A few thousand years ago, the Bible story goes, Pharaoh woke up from a dream he couldn’t understand: He was standing by a river and saw seven robust cows emerge, followed by seven emaciated cows. “I have not seen such ugly ones throughout the entire land of Egypt,” he would later say to Joseph, who he was hoping would interpret the dream for him.
Then the ugly cows devoured the healthy ones.
Pharaoh’s dream was followed by another, similar one. Seven full, good ears of grain grew, followed by seven hardened, thin ones. The thin ones devoured the good ones.
Seven years of plenty followed by seven years of famine. This famine will be so severe, Joseph told Pharaoh, that even the memory of the good years will be erased. Then he advised Pharaoh how to prepare: Collect food and store it during the good years. Use the reserve during the seven years of famine, so the land won’t be destroyed.
Good advice, right? Too bad we ignored it.
In the years of plenty, while our houses were rising in value, our jobs were secure and our salaries were high, our savings rate hovered between 1 percent and 2.5 percent. Hardly enough to withstand a famine. And with wars and tax cuts, the government savings rate went negative: When we should have been saving for the lean years, our deficit increased.
Because when we’re in good times, it’s hard to imagine they’ll turn bad. But they always do, which is why Joseph’s advice is timeless.
Now, we’re in the famine. And while I’d like to be optimistic, I’m not. There are already 15 million unemployed Americans, and we need 130,000 to 150,000 new jobs a month just to keep up with the workers entering the work force.
But, according to the job report recently released by the Department of Labor, we didn’t add jobs in June; we lost 125,000. The department attributes that to the loss of 225,000 Census jobs. But with jobless claims rising and 1 million people whose unemployment benefits have expired, we’re not emerging from the famine, we’re going deeper into it.
One minute after writing this last sentence, I received an e-mail from a friend of mine whom I’ll call Frank. He told me he just lost his job.
“I was not, am not, prepared for this and quite frankly I’m a little lost,” Frank wrote. “I don’t even have a resume yet. I’ve been with [his company] for over 10 years. … Any suggestions would be greatly appreciated.”
Although it’s a shame we didn’t prepare better for this famine, it’s not too late to follow Joseph’s advice. In fact, we’ve already started. Remarkably, while our personal savings rate declined during the fat years, it rose, from 3.5 percent to 5 percent, in these lean years. We’re actually saving money when we have less money to save. That’s inspiring.
I have three pieces of advice for Frank:
• Drastically reduce your expenses. Assume that it will be a year, or even two or three, before you get another job that pays what you were making. Stretch your dollars out as far as possible. Be drastic. A good friend of mine who lost his job canceled his cable, got a roommate and sold his car in order to pay off credit card debt.
• Spend some time — but not too much — looking for a job. Assume this is going to be a marathon, not a sprint. I know this might be hard to swallow, but after the first few weeks of getting your résumé together and figuring out the lay of the land, don’t spend more than an hour a day job hunting. It won’t help you get a job and will only depress you.
Instead, spend your time doing things you love with people you enjoy. It will position you to be much more successful when the job market opens up.
• Reset your expectations for the future. Joseph persuaded Pharaoh to pay for the future with savings from the past. We, on the other hand, are paying for the present with earnings from the future. Which means you can be certain we will be facing slower growth, higher taxes and fewer services.
So think about what you love doing that requires little or no money. Spending time with friends and family. Taking walks. Enjoying nature. Listening to the radio. Any time you have a choice of doing two things, choose the less expensive one. Quit the gym and go for a run. Stay home and cook. Life doesn’t have to be miserable.
Don’t confuse money with happiness. For many people, life actually improves. We need to be less focused on spending money and more on saving and stretching it. And not just for now, forever.
A friend of mine told me a story: A man was shipwrecked on an island. For several days, he had no food or water. Then he found a cave where, through a crack in the rock, a spring was trickling, drop by drop.
The man hollowed out some wood to make a cup to collect the water. He was terribly thirsty, and as soon as he had collected a few drops of water, he was tempted to sip them.
But he knew that would empty the cup. And having been deprived of water for so many days, he did not like empty cups. Instead, he continued to collect the drops until the cup was completely full. Then he took a tiny sip — just a few drops — and placed it back under the trickle.
And he continued like that in comfort and confidence, even during a drought, when the trickle was negligible. He always took small sips from a full cup.