Layoffs and unemployment have dominated the news cycle over the last 5 years since the economic downturn.  Job numbers are consistently a topic of discussion, as that statistic is a lagging indicator of overall economic health and direction.

Last week we talked about what you should do when an unexpected blessing comes your way – a bonus, a gift, an inheritance, etc.  But what about when the opposite happens, when you have an unexpected loss of income or unexpected expense, like a layoff, hours cut, medical bill, or significant car repair?

If not handled well, unexpected income won’t hurt you – you’re probably just having fun.  If you don’t handle an unexpected income loss well, it can really hurt you.  Layoffs and other income changes have resulted in damaged credit, harassing collection calls, and even repossessions or foreclosures for thousands of people across the country.

To prepare for a loss of income…

1) Build your emergency fund!
You can’t do this fast enough.  Especially if you own a home, you should have an emergency fund of 3-6 months of expenses.  Set aside money each month to go into a separate account that you touch only in an emergency!  A job loss, medical scare, or major car repair would qualify!  Our emergency fund sits at about four to five months of expenses.  In case of a job change, you obviously want to replace your income ASAP, but that emergency fund can help cover the bases for a short period while you’re working on that.

2) Identify non-essential expenses.
What could you live without?  I know, right now, that we could cut Netflix, stop eating out, reduce our cell minutes allowance and data plan, decrease our blow money, and reduce a few other discretionary categories like gifts and clothing to save at least a few hundred bucks a month.  What could you do?  Thinking about it beforehand will help you avoid a deer-in-the-headlights approach when something happens.

When a loss of income happens…

1) Pray.
My Bible says that God will provide all my needs according to the riches of his glory (Philippians 4:19).  My Bible says that God cares for ravens and wildflowers, so how much more does he care for and will he provide for us? (Luke 12:22-31)  First off, turn to him.  Ask for what you need.  And keep asking until it comes to fruition.

2) Spring into action!
I love the quote from St. Augustine, “Pray as though everything depended on God. Work as though everything depended on you.”  Though God will provide, he uses me to provide for me.  So if it’s looking for another job (part- or full-time), cutting your expenses, or another approach, spring into action!  Don’t just stand there, do something!  The severity of your action should be relative to the severity of your income crisis: more intense need, more intense action.

3) Cut those non-essential expenses.
All those expenses you identified?  Start turning them off, diverting whatever money you can to the essentials.  Verizon will still be there as soon as your income comes back up to sign you up for more data, you can count on that.  So cut out what you can immediately, then look for more things to cut if the income challenge continues.

4) Beat the pavement like it’s your job.
If a job is what you need, that is your full-time job.  Wake up for the work day, exercise, read the Word or something inspirational, and get after it.  Not just faceless e-resume’s from miles away, follow-up with a call or a visit.  That’s the kind of initiative employers are looking for!  If you need to pick up another part-time job to cover the expenses, find one worth your time and go after it!

For as many people are experiencing an unexpected blessing, possibly many more are facing an unexpected trial from a huge expense or loss of income.  With preparation before and action when it happens, we can avoid many pitfalls can throw us off track.

When have you experienced something like this?  What did it take to get through it?