Unstable Job, Stable Finances
Cutbacks, downsizing or layoffs can bring about many emotions in people. For some, their self-esteem may be threatened, or they may feel betrayed, angry or fearful. Others will view it as a blessing, an ending to all the pressure, a chance for a new start without that long commute. In either case, there are always financial concerns looming. How will you meet your monthly bills? Experts offer these steps to help you in this time of transition.
Identify and gather your benefits.
Look into your unemployment benefits, a lump-sum payout from your employer or severance package options, as well as information regarding your options regarding continued health insurance coverage. Assess what you have to work with and what procedures you must take to obtain them.
Hoard your cash.
Immediately switch from a spending to a savings mode. Get the whole family involved. Explain the situation to older children and ask them to understand what this change means to the family. Work together to come up with ways your family can help. A part-time job could offer pocket money and take the burden from your budget. Youngsters could give up a special treat each week. Try designating a savings jar where everyone can collect their extra change.
Don't pay off debt.
It's tempting to take that severance money and pay off bills. Don't. Since you don't know the length of time it will take to regain employment, pay only required minimums. If you are pre-paying principal on your mortgage, pull back to the minimum amount required.
No new debt.
If you think about a new loan, refinancing an old loan or responding to a pre-approved credit card offer to raise the cash to replace your next paycheck, remember, debt is a problem, not a solution.
Define essential and optional expenses.
An essential expense is one that provides for the sustenance of life or is required by law. Some examples are housing, food, utilities, debts, child support and taxes. Optional expenses are all those other things that make life nice but are not necessary to your survival.
Advise creditors of your situation and work with them to keep your credit rating in good standing. Many will have programs in place that you may qualify for. Ask about deferments or interest-only payments.
If you are coping with a job loss, your financial challenges may seem overwhelming at times, but remember, these challenges are only temporary.