Losing a job can be devastating news, but not having a financial plan in place can only make matters worse. Chances are, finding a new job in today’s economy may take some time. This is why it is important to take a moment to strategize your finances.
You can start by realistically accessing your situation. Calculate exactly how much income you have to live on each month. This can be in the form of severance pay, unemployment compensation, income from a spouse, interest from savings, dividends from investments income, these against tax refunds, etc.
Next, you should make a list of all the bills you are responsible for paying these against your income. Now is a good time to start cutting any unnecessary expenses and luxuries. This can help you make your life less complex until you can secure a new job and your future finances.
If it becomes apparent that you will have trouble making your required payments, you may want to consider these strategies:
- Refinancing or renegotiating your mortgage could help lower your monthly payments.
- Stop direct payment of bills from your checking account. This will allow you to decide which bills need to be paid first.
- Discontinue automatic contributions into investment accounts, college savings or any other savings until you can manage to pay your bills.
- Explore the services of a consumer counseling agency. They may help you determine the best approach for your situation at a nominal cost or in some cases free of charge.
- Contact your utility companies and discuss a budget plan that may lower your monthly payments.
- If absolutely necessary, you may be able to borrow money from your life insurance policy and/or retirement funds. Please ask your financial advisor or insurance agent for more information.
- Do consider finding a temporary job in order to generate more income. Keep in mind that while getting unemployment pay, you can still earn up to 40 percent of your unemployment benefits without penalty.
If you plan carefully, you can get through this complicated time. Your previous lifestyle may have to be put on hold for a while, but with proper planning and determination you can get yourself back on track.
Answers from AZ