Managing your money after a layoff

After a layoff, it's certainly natural to lie in a state of denial.

We continue the Thursday evening happy hours with our friends, the spa treatments, dining out, Starbucks trips -- among a host of other frivolities. But soon after the severance pay ends (if you're fortunate enough) and the emergency funds dwindle, the reality of living on a fraction of your prior earnings sinks in. This is followed by flashing red lights and palm-sweating fear.

Here are 7 time-tested ways to stay financially fit after a layoff.

1. Write down and track your expenses. As simple as this may sound, there are a host of people who don't realize how much they spend each month. They either pull out the credit or debit card to pay for purchases and rely on the paychecks to replenish their spending sprees.

2. Think realistically about what you can do without. Do you need 300 cable channels? True, you're going to be home a lot more these days, but changing your cable subscription could save you $300 each year. Look for other subscription services you can switch to a lower plan, including your cell phone, newspaper and movies. Though bundling services may seem like a great way to save money, getting behind on the payments could mean the end of all three!

3. Spend with cash. We all hate to break a $50 bill. "It goes so fast!" We often exclaim. There's something psychological about breaking a large bill. Try carrying around cash and you'll immediately see how hard it is to give up. Using a debit or credit card keeps money in a never-never land. But having cold hard cash in your hands, quickly brings home the reality of your finances, and can make you think twice about parting with your greenbacks.

4. Call up your creditors! Yes, that's right. Don't hide from the bill collectors. Surprisingly, creditors are more likely to work with you after a layoff, particularly in the present economy. They, like you, are reading and hearing about what's going on with the economy. Merely ducking your creditors will make things harder for you if your layoff extends beyond a period that you had envisioned.

5. Look for free services and offers! It's normal to want to continue in the lifestyle that you're accustomed to. But the truth is, few of us will be able to do so. If you're at an executive or senior management level, it's tempting to want to take advantage of that expensive headhunters. I had a headhunter to call me before my layoff and offer to help me find another job for about $1400. I turned her down. I just don't think it's necessary to pay someone to find me a job. There are a host of job and employment agencies. Make appointments to meet with recruiters and pick their brains. Join an online media group like Linkedin.com, Facebook, or Twitter and network with other professionals. This will save you tons of money down the road. If you have a strong network already, logically you will start there in looking for your next opportunity. However, you may find that many of your friends are like you and looking as well.

6. Find ways to cut your utilities. Inspect your home or apartment. Look for ways you might be wasting money. Check your thermostat. Is it set too high? Look in your fridge, I recently gave my fridge a good cleaning and immediately noticed how much colder things were after the clutter was moved away. Now that you might be working from home, you may find that you're using more electricity, heat and eating more food. But you're probably going to spend less at the gas pumps and eating out. Make sure that lights aren't on in rooms that aren't being occupied. Can you rearrange furniture so that heat is better dispersed?

Pick up your laptop and go to a mall, restaurant or the local library. This gives your utilities a rest and gives you some fresh air and a change of scenery.

I saw a special on Oprah recently where a young lady actually unplugged appliances tha weren't being used -- TVs, radios, can openers, coffemakers and saw a huge decrease in her electric bill! Try it!

7. Continue to save. If I've learned anything after a layoff it has been that living on less money is possible. I'm fortunate that I have a spouse. However, there are things we've had to live without.

Though you may not be able to save at the rate that you did before your job loss, keep up the practice of putting away a few dollars here and there. ING offers great savings products online with a better return than most banks.

I've learned to get creative when it comes to cutting costs. I'm convinced that the layoff will only better prepare me for dealing with an even larger salary than the one I had before!

If you're fortunate and are currently working, make sure that you have money for a rainy day. Debt experts recommend having savings for three months. Forgo the expensive lunches and lattes for a few days to make sure that you're stashing money into your rainy day fund!

If you're not there yet, don't fret. It's just a job!