Akanksha Aurora, a Los Angeles-based writer and comedian, found herself in a dire situation after suddenly losing her full-time job.
“I was completely depressed and going crazy,” Aurora said. “It was really scary, [required] It's a major downgrade in lifestyle. ”
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Things have gotten better since then. Aurora now has a new job that she loves. The problem is that her salary is significantly lower than in her previous role. The drastic pay cut meant that Aurora's lifestyle required even more pay cuts.
Find out how Aurora scaled back her financial life to make the most of less income. GOBankingRates has also compiled some advice from financial experts centered around what you can do if this happens to you.
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I temporarily moved to a country where living costs are low.
Aurora's entire family is in India, where the cost of living is significantly lower than in the United States. After losing her job, Aurora returned to India for several months.
“I took the severance check they gave me and rented a beach villa in Goa for two months,” Aurora said. “I saved up a lot of money and took a remote writing job at an audiobook company. It's a 1099 job, so there are no benefits, and the pay is much lower than my previous job. But I like the flexibility of working remotely. .”
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Subscription canceled
I had no choice but to cancel my subscription to Aurora.
“We canceled everything,” Aurora said. “No-makeup subscription box. No Netflix, Hulu, etc.”
I signed up for a phone plan with a friend.
Rather than continue paying for her own phone line, Aurora worked with a friend to sign up for a phone plan together.
“Now my bill went from $80 to $50,” she said.
My friends and I buy in bulk at Costco.
Aurora also works with friends to keep her grocery shopping within budget. She and her friend got Costco memberships. They buy in bulk, including from the frozen aisle, and divide the items accordingly.
Stop going out and use your free time more creatively
Due to the big pay cut, Aurora has to decline invitations to events ranging from happy hours to weddings, but she's not as upset as one might expect. She probably found a better way to spend her precious free time.
“I only do what I love in a limited way,” Aurora said. “I found a way to be more creative. Now that I have time back, I can put it into figuring out what I really want to do, and maybe someday make more money than I did before.” not.”
Get budget-friendly recipes on TikTok
“I spend a lot of time looking up budget recipes on TikTok,” Aurora said. “There are a lot of poor people out there making really good food!”
I eat less meat
Meat isn't cheap, so one of the healthy and frugal actions Aurora has taken while living on a significantly lower salary is to reduce her meat consumption.
I will continue to use public transportation
Aurora has since returned to her home in Los Angeles, where many believe having access to a car is critical. But that's only if you're not familiar with public transportation.
“I don't have a car,” Aurora says, nodding at the money she saved by forgoing this luxury in favor of public transportation. “I never did.”
I'm prioritizing my mental health and I'm actually happier than when I was earning more
Although Aurora is not as comfortable in her life as she was before she lost her previous job, and admittedly worries more about money, she has actually been feeling happier lately.
“I'm living on much less money now, but my mental health has improved a lot,” Aurora said. “It's nice to feel free in a way. I can work from India, so I'm planning to work from Mexico City next month.”
If this happens, make a budget to accommodate your newly reduced income.
As soon as her income decreased, Aurora did the right thing by immediately creating a budget to reduce her income. That's what financial experts recommend.
“Planning your budget to account for your new reduced income can help you identify areas where you may be overspending. [you] We can identify cuts that are quick, easy and painless,” said Jeff Mandel, CEO of Credit & Debt. “This exercise and process is healthy and should be done at least once a year.”
Distinguish between wants and needs
You may have already become adept at distinguishing between wants and needs when you were budgeting for your previous salary, but when your income takes a hit, like Aurora, it's important to keep a firm grasp on this. need to do it. For example, she canceled her subscription service. she saves money
“'Needs' are essential items such as food, housing, and transportation,” Mandel said. “'Wants' include things like cable TV, streaming services, eating out, new clothes, and vacation expenses.”
It sucks, but it's not the end of the world.
Experiencing a significant pay cut is frankly very disappointing. However, keep things in perspective. As Aurora showed, there are ways to do well on a low income.
“[A pay cut] It's not the end of the world,” Mandel said. “I hope your salary cut is only a temporary change that forces you to eliminate areas where you are overspending and practice more financially smart and disciplined habits going forward. When it increases again, you can actually save more money.”
GOBankingRates Details
This article originally appeared on GOBankingRates.com: I Survived a Huge Salary Cut: Here's How I Downsized My Financial Life
