Job security is a thing of the past. A boss who sustains a bad quarter could easily decide your job or department is the one that, if eliminated, will convince board members and stockholders to give the company another chance.
That means that no matter how good you were at your job, you are now unemployed. How do you handle your finances next?
Unemployment will provide some relief
Unemployment benefits will provide a portion of your income for a limited time. Don’t count on it to pay all your bills or last a very long time, but it can help when you’ve had an unexpected job loss.
Don’t forget, you must pay income tax on unemployment benefits.
It’s also important to evaluate your finances. Find out how much cash you have on hand and how much you can have access to on short notice.
Then you should quickly reduce spending. Examine your monthly bills – mortgage, car, credit cards, utilities and so on. Look at your monthly phone, internet, cable and entertainment expenses. Reduce your spending ruthlessly. Bundle costs where possible but be wary of high interest rates or late payment fees.
Resist the temptation to buy on credit. Use credit cards sparingly and only in case of emergencies. Interest charges and late-payment fees are usually exorbitant. Avoid transferring balances from one card to another – the offer of a low introductory rate is often followed with a higher interest rate, plus some cards charge fees for balance transfers.
Avoid withdrawing from savings plans or retirement funds. Most withdrawals incur a tax penalty.
Help from government agencies, unions
Get help from dislocated worker services. Labor unions will typically have programs to help you get back on your feet. There are other organizations through the state that help with retraining, resume writing and job placement.
Don’t take the risk of discontinuing medical insurance. Look into COBRA insurance coverage through your former employer and well as Be Well NM, the state-sponsored health insurance exchange that may provide insurance coverage.
Reverse mortgages and home equity loans can be a source of income, but remember that they are also subject to interest payments and by their nature they dig in to the amount you receive if you sell your home.
Avoid investment scams. There are plenty of people who are willing to take your money. If a deal is too good to be true, it usually is fake.
If you find yourself without money and plenty of bills, bankruptcy might be your best option to restart your finances. Contact a qualified lawyer to help you through the bankruptcy process.