Losing your job can be a devastating turn of events. You may have felt it coming or maybe you were totally blindsided by layoffs or cutbacks that you had zero control over. At the time you are let go, you may feel a bit of panic coming on (or a lot of panic!) about what to do regarding your finances.
Hopefully, you have a little bit of “rainy day” cushion in regards to at least 3-6 months of living expenses saved up to use for emergencies like losing your job. That fund is meant to cover housing, food, healthcare, and other personal expenses while you look for a new job. Many people living in this economic climate don't have that savings when living paycheck-to-paycheck can feel like the norm. If you feel overwhelmed, that’s to be expected, but there are a few things you can do financially to make sure you are covered after any job loss. Here are some steps to help ease your mind money-wise to get you through this trying time in your life.
Step 1: Determine Your Minimum Budget
This minimum budget number is the exact, or pretty close to it, figure you need to get by each month. This includes your rent or mortgage payments, food, utility payments, transportation, and any debt that you don’t want to get behind on. Jot it down so that you can see it on paper in black and white with each expense listed out.
Step 2: Cut Out Unnecessary Spending
That $5 a day latte habit from Starbucks needs to fall by the wayside for the moment. You probably already knew that. By cutting back on any unnecessary spending, you are going to be able to get by much smarter than if you blow your cash on things like eating out at restaurants, non-essential shopping, and trinkets you don’t need at the moment when you are jobless. If you have a family, now is the time to have a serious talk with everyone about “belt-tightening” for the moment to get everyone on board with the lifestyle adjustment you'll need to make.
Step 3: Figure Out State Unemployment
If you’re going to receive unemployment, there are forms to be filled out and filed with the state. Make sure you have all of that taken care of with your ex-employer so you don’t miss out on getting those payments in a timely fashion.
Step 4: Contact Your Creditors
Prioritizing your debt payments when you lose your job is an important step to take as well. If you know you won’t be able to pay on time during any month, it's important that you contact those parties immediately. Let them know what happened and when you intend to pay on time again. This might just be a hopeful guess, but keeping them in the loop about your circumstances may prevent them from sending your overdue bills to collection agencies. Many companies are flexible due to COVID-19, don't hesitate to take advantage of that.
If you have always paid on time before, they are going to be more willing to work with you in this emergency situation. Many creditors have unadvertised “hardship plans” that you may qualify for. Don’t let the bills stack up unpaid before you look into all your options.
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This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.