MTV’s “True Life: I Can No Longer Afford My Lifestyle” chronicled three twentysomethings who once had highly paid corporate jobs that allowed them to live extravagant lifestyles. All of them lost their jobs in the recession and are now struggling to make ends meet. These people were brave enough to have their struggles documented for all to see. It’s easy to judge them, but this could happen to anyone.
Caitlin, 25, worked in the subprime mortgage division at Lehman Brothers right out of college. She bought a new sportscar, went out to dinner five to six nights a week, traveled extensively, and shopped frequently. Since Lehman Brothers went bankrupt, she has been working three jobs to get by. She relies on her parents for support her when she needs money.
Adam, 26, worked at a PR firm in San Francisco. The stress of losing his job eventually caused him to lose his girlfriend and apartment. He looks for jobs 7 days a week. Adam even applied for a job at the House of Prime Rib, a restaurant where he and his friends used to regularly spend $2,000 on dinner.
Aja, 28, is a mother of three who had an executive level job in real estate at a Fortune 500 company. She spent her money on fancy vacations, designer handbags and clothes, a nice house in Brentwood, and private school for her three children. Once she lost her job, she lost her marriage too. Now she is living in a one bedroom apartment, has some government assistance for groceries, works a part time job that only pays $40/mo., and is contemplating whether or not to keep her kids in private school to keep some consistency for the kids.
One of these three young people worked their way out of their situation is climbing back on top. The other was bailed out. The last one is still looking for a job.
These young people made it big in their 20s only to lose it all in the next moment. They didn’t think that they were expendable. But anyone is expendable. No job is really secure in these times. As I am writing this, people are losing their jobs in the magazine publishing industry.
What can we learn from this?
Save big. If you are lucky enough to have a job right now, save, save, save! Suze Orman recommends saving up to 8 months worth of living expenses. Saving up for a year is not a bad idea either. Also, save enough money to pay for your own health insurance. Cobra insurance is expensive. If you have a pre-existing condition, you may have to stick with Cobra until you find another job.
Spend less. When you have a job and money to spend, it seems like it will last forever. Chances are it may not last. It’s easy to spend. So don’t do what’s easy. Those who understand the importance of being frugal either have been through tough times or grew up in a family who struggled or valued frugality.
Pay off things. If you can pay off your car or credit card debt, now is the time to do it. Don’t wait until you are laid off. Caitlin worked three jobs to pay for her car payments and car insurance.
Support your significant other. Two of the three people featured on “True Life: I Can No Longer Afford My Lifestyle”, were dumped by their signficant others once the good times were over. The stress of not having enough money can put a strain on a relationship. This is normal and it happens to a lot of people. If you are going through this, be patient and support each other. Seek spirtual guidance if you are religious. If you two can weather this storm, you can go through anything. In the end, your relationship will come out stronger.