Out of Work but Not out of Bills

Due to lower sales, the company for which Ed Weston works was cutting back on its work force. Even though Ed had been with the company for seven years, most of his duties were being performed by new, automated equipment.

After getting the word about losing his job, Ed talked with his wife, Alice, and their two children (ages 12 and 9) about ways they could reduce spending. The Westons started by making up a list of three things: (1) bills they had to pay each month, (2) areas where they could reduce spending, and (3) sources of funds to help them pay current expenses. Each family member had several ideas to help them cope with the difficult financial burden that was likely to occur over the next few weeks and months.

Before Ed was unemployed, the Westons had a monthly take-home income of $3,165. Each month, the money went for the following items: $880 for rent, $180 for utilities, $560 for food, $480 for automobile expenses, $300 for clothing, $280 for insurance, $250 for savings, and $235 for personal and other items. After the loss of Ed's job, the household's monthly income is $1,550, from his wife's wages and his unemployment benefits. The Westons also have savings accounts, investments, and retirement funds of $28,000.

Questions

1. What budget items might the Westons consider reducing to cope with their financial difficulties?
2. How should the Westons use their savings and retirement funds during this financial crisis? What additional sources of funds might be available to them during this period of unemployment?
3. What other current and future financial actions would you recommend to the Westons?