This is a transcription of the JeffEffect podcast from April 13th, 2020.
Surviving Unemployment Right Now
I originally had no intention of doing this podcast, none whatsoever. But you know what? I think it's really needed. I think this is something that a lot of you need to hear because it's going to help you right here right now.
[0:56] The economy, the Coronavirus. It all sucks. You're now unemployed. Now what? Well, as I mentioned in my previous podcast on understanding unemployment and the economic thinking about unemployment, I mentioned I have been unemployed several times in my life, sometimes very unfairly, one time during national crisis. And you know what, now I'm unemployed like a pro. I know how to be unemployed really well. It's a skill I didn't want to have. It's a skill I hoped I never would have to learn. It is also a vital skill, and today it's a very valuable skill. I'm going to share that with you just because I want you to be happy and I want you to have as least-bad experience for the next month or so as possible.
So, to rehash, I have been exactly here before. I said it before — the duel economic slap in the face in 2000-2001 with the bursting dot com bubble and then 9/11, we were wiped out. We were wiped out. It just kicked our butts. And as a result of that, we spent a period trying to find jobs and do jobs and get re-employed again. Whether you're unemployed or you're under-employed, which means you're not making as much you can or doing cool stuff like you're used to doing, it doesn't matter. You are in this time. You are in a place where you are not working at your normal job, but here's the deal. I want you to shift your thinking.
Be Jobless Like a Champ
[2:58] You are unemployed. Right now, you need to treat your time without a job as if being unemployed is your job. You need to be kind of a professional unemployed person. You need to be jobless like a champ. You need to be jobless like a pro. That starts with a really simple premise, and it sounds easy and like, “oh yeah, Jeff, I know, I know. Everyone always says this. Yada yada yada,” just repeating things over and over again. But, there's two principles here. You need to get cash and you need to spend less of it. Sounds simple, right? Believe it or not, it is. If you can get your ego and all your confusing thoughts and your depression about the whole situation, if you can get that out of the way and just look at this clinically, you can do a better job of getting cash and a better job of spending less of what you've got.
You've got to collect cash with a shovel and pay it out with a teaspoon.
You’ve got to gather your cash together like a fire hose into a pool. You need to spend it with an eye dropper.
I'm not just spouting this off as philosophy; I'm spouting this off as somebody who has done this. I have lived this more times than I would like to. It got me through it and it’ll get you through it, too.
You’ve got to gather your cash together like a fire hose into a pool. You need to spend it with an eyedropper.
[4:35] First, we're going to talk about getting cash and we're talking out spending less. First things first, let's get some cash — and you can.
Unemployment Insurance
I remember the first time I was unemployed, I was embarrassed about filing for unemployment insurance. I had this stigma in my brain that was kind of blocking me from wanting to do it. Call it pride, call it whatever, and it's good that we have instincts in our brain that we don’t want to accept unemployment insurance. We have to remember something. It's not charity. [It’s] from your paycheck whether you paid yourself through your small business or whether you are paid through somebody else on a regular paycheck, you've been paying a small bit of your wages every single month towards unemployment insurance.
More specifically, your employer has on your behalf. This is money that's specifically set aside for your times of unemployment, so you need to get that out of your brain as being a problem. It’s not supposed to make you comfortable in unemployment, but it’s supposed to help bridge the gap. In reality, I got to jump back a lot. The reality between success and failure while you’re unemployed can just come down to a couple hundred dollars a month. It's amazing what a difference that makes in your capital burn and how fast you burn through your reserves or how you’re able to hang on for an extra month or two. It makes a huge difference. Just a few hundred dollars a week extra from unemployment insurance — it’s a big deal. You have no idea what a big deal it is and how it makes a difference in your life.
Sell Stuff … Seriously, Sell As Much As You Can
[6:10] Next thing. Sell stuff. Trust me, if you're an American or you're anywhere in the first world, in fact Americans are probably more guilty of this than anybody else, we have lots of stuff. We have more stuff than we need. We have old pairs of shorts and concert t-shirts that probably go back to our high school years sitting in a box somewhere. We have old vases and lamps that no longer serve a style but we aren’t ready to part with them so we put them in different places. We have extra sets of towels. We have all kinds of things. You would be amazed how much stuff you have that you don't need. You think you need, you want, you were probably just purchasing at the time for shopper therapy to make yourself feel better, but you have a lot more than you need, but I got to tell you something. Somebody wants it. There's somebody out there who wants that extra set of matching dish towels that you got sitting back .…
Think about this — all those ugly old gifts that relatives who have no clue about your personal style, they gave it, you stuck those ugly reindeer printed Christmas towels and you only bring them out once a year, you don't really like them. Somebody wants them. If we're just talking about 5 or 10 bucks, you get enough of these $5-10 things together and you sell them on eBay and then ship them out. Not only will you be productively engaged, actually doing things in a way that generates money, but you'll generate some real money.
You can’t do a yard sale this time [social distiancing]. My two most successful periods of unemployment, we did huge yard sales, and we just sold extra stuff in the yard. One of them, we made $1200 and another one we made $2300, $2400. Cash flow. Old filing cabinets, old countertop wine racks, books, CDs, record albums that I collected at one point but I haven't listened to and looked at or pulled out my turn table in a long time. I sold some of those. I play bass, so I discovered I had an old small practice bass amp. I hadn’t used it in years, didn't like the tone anymore. Somebody paid me 50 bucks for it. This is the thing. You have things you don't use .… Old digital cameras, because now you take all your pictures on your cell phone. I guarantee you somebody wants that old Pentax 9 megapixel camera that you got back years ago. Somebody is willing to buy it from you for a few bucks. You don't have to make a killing; you just have to get some cash flowing. It’s a great way to do it. Don't sell yourself short. You'll be amazed how you can rack up some cash.
You Are Now A Part of the “Gig Economy”
[9:03] Next thing. Whatever you did for a job, there's someone out there who's willing to pay you to do it as a gig online. Think about that. Whether you go on to Upwork or Fiver or whatever service you have out there, there's a lot of gig market places out there. Brace yourself. If you're used to making 20-30-40 or $50 an hour at you normal job, you don't have that money right now. It doesn't matter. Making 5 or $10 an hour, keeping your skills sharp and doing something online for work and generating some cash flow for 5 or $10 an hour is totally worth it. It makes a difference of hundreds of dollars per month. You have no idea.
Pride Is Worthless When There’re Bills To Pay
[9:53] Next thing is when the economy starts up again and it will, whenever that may be, it will be slow at first. Real long permanent jobs will be slower to come back. Employers will be getting their money together, trying to get sales together, cautiously approaches in the economy so that they're not worried about another double dip. They’ll be approaching it slowly, so your chosen type of job may just not jump back on the market right away. You might not be called right back right away. There might not be some good job postings for you right away. Here's my philosophy … when I'm unemployed. This is careful. This is secret; this is top secret. Ready for this? Here's my philosophy, my secret to doing jobs when I'm unemployed. Any thing, any time, any way, any how, any where for any pay. Think about that for a second. That takes severe self-honesty and humility.
I want to tell you story. This is a true story. It goes back 25 years ago, I think. I was in the printing business and we did printing for aerospace companies. That’s how I got into technology. I was doing printing and manuals and stuff like that for high tech companies and I got recruited from the printing shop because obviously they were smart people. Aside from that, I knew a guy who was an aerospace engineer. He was a customer and became a friend, and he got laid off. Something that happened cyclically in the aerospace industry, layoffs happened. He got laid off for a while. He was unemployed and laid off for about 5 or 6 months, and I just wanted to see how he was doing so I took him to lunch. He said, “Jeff, I'm really concerned. I've burnt through my savings. I think I'm going to lose my house.” I said, “Well, get a job.” He says, “Jeff, you don't understand. I'm an aerospace engineer. There's not a whole lot of jobs out there for guys like me right now.” I said right back to him, “No. You were an aerospace engineer. Now you're a guy with a mortgage.” Probably at the time, I said that in a little bit harsher than he needed to hear, but he needed to hear it, right?
[12:28] Whatever your job is …. You are a software developer, or a network engineer in a data center, or you're a guy who does marketing for Procter and Gamble. It doesn't matter. That is what your job was. And when you're unemployed, it is not your job. When you have bills that need to be paid, sometimes you got to take things that aren't in alignment with your career path. What matters is getting some cash flow together. This is my philosophy, anyway. It's worked out for me. So a couple of times where that worked — I remember one time very early, I lost my job. My lovely wife who’s always been very supportive, she took and she was actually working for a temporary help agency. She got me all kinds of jobs, all kinds of little day jobs. I would spend a couple of days in a legal office, and then I would spend a couple of days doing construction, and then I’d spend a couple of days moving carpets around a warehouse. Literally, I took whatever they had. I was a writer. I took a couple of days where I was just a typist. You can't be too proud for that. You have to take the job you need at the moment.
Another time, I was unemployed and my uncle who was a general contractor, he just needed somebody to sweep up at the end of the day because it was a requirement for the city. He said, “Jeff, the only work I got for you …. You don't have any construction skills. I need somebody to sand down. My drywall guys need the walls sanded down, and I need the whole place swept out.” Dirty, smelly, unforgiving, low-paying work, but grateful to have it. I was a professional guy, but I took that job and I was grateful for it. You need to be, too.
[14:15] One more quick story. Bridging a time of transitionary unemployment, I wrapped up one job and I was getting ready to start another one, but the new job didn't start until after the holidays. I took a job just to keep myself busy. I took a job selling watches and I was the best damn watch salesperson at the company. Anyway, I still have the free watches they gave me for awards for top salesman in my short 3-month tenure there. The point being is that your job doesn't define who you are, but your willingness to work does. That’s just it.
Borrowing Is Your Last Resort, But Be Smart
[14:52] Next, you can borrow. I think all of us, throughout the course of our life, there have been times where our parents have loaned us a little bit of money here and there. It's not sustainable, but you can't be too proud to ask, borrowing from family. And last but not least, if you were working for a major corporation and you had a 401k, it is set up so that you can borrow funds from your 401k without tax consequences. You have to pay it back at a very low interest rate — less than 1% or something like that, but you can do that. But again, borrowing should be your last resort. Get cash other ways.
This is just practical how-to. This is just practical do-it stuff on how to get cash. If you put your mind to it, and you decide that you like keeping all those ugly Christmas sweaters up in there because in case you go to an ugly Christmas sweater party, I guarantee you somebody’s going to pay you 20 bucks for that ugly Christmas sweater. You'd much rather have the 20 bucks right now than just oddly be prepared for your next ugly sweater party next holiday season. I hope that made sense. I'm sure that story is speaking directly to somebody in the audience and I hope it's you.
Spending Less, A LOT Less
[16:05] Next. We talked about getting cash. The next thing, spend less. Deep practical stuff. Maybe you know this, maybe you just needed me to kick you in the butt with this. Spend less right away, and you can.
Autopayments & Subscriptions
First things first, the world has moved to a subscription economy. It may or may not surprise you that if you truly comb over your credit card bills and your debit card bills, and you look at all the automatic payments that are coming out, not things like you've set it up to pay your electric bill from your account automatically each month. I'm not talking about that. I'm talking about all the software and music. When I just did my recent …. I try to clean house every year at least once just before tax season and go through and make sure I don't have unneeded subscriptions I found out I have four streaming music services. Four. I don't need four. First of all, I own a ton of music. Why do I need four? I should pick the one streaming music service that is the best and most suited to my style and taste and user preferences, and cancel the other ones. You should, too. In a real pinch, you cancel them all.
Time To Cut The Cable
What about your cable bill? Most Americans have a cable bill. A cable bill includes TV, internet, and phone. That’s most people. You only need one of those. You only need one. You only need the internet. You don't even need basic cable; you need sub-basic cable. You just need an internet pipe these days. It used to be kind of a cool trend the last couple years. I’m a cable-cutter; I'm just streaming things over the internet. Hey, look at me, I'm cool. I’m a cable-cutter. You know what's now? Now is everybody needs to be a cable-cutter because the only thing you need is the internet. You need the internet to be able to, of course, surf the web and to do some tasks, do your job and your research, and do all those things you do on your computer, but you can stream everything you need over the internet. There's free YouTube content out there. That brings me to the next point.
[18:23] Next point. You have all that stuff out there. You have the premium cable. You just need basic cable. You don’t even need that. I’ll tell you what else you don’t need. You don't need Netflix and Hulu and Sling and Disney+ and Amazon Prime video and YouTube TV, and the ESPN NFL package and the ABC Now for $5 a month. You don't need any of those really, but you can be perfectly happy just picking one good one. That’s what we did. We cancelled all the other pay ones and we just have Sling. Now, you choose the one that's right for you, but you don't need those other things. Is time to trim those away. I guarantee you …. if you want to have the luxury of having 17 streaming services out there to watch whatever you want to watch whenever you want to watch it, that's great. But, you just got unemployed, so that's not for you right now. I guarantee you, when this thing starts to blow over, all those subscription services will be sending you special come-back offers. I guarantee it. They'll try to keep you from leaving, you'll go in trying to cancel, and they’ll say, "Hey, don't cancel. We’ll give you a discount or we'll give you another month free. Don't cancel, don't cancel,” but you cancel. Then they're going to be marketing the crap out of you for months trying to get you back. I promise you that's the case.
Your Cell Phone Bill
The same thing is true with your cell phone bill. I'm going to give you a little insight here. If you're doing it correctly, when you talk on your cell phone bill from the house, you're not using any cell phone minutes at all because your phone’s connected to your WiFi network in your house. You're not leaving the house right now. You almost don't need any cell phone minutes at all. Just think about it, for the first time in your life, you can use a cell phone and not consume any cell phone minutes. Call your cell phone provider now and dial your plan down so that you have the smallest amount of minutes and data plan as possible. All connections through your home WiFi network, all Wi-Fi calling, is included, is free because you're just using your own network. You can do this right now. If you're a family of four, you're going to save hundreds of dollars a month. You just are. You just dial the plan down.
Self-Awareness Time — Sacrifice The Unprofitable
[21:10] Next thing — you need to have some really strong honesty with yourself right now. I'm in a unique position. I've been an independent consultant for five years. I work from home and I do that. And by the way, you need to go out there, and last week, I put out the podcast episode three of the Jeff Effect Podcast: “Let Me Help, Working from Home Survival Guide”. Some of you are working from home for the first time, and it's freaking weird, and you're a little bit depressed and sad, and you're a little bit lonely, you don't know how to deal with it. You need to go and listen once this one’s done to episode 3. I can help you because I've been through that.
I’m going to go on a limb here. I’m going to speak specifically about Shopify because I know the network really well, and I've got friends in the business. Shopify is a great product if you’re into e-commerce. It’s a great product; I recommend it. A lot of people right now are going to be trying to start their own side gig or their own online business. It's not all roses and peppermint mints. It is a hard slog. It takes some capital to get started. If you know what you're doing and if you're fully committed and you truly believe in your product and you've been working towards this goal for a while, maybe this is your chance to do that, but let's have some honesty here. Right now, Shopify has over a million e-commerce stores in their portfolio. I’m going to give you a little bit of insight. Most of them make no money. Think about that. Most of them make zero. Most of them lose money.
Shopify is a subscription service. You are paying to keep it open and maybe you make a buck or two, maybe you lose a buck or two. It's kind of your dream, but you like it, and maybe you're selling T-shirts with funny sayings on them, or maybe you're selling press-on nails. Maybe you're selling vaping supplies, which is a business that has a lot of endemic problems these days. Whatever it is, you're doing something in your Shopify store and you kind of like it, and you like being able to call yourself an entrepreneur, but you got to be honest with yourself. You either go all in and you get that sucker running and you start generating some real sales or you've got to turn it off. You can't afford to have it sitting there just losing money because you're not working it, but that's okay. You have to be honest with yourself. It's okay to say, “You know what? I'm not disciplined enough or good enough to make a living there.”
The point being is, if it's not making any money, it's costing you money, and you don't have clear visibility that it’s going to start making money for you real soon, you've got to turn it off. Otherwise you’re just throwing your money away. It’s not a very popular thing to say right now, but you have to be honest with yourself.
Hidden Savings — Your Car In Now Over-Insured
[24:15] Next, this will surprise you. Call your car insurance company. You're about to save some money. All car insurance rates are based upon three things: the value of your car, your driving record, and the number of miles you drive back and forth to work. I think you can see where I'm going with this. You have your car still and that car is just a depreciating asset right now. It's worth less unless every day, but you can't change its value overnight, so that is what it is. Your driving record is probably getting better right now because you're not driving a whole lot. And if you were kind of a speed demon, you’re not speeding now. The last component — if you normally drive on average, let's hypothetically say, 15,000 miles a year, which is about middle of the road for most people, you have a rate that's calculated based upon 15,000 miles per year. That’s how much exposure they have. Right now, if you’re unemployed, you're probably on track to drive 2,000 miles this year. This makes a difference.
I know the first time I stumbled into this when I became fully working at home five years ago, my insurance company, a great insurance company, USAA at the time …. Although USAA doesn't insure me here in Puerto Rico. They don’t do business here yet. They didn’t have a number less than eight. Previously I was saying I drove 24,000 miles a year, which was true. I drove about that. Then I started working from home and the lowest number they had in the form was 8,000 miles a year. Every year, they sent me a note just checking, "Hey, you know what? This is pretty low. Are you sure you're only doing 8,000 miles a year? We want to make sure.” I’d say “Yep, I’m doing less than that.” They’d call me on the phone sometimes, “Mr. Hardy, you’re still working. We see all your activity, but you’re only claiming less than 8,000 miles a year.” I say, “Yep, because I’m working from home.” That’s it. I saved hundreds of dollars a year on my insurance. Do that. This has got to be golden for you. This is something you can do tomorrow. You could just call the insurance company, “Hey, dial my insurance down. Oh, by the way, when I bought the car new, it was worth $30,000. Now it's worth 15.” Reset your collision damage, a reimbursement to fit to the value of your current car as it is today. Tell them your new miles. You're going to save hundreds of dollars. It's crazy.
Call Your Landlord Or Bank
[27:04] Finally, this: these are unique times if you have a mortgage or if you have a landlord. Call them. Ask them if they have a Covid plan. Ask them if they have some sort of a new Covid special edition rescue thing that takes and lets you skip a couple of payments. They're going to add the payments to the end of your loan or the end of your contract most likely, but that's okay because you need cash right now. You need to have the cash in hand for the next couple of months until this economy gets going again, until you have a job available to you. You need the savings now. It doesn't hurt to ask. It doesn't hurt your credit to ask. Ask them if they have a special plan. Say, "Hey, you know what? My rent here is due to be up in December. What if we did this? What if we skipped the next two months, we put it in writing, and we skip it.” Put it in writing, signed by both of you and keep a copy. “We make it an agreement that we're going to skip the next two months with the rent, but then I'm going to extend my lease by two months at the end so that you’re not left hanging after the Christmas holiday,” and make him an offer. He can say no.
Your bank, same thing. You have 25 years left in your mortgage. “How about this, Mr. Banker. How about you re-calculate, give me a three-month window to recover, and you just put it on the end of loan?” I'll bet you the major banks have this plan in place. Doesn't hurt to ask, doesn't harm your credit to ask if they've got some sort of a Covid plan for guys like you in place, or gals like you in place. Then you can take advantage of it. Again, get and save and preserve as much cash as possible.
Coupons & Sales Really Work
[29:06] That's the big stuff. But if you spend some time, you're going to think of stuff that I don't think of. Oh, I got one more. Guess what? If you're unemployed, in addition to being unemployed like a pro, you are now a professional coupon-clipping, sales-searching, bargain-hunting maniac monkey. That's who you are. Now you don't buy gourmet chai tea in little wax paper folds anymore; you buy Lipton when it's on sale. Another thing, if you smoke, you just quit.
Smoking & Other Vices
Honest-to-goodness story. I had an employee when I worked at the software company, and she smoked. She was thinking about quitting smoking, and I just made a comment, as I made no pressure from me. She didn't smoke in the office. She was very considerate about it, but she smoked a pack-and-a-half a day, something like that in total. I just did a spreadsheet for her one time. She was young; she was in her low 20s. I said, “You know, I hope you really like smoking.” She says, “I do.” I said, “because that smoking is costing you a million dollars.” She looked at me like I was crazy. I don't blame her. It sounds crazy. I just took and went online, found her brand of cigarettes, and I said, “If you smoke until the age of 60, you have two choices. That's a certain amount of money and you have a choice to invest that money in conservative investments or to spend it on smoking.” The difference between the two was a million bucks. Absolutely true. I should just redo that spreadsheet and show it to everybody because everybody thinks I'm nuts. They think I’m just being crazy. But when you look at it, over 40 years all that money spent on cigarettes …. Now, I'm not preaching at you. If you want to keep smoking, go forth and puff. The point being is that cigarettes are expensive, they're not really socially acceptable, they make you smell a little funny, and that money could be put to much better use.
[31:18] What about this? I love my coffee. I made this decision a long time ago. If you are a double caramel latte per day person, guess what? Now you’re not. I love my coffee. I would sacrifice a lot of things before I gave up my coffee. Everybody who knows me knows that about me, but you know what? Starbucks is the most expensive coffee on the planet. It just is. You can get a machine at home and maybe it's not 100% as good. Maybe it doesn't feel as special as going to Starbucks, but Starbucks just wants your money. That’s the plan. In a presentation I gave a couple of months back, I used Starbucks as an example. I think these numbers are still accurate. They spend hundreds of dollars for the cost of customer acquisition and you think, "Well, how can they afford to do that? How can they spend say 120 bucks to get a customer when it's a $5 cup of coffee?” It's not a $5 cup of coffee. Once they have you as a customer, they know that you're going to be a customer for somewhere between 17 and 23 years, and that you’re going to spend $27,000. They know this about you. Just think about that.
You would right now rather have that $1,000 a year or so. You'd rather have that than not have it. If you look at it that way, you'd probably much rather be mixing up some cream and frothing some milk on your stove if you have to, and keep that $1,000 in your pocket over the next few months. Just saying.
Other Bits & Pieces
[32:56] Other little tidbits — Do you have health insurance? I'm not being political. I got to tell you …. I got an example for you. It's a company. I get nothing from them. I don't own any stock in them. In fact, right now I don't own any stocks. Nothing else is influencing me. United Healthcare, in most of the continental United States, has a division called Golden Rule Health Insurance, and that's the division of United Healthcare, big secure well-capitalized national healthcare and insurance provider. Golden Rule Healthcare. All Golden Rule is is short-term catastrophic care and it's really cheap. I'm 55 with no underlying health conditions, and I could get a catastrophic plan where I pay big deductibles and stuff, and I have a deductible up to about 2,500 bucks, something like that. But, I'm covered if anything major happens. If I break my finger, I'm probably paying for it myself. But, if I have something really major come up, the insurance kicks in and I don't pay a thing. I was able to get fully covered as a middle-aged guy for 130 bucks a month. I think it’s $127 and change per month. When you're unemployed, you don't need bells and whistles. You're under less risk. You are not as prone to get in car accidents. Your risk is less and you really just need catastrophic care.
Embrace Your Feelings, But Do Not Be Ruled By Them
[34:37] Lastly, I'm going to remind you of this — being unemployed is just depressing. No matter how kind of good it feels for a minute because you feel naughty not doing something, feels like you're playing hooky from school, deep down, it's not a good feeling. Nobody wants to be unemployed, not really. You may want a different job, or a more exciting job, or a better paying job, or you may hate your boss, but nobody really wants to feel unneeded and underutilized. That's just a bad feeling for most of us.
Embrace it; it's real. If you need to go back and listen to episode three, that'll help you, too. Again, episode three is titled “Let Me Help, Working from Home Survival Guide”. Part of that is exercising every day. I can't tell you how important that is for me to keep my head right.
This Will Be Over, You’ll Be OK
Okay, guys, that's it. If you have any specific questions, just DM me on Twitter. It’s the best way to do it. If you have a specific question, I will have a confidential and private conversation with you, I'll give you a piece of advice. No charge. That's just the way it goes. Or, if you want me to take and explain something about economics, or messaging, or business analysis …. If you want me to do that and you have specific topic you'd like me to talk about for a bit, just propose a topic and I'll see if I can cover it. Don't forget to subscribe. That's it.
Okay, guys, that's it. If you have any specific questions, just DM me on Twitter @jefreyjhardy. It’s the best way to do it. If you have a specific question, I will have a confidential and private conversation with you, I'll give you a piece of advice. No charge. That's just the way it goes. Or, if you want me to take and explain something about economics, or messaging, or business analysis …. If you want me to do that and you have a specific topic you'd like me to talk about for a bit, just propose a topic and I'll see if I can cover it. Don't forget to subscribe. That's it.