What To Do If You’re Probably Getting Laid Off
Maybe you’ve missed the first round of cuts, but business still hasn’t picked up. If you think that you may end up getting laid off, the time to prepare is not after the event, but before. Financially, your house should be in good order to withstand the long hunt for a job that is now facing millions of unemployed workers. Starting early to get your house in order is the best strategy to survive a potential loss of a job.
Use Your Good Credit While You Can
While employed, you’ll have easy access to payday loans, credit cards, and home equity loans. Your credit will probably be good up until you start missing payments. If you lose your job, the possibility of being late or missing payments increases, and so your credit score decreases. The time to make sure you have enough emergency cash to weather a rough cycle is before you lose your good credit standing.
Restructure Your Debt
Start by reducing your bad credit, like credit card debts. Lower the balances as much as you can, eliminating them if possible. Keep the accounts open so that it doesn’t affect your credit score. Check into home equity loans while you still are being offered them. You can open a line of credit on your house and not use it until absolutely necessary. Just be careful as this type of debt, if not paid back, can cost you your home. If you have student loans, look into deferrals and forbearance. If you can restructure your debt to keep you from paying too much while you search for a job, you are way ahead of the game.
Reduce Your Expenses
Next, you’ll want to figure out how to live below your means, before you actually get laid off. If you can save an extra $300 to $500 per month and add that to an emergency fund, instead of eating in living costs, you will be much more secure. You might be able to find a bit of a cushion just by eating out less, lowering your thermostat, or giving up an extra car. In the event that you lose your job, make sure you do not owe daycare expenses if you take your kids out early. This is an easy way to save money while you are home looking for a job.
Look For Side Income
Too many people wait to burn through their unemployment insurance before they think about creating side income sources. Do this before you actually lose a job, by searching for part-time or freelance work while employed. Should you lose the main source of your income, you will still have some coming in, and you can earn a bit of extra income without it affecting your unemployment insurance claim. Just check with your local unemployment insurance office to know what the rules are before you actually go out and get a lower paid, temporary job, to fill in the income gap.
This entry was posted on Wednesday, October 21st, 2009 at 9:06 am and is filed under Financial Planning. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
