|You can survive a job loss financially with careful budgeting.|
Some of these suggestions may sound harsh and almost impossible to implement, but it is critical that you take action to hold your finances together.
- Create a budget to track all your expenses and income. If you have a family, sit down together to discuss what everyone will do to stay within the budget. Learn all you can about budgeting and other good personal finance habits.
- If you receive severance from your former employer, be sure to manage it carefully. Make your severance last as long as possible.
- File for unemployment insurance with your state. In addition, if you are in a dire position, ask about other government assistance, such as expedited or emergency food stamps (now called the Supplemental Nutrition Assistance Program--SNAP). Find a local American Job Center (which may be called by a different name in your area) to get started with unemployment insurance and government assistance referrals; all services are free, courtesy of Uncle Sam.
- Weigh your health insurance options. If you cannot be insured through a parent (if you are under age 26) or a spouse/partner, look into obtaining health insurance through the Health Insurance Marketplace at www.healthcare.gov or through your state’s insurance exchange if offered instead. You may be eligible to receive a tax subsidy based on your income to immediately lower monthly health insurance premiums. If your income is very low, you may be directed to Medicaid. If your family income is too high for a subsidy or for Medicaid, COBRA is an option. Through COBRA (which stands for the Consolidated Omnibus Budget Reconciliation Act), you continue to pay premiums for the health insurance formerly provided through your past employer.
- Avoid dipping into your retirement accounts. Hands off! Your retirement accounts are for your retirement. Any withdrawals you make may be penalized, although exceptions exist for certain financial hardships. But, if you pull out money now, how will you ever make it up for your retirement years?
- Don’t be rash with your cash. Just spend less. You can do it! Stay away from restaurants, big stores, malls, online shopping, movie theaters, concerts, casinos, and anywhere money seems to evaporate. Get inexpensive haircuts. Make gifts instead of buying them. Shop at low-cost grocery stores. These changes will add up.
- Cut your bills as much as you can. Examine all your monthly bills to see what you can eliminate. Look into bundling, trimming, or cutting services and fees; eliminating unneeded insurance coverage; raising car and home insurance deductibles; and selecting cheaper phone, Internet, and TV options. Cancel your health club membership and start walking.
- Avoid and manage debt. Call your lender about your mortgage to learn if you can arrange lower house payments while you are unemployed. Avoid piling up credit card debt because it may take years to pay off at high credit card interest rates. Use cash instead of credit cards to spend less.
- Raise income in multiple ways. Work part time, get a temp job, do odd jobs, take on seasonal work, or find freelance or consulting work. Sell items you don’t use or need. Perhaps you can rent a room or your garage.
- Become frugal. A thrifty lifestyle can benefit your wallet and other areas of your life. Cook at home, use the public library, enjoy free parks and events, take public transportation, buy used clothes, and repair clothes.
Your ultimate goal should be to never again let your life be upended by a financial emergency. Aim to always have a healthy savings cushion, a budget, little or no debt, and a good grasp of your financial situation.