Apr 26

How To Stay Afloat Financially When You’re Unemployed

Whether it was called reduction in force, lay-offs, reorganization or downsizing, facing the loss of a job is always hard.  You have to deal with a lot of psychologicial and fiscal challenges that occur in the days and weeks right after a job loss.  If being unemployed lasts for a longer time, the effects can be overwhelming to both your psyche and your wallet. 

The first thing you should do when you are out of work is to assess your current spending and the bills that you are faced with.  Don’t waste time in denial.  You might get a brand new job in just a few weeks but it could be quite a while longer.  Remember the adage that says hope for the best but you should always for the very worst.  Your financial obligations won’t stop when you’re out of a job.  You must find a way to keep paying them until you turn up another job.  Think about taking a two-tiered tact in this enterprise: reduce your expenditures and maximise your incoming cash.

To minimize your spending, start to get comfortable with 2 words: “no” and “later.”  It might be difficult on your ego but force yourself to turn away your friends, spouse and children.  This blow can be diffused by using the word “later.”  You may not be able to purchase a certain gift or eat at your favorite restaurant now, but can thing about it again at a later date.   Keep a “later list” and you will enjoy picking those things off once you’re back to work. 

Right now, you have to get your priorities in line.  Have a seat with all your expense items and bills and consider what gets paid first.  Your mortgage should most likely be at the top of the list.  Shelter is a fundamental necessity and falling behind on that obligation could do the most harm to your credit.  Keep your insurance, as well.  Use your COBRA or buy another policy.  Even with a costly deductible, it’s worth maintaining.  One medical emergency can wipe out your whole savings and place you in a terrible financial hole.

Do away with your lowest priority expense items.  Examine your billsexpense categories) for things to trim inefficient, like cutting the voicemail from your telephone provider.  You don’t have to have that traditional landline if you prefer a cell phone.  You may be able to save a few buck by bundling services into just one bill.  Look at all of your bills with an eye towards shrinking or reducing your cash outlays.

Contact your creditors regarding how to decrease your bills.  Tell them about your situation and inquire about alternatives.  Most creditors would much rather negotiate a payment schedule than have you avoid payment on your account entirely.  Once you’ve put the freeze on the excess spending and lowered the discretionary expenditures, think of ways to optimize your cash flow to cover your bills. Apply for unemployment immediately.  It could be weeks before your claim is finalized and you can begin recouping the funds you’ve paid into the system. 

You may qualify for benefit programs in your city or state.  Call 211 to discover what government agencies are available in your area.  Don’t hesitate to employ the services made available to you.  You paid into these social services programs when you previously had a job.  Don’t feel any hesitancy to benefit from them now. 

While you’re searching for your next job, do not be intimated by the thought of being underemployed, AKA working part-time.   A more modest paycheck is definitely better than no payday at all.  You might be able use the skills you have gathered to freelance on the side as well. Gaining employment in any capacity bolsters a feeling of self-esteem and deflects any feelings of hopelessness common among those out of work.  When your cash reserves get low and a bill is coming due for payment, websites like eBay and Craig’s List offer a quick way to fill in the financial gaps.  A yard sale can muster some much needed cash flow.  If you have been meaning to do away with some items, there is not a more perfect time than when you’ve lost your job.

As you’re reconsidering your finances and on the lookout for extra cash, don’t “rob Peter to pay Paul”.   Leave your retirement money alone. The loss you will suffer in surchages is far too costly compared with the immediate gains.  Likewise, leave the equity you’ve built up in your house if at all possible you can.  Stand firm against the temptation to live by way of your credit cards to uphold your current measure of living.  This is undoubtedly not the time to be piling on your debt obligations.  Paying bills is always challenging but it’s especially hard when suddently find yourself out of work.  Formulate a plan to keep from falling behind.  There is no magic bullet but with a rock-solid strategy, you can weather the storm

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