used to mean dining out less for a few weeks until you'd covered the deductible, now means that you've permanently lost the interest that the deductible money would have been earning--if you haven't lost the use of the car altogether.

In fact, though, being careful not to break stuff and using things gently so that they last is just good sense--a wise habit that will be worth preserving even when times get better.

Enjoy it

Is there any overlap between living in poverty and living large? Personally, I think there is. Being forced by hard economic times to eke out a meager existence--that's not much like living large. But choosing to eke out a meager existence, because it's the best way to live according to your own values?  That's living about as large as you possibly can.

Most people never think about what they most want to do with their lives. They find something that they're okay at that pays enough money to support them, and then let a rising income drive a rising standard of living with no real thought even to the possibility that there might be alternatives. In hard times, though, the alternatives may be all you've got. Fortunately, there's a good chance that one of those alternatives is actually a better choice than whatever you ended up doing.

You can get by without a job if you cut your spending enough. And if you do that, you open up a universe of possibilities that most people don't even know is out there. Take advantage of the opportunity to explore those previously uncontemplated choices. If you don't like what you find, you can go back to working a regular job just as soon as you find one. Maybe, though, you'll find the alternatives as alluring as I do.

Especially in rich countries, it's possible to get a lot of what you need without money, which is the final part of this series.

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Guest's picture

very applicable article.. going threw my own 'experience' right now, on what to do next.. ripped apart the budget and axed pretty much anything non-essential.. wife took a 2nd part-time job.. still have yet to receive an Employment Insurance check though, but should start soon.. forced introspection.. the house is for sale, the one we thought we 'needed' to have; though it's been on the market for months with no sale, guess the price is going have to get allot more aggressive, we've still got a very long way to go before we'd hit was owing on the mortgage though.. If the house would sell we'd be fine for a long time..

Guest's picture

A fabulous post, as always. My husband and I think that our lifelong frugality is a function of graduate student poverty. We have a post on this on our blog...check it out!

By the way, I taught at Earlham for a while many years ago....your thoughtful posts bring back memories of my wonderful students there.

Philip Brewer's picture

@ frugalscholar:

Gee, if you taught at Earlham many, many years ago, maybe it was while I was there (which was 1977-1981).

Thanks for the kind words.

Guest's picture

Recently, I have both downsized my flat and have gotten rid of my car. It's been amazing how much money I've saved doing both of these things. But remember, it's also those little sacrifices which also make a big difference to your bottom line.

Guest's picture
poor boomer

Monthly income: $908

Expenses: Rent $650 (room in a house with nine people)
Medical exp $110
Student loan pmt $135

How can I reduce my expenses?

Guest's picture

You could buy a van (ideally, a camper van) and live in it. And/Or, you could find housesitting positions to spell you out, using the van as a "base of operations".

Philip Brewer's picture

@ poor boomer:

In Champaign, Illinois (where I live) $650 is enough to rent a whole house.

Guest's picture

I taught there from 1986-88.


Guest's picture
Mom of 6

There is a world of information available on how to spend less. Perhaps the best one you'll find is your own grand or great-grandparents who lived through the Great Depression. You might need to listen to several weeks of stories to get to the gem that you can use, but there are real diamonds in the experiences of those who lived during that era.

We have been living on one medium five-digit income for 25 years with six children. People look at us like we're nuts, but having a stay-at-home mom was important and we were willing to sacrifice to do it. Now that hubby has been laid off and we're trying to get by on even less, seeking out the advice of The Greatest Generation has helped me stay calm in the face of what most Americans would consider poverty (and most of the rest of the world consider unimaginable wealth.)

Guest's picture

An option if it is just you for a short term housing situation might be house sitting. I was looking at taking a job in another city, renting an apartment until we moved everyone just seemed like too much work. Someone pointed me to a local house sitting list. Free place to live and much nicer than any apartment since most of these were people who were gone out of the country for a month or more.

Guest's picture

but what do you do with a house? selling takes many months nowadays, and if you're "upsidedown" on your house and owe more than it would sell for in the current market, that means even if it did sell, you'd have to show up at closing with possibly thousands of dollars. and rents are depressed, so it's possible you couldn't even rent your house for as much as the mortgage.

it's the one part i puzzle about if i were to get laid off ... i can cut down everything else, i don't have car payments, etc., but if i were to get laid off, the house is a total albatross.

Guest's picture

Doing some voluntary work would be a good idea in-between jobs.
It immediately opens up your range of contacts and increases your chances of hearing about job.

Plus you can learn new skills and benefit an organisation that can't afford paid employees.

It's better to say when you go for an interview that you've been volunteering rather than doing nothing since your last job

Guest's picture


Mentioned your piece on 'Serge the Concierge' as part of my Monday Work Etiquette # 66 Time to Shrink or Time to Build.

I also included Wisebread in my Around the World in 10 Blogs list on

Take care

'The French Guy from New Jersey'

Philip Brewer's picture

@ Dianna:

You're right.  There may be no good answer for an underwater mortgage.  (I've been shaking my head in disbelief for years at the people who were saying, "Oh, no--you want the biggest mortgage you can get.  That way, if you run into problems, it's a problem for the bank as well as for you."  I think most of those people now understand that making problems for the bank does little to help the homeowner.)


  1. A short sale.  This is where you get the bank's permission to sell the house for less than the balance due on the mortgage.  Sometimes the bank will settle for the sale price and wipe out the debt.  Other times they still expect you to pay the difference--the balance due is just converted into an unsecured loan.  Even in the latter case, you at least owe a lot less money.  (Of course, you also have no place to live.)
  2. Negotiating a lower balance.  The federal government is pushing various plans to write down the balance due on mortgages to a reasonable fraction of the value of the house.  That might make the house affordable to keep.  It might just make it affordable to sell.
  3. Walking away.  In some places, mortgages are often made on a non-recourse basis--that is, the bank can take your house, but can't come after you for any balance due on your mortgage.  This is not universal!  Don't just assume that you can give your house back to the bank.
  4. Bankruptcy.  Especially if a lot of your assets are in retirement plans (which you generally get to keep in a bankruptcy), bankruptcy is one option for households with an untenable cost structure.

I'll grant you that none of those are particularly appealing.

In any case, be sure to get good legal advice early in the planning stages if you're considering any of these options.  There are all kinds of gotchas in the details of tax treatment, bankruptcy rules, etc.


Guest's picture

Above comment about living in a van was intended to be a reply to "poor boomer", who wrote,

"Monthly income: $908

Expenses: Rent $650 (room in a house with nine people)
Medical exp $110
Student loan pmt $135

How can I reduce my expenses?"

Living in a van would be the next step down the ladder. Plus you can sell it when you're done, unlike the room in the house, which is just an ongoing expense.

Not for most people, but worth considering.

Guest's picture


Mortgage : paid off

Motgage: paid off;
Utilities: $400
Food and petrom:300

Income from Rental(part of house): $800
Savings: $130,000
STOCK : $360,000
Raw Land :$80,000
Retirement saving nil
Age 61
Dependants none
Debt none
Am in a precarious position?

Guest's picture

You never really know what you can manage until you're forced to. I've become an expert at budget cutting almost, and the first step was eliminating debt.

Now the only things I pay for are my daily expenses like utilities, and food. I'm not burdened by car payments, credit card debt, ect.

It's very rewarding when people start talking about how much debt they have, and you ask them 'What's that?'.

Guest's picture

I'm pleased for your sake that your financial postition is good and you have no debt, but please be aware that verbalizing your gloating feelings to people who are in debt will likely be perceived as provocative as it is believed by many people to be unkind and may cause them to feel resentful towards you.

Guest's picture

That (^^^^) was directed to the comment by


Guest's picture

Seems almost daily -- or it used to -- that someone gloated at me about their fancy stuff, jewlry, car, teevee, etc. It's amazing how proud people can be of their bling, and how judgmental they can be of those of us who prioritize security over stuff.

Philip Brewer's picture

I have a problem with being smug.  I struggle against it (with some success, I think), but it's hard to conquer completely.

Much better, when you can manage it, is to share the joy you feel at your successes.  It actually turns out to be a lot more fun than feeling smug, plus it's a lot more likely to motiviate people to follow in your footsteps.

For example, back when I had a day job, I'd ride my bike to work anytime the weather was nice.  When I passed a gas station and saw that prices were way up, I found it hard to resist feeling smug (but managed to, mostly, keep it to myself).  When coworkers complained about gas prices, I (mostly) managed to keep my mouth shut.  When they said, "Have a nice day," though, I was always pleased to answer, "Yes.  It's always a nice day when I can bicycle to work."

Guest's picture

and I went back and read the old one too. I enjoyed it immensely. I enjoyed reading from the people who would NEVER move away from LA (okay then, that's your choice to live in an expensive place). I live in So Cal too, but if we lost our jobs, we'd be gone in a heartbeat.

The medical insurance issue was a good one too. Because back in the 60's, medical care was different. I was a kid in the 70s and 80s, and for a good while we didn't have insurance. We paid for dental visits annually out of pocket. No braces. The occasional doctor's visit. And when I had to have surgery in 1983, my parents paid that $6000 bill for YEARS, at $100 or so a month.

Guest's picture
poor boomer

Um, Philip, I have this slight problem...It costs MONEY to move across the country and I don't have it...and I'm not going to have it as long as I'm paying two-thirds of my income for rent.

This is the same reason I cannot move across town into a cheaper room.

Philip Brewer's picture

@ poor boomer:

Looking again at the little budget you posted, I'm guessing that the money you listed as "rent" actually includes food and utilities (since you don't list them separately).  If that's the case, then you probably couldn't save much money by moving.

Looking at your other recent post, I'm also guessing that you're disabled.  This makes a huge difference, of course.  Being disabled puts substantial constraints on the sorts of things you might do to either cut spending or boost income.

With that in mind, I'd have to say that I don't have enough information to provide any useful advice.  For one thing, you don't say if any of the income you list is from disability payments--if it is, earning any money on the side might reduce that income--and the general advice to do things yourself rather than hiring someone to do them for you may simply be impossible.  Even with more information, I don't know that I'd have anything useful to suggest.

Sorry I can't be more help.

Guest's picture
poor boomer

Guest -

Thanks for the camper/van suggestion. Unfortunately, I don't have any money to buy one, not to mention that I no longer have a license to drive.

Several years ago I had an extended hospitalization, during which my car - which was parked at the back end of the driveway furthest from the street, with two other cars parked directly behind it closer to the street - got a bunch of tickets because the tags were expired.

I didn't even know about the tickets until it was too late to contest them. With late fees yada yada I owe several hundred dollars and my license was suspended until the tickets are resolved. I never returned home because I was not able to walk up the steps - family flew me to stay with them - now I live umpteen thousand miles away and doubt the tickets will ever be resolved.

So I don't expect to be doing any driving in the foreseeable future.

Guest's picture

Poor boomer - I take it you live in the US. Have you called your student loan company? Many lenders will recalculate your monthly loan amount based on your income level. They may even forgive part of your debt, if you qualify for very low income.

Explain your problem - you're barely making ends meet and can't afford the monthly payment. Many lenders would rather have a smaller monthly payment than non-payment.

Guest's picture

People always hate to talk about when they are laid off. But as it has become every day's news headline since Yahoo started it with cutting 1500 of its task force last year, now a need of platform has been in demand where people can express their selves in words how they are feeling about their company, whey the got laid off was that justified or not.
And every thing they want to tell anonymously.And is providing you that platform.

Guest's picture

I have a very close friend, who graduated from Harvard. Worked for ML for over 8 years, recently he’s been "right sized" too, despite of outstanding performance. OMG, now the banking industry is badly hurt, how long it would take for those financial background guys like him get back to the job market. Banking jobs are not there as much as before as easily seen on and other job sites in the region

Guest's picture


Just wanted to say thanks so much. I've been looking for an article just like this, basically advice on what to do if you've been laid off that's practical and even hopeful. I just got laid off last week and after reading this, I feel a lot better.

Guest's picture

Marketing has brought us to a point where we believe is essential to have a premium gym membership instead of enjoying the benefits of running in the park, or Tv cable and subscriptions to magazines and newspapers. Most of these are thrown away money since today you can find a lot of information and entertainment on Internet.