Tips on Surviving Unemployment
Sudden unemployment can complicate your personal finances, and if you're unable to secure new employment quickly, you risk foreclosure and credit problems due to the inability to make monthly payments. Unemployment is unpleasant, but there are ways to cope with the loss of income, and keep your head above water.
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Debt Management
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Taking on new debts or using credit cards while unemployed creates additional monthly expenses. Granted, some people have to rely on credit cards for necessities when cash is low. But if you can, avoid using charge cards, or only charge a small amount each month and try to pay off the balance to avoid accumulating debt.
Spending Habits
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This isn't the time to plan an elaborate vacation or to shop needlessly. Surviving unemployment involves controlling your spending, conserving your cash and only buying items that are absolutely necessary. Trying to maintain your old lifestyle while looking for employment is unrealistic, and by doing so, you'll likely blow through your savings before you get a new job.
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Emergency Funds
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Savings accounts and emergency funds are useful after losing your job. Aim to survive on unemployment compensation or severance pay, if possible, to avoid depleting your emergency fund. But if it's necessary, withdraw money to pay necessary expenses like mortgages, auto loans, utilities, groceries and insurance. Look into borrowing money from a 401K, or another retirement account, to avoid defaulting on bills. Talk with a financial planner to discuss the risks or penalties associated with withdrawing funds from retirement accounts.
Extra Income
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Special skills or talents can create additional income and help you survive unemployment. If you have a lawn mower and other yard equipment, go around your neighborhood a few hours each day, and provide lawn services. Begin a daycare inside your home. Tutor children after school. Start an office cleaning service.
Mortgage Help
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Losing your job may qualify you for mortgage assistance. Call up your mortgage lender to see if you meet the criteria for a modified home loan, or forbearance, to ease the financial burden and remove the risk of foreclosure. Modified loans lower your monthly payments, whereas forbearance suspends payments and gives you time to fix your finances.
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