When Akanksha Aurora, a Los Angeles-based writer and comedian, lost her full-time job out of the blue, she found herself in dire straits.
“I felt absolutely down and out,” Aurora said. “It was really scary and [required] a huge lifestyle downgrade.”
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Things have gotten better since then. Aurora now has a new job that she likes much better; the problem is, it pays significantly less than her last role. The substantial pay cut necessitated quite a few other cuts in Aurora’s life.
Here’s how Aurora downsized her financial life in order to make the most out of a much smaller income that she was used to. GOBankingRates also rounded up a few pointers from financial experts centered on what you can do if this happens to you.
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I Temporarily Relocated to a Cheaper Country
Aurora’s entire family is in India, where the cost of living is significantly lower than in the U.S. After losing her job, Aurora returned to India for a couple months.
“I took the severance check they gave me and rented a beach villa in Goa for two months,” Aurora said. “I saved a bunch of money and got a remote writing job for an audiobook company. It’s a 1099 job, so there are no benefits, and it pays significantly less than my last job did. But I like the flexibility of working remote.”
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I Canceled My Subscriptions
Out of necessity, Aurora parted ways with her subscriptions.
“I canceled everything,” Aurora said. “No makeup subscription box. No Netflix, no Hulu or anything else.”
I Got on a Phone Plan With Friends
Rather than continuing to pay for her own phone line, Aurora teamed up with a friend to enroll in a phone plan together.
“That brought my bill from $80 to $50,” she said.
I Buy in Bulk With Friends From Costco
Aurora also collaborates with friends to stay on budget with grocery shopping. She went in on a Costco membership with a pal. They buy in bulk — including from the frozen aisle — and divide up the goods accordingly.
I Say No to Going Out — And Use My Free Time More Creatively
Due to her major pay cut, Aurora has to turn down invitations to many events — everything from happy hours to weddings — but this doesn’t faze her as much as one might expect. She’s found arguably better ways to spend her valuable free time.
“I only do what I love in a limited way,” Aurora said. “I find ways to be more creative. I have time back that I can pour into figuring out what I do want and maybe one day making more money than I was.”
I Get Budget-Friendly Recipes on TikTok
“I spend a lot of time on TikTok looking at budget recipes,” Aurora said. “There a lot of poor people on there making really good food!”
I Cut Back on Eating Meat
Meat isn’t cheap, so one healthy and frugal move Aurora has made since living on a significantly lower salary is scaling back on meat consumption.
I Continue To Embrace Public Transit
Aurora has since returned to her home in Los Angeles, where having access to a car is, in the minds of many, considered crucial. But that’s only if you don’t have a savviness for public transportation.
“I don’t have a car,” Aurora said, nodding to the money saved by foregoing this luxury and opting for public transportation instead. “Never have.”
I Prioritize My Mental Health, and Am Actually Happier Than When I Was Making More
Though Aurora lives less comfortably than she did before losing her previous job, and money is certainly more of a concern, she actually feels happier these days.
“I am living on way less money now, but my mental health is so much better,” Aurora said. “It is nice to feel free in a certain way. I could work from India and am going to work from Mexico City next month.”
If This Happens to You, Budget for Your New, Lower Income
Aurora made the right move in immediately budgeting for a lower income as soon as hers dropped; it’s what financial experts recommend.
“When you create a budget that factors in your new, lower income, this helps you identify areas where you might be spending excessively, and [you] can identify quick, easy and less painful cuts,” said Jeff Mandel, CEO of Credit & Debt. “This exercise and process is healthy and should be done at least annually.”
Distinguish Wants From Needs
You may have already been savvy about separating wants from needs when you were budgeting for your previous salary, but when your income takes a hit, you need to really home in on this, as Aurora did — for example, she canceled her subscription services to save money.
“‘Needs’ are items such as essential food, housing and transportation,” Mandel said. “‘Wants’ can include things like cable TV, streaming services, going out to eat, new clothes and vacation expenses.”
This Sucks, but It Isn’t the End of the World
Experiencing a huge pay cut can be, to put it frankly, a major bummer. But keep things in perspective. There are, as Aurora has laid out, ways to make a lower income work for you.
“[A pay cut] isn’t the end of the world,” said Mandel. “Hopefully, your pay reduction is only a temporary change that forces you to eliminate the areas where you’re overspending and implement more financially savvy and disciplined habits going forward. So, once your income increases again, you are actually able to save more money.”
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This article originally appeared on GOBankingRates.com: I Survived a Huge Pay Cut: Here’s How I Downsized My Financial Life
