Losing a job can cause panic and uncertainty, but these tips for financial survival after job loss will help you assess your situation and create an action plan. It can be tempting to give in to depression and hopelessness, but it’s the worst thing you can do in a financial emergency. This is especially true if you have a family that depends on you. These tips can help you tackle things like a pro.
It seems like every day the news informs us about another company that is downsizing. Suddenly there are still a few thousand people without work. Life can feel incredibly vulnerable and intimidating when you’re the one being downsized, especially if you have a family that counts on you. Many of us are the only provider in our household. And even in homes where there are two incomes, the loss of one of them can be devastating.
But losing a job doesn’t have to be the end of the world. Take a deep breath. Relax. Let’s take a look at some tips for financial survival after a job loss.
6 Most Effective Financial Survival Tips After Job Loss
1. Evaluate your net worth
It’s hard to make a plan without a full understanding of your financial situation. So grab some paper and pen and start listing your assets.
Document the balance in your checking account, savings accounts, Paypal account, your 401K, the $80 you hid in the sock drawer for emergencies, and anyone else who owes you money. Write it all down so you can see how much money you have in hand right now.
When you’re done, inventory your stuff. Think of things of value that you could sell or pledge. Think about things you could list on Ebay or sell in a yard sale. If the amount of your cash matters, selling your surplus items is a great way to clean up while helping your family survive.
2. Get clarity about your budget
If you haven’t set a budget for your household yet, now is the time. It is vital that you know exactly what expenses you have and how much it costs you per month to pay your bills and live your life.
Write down everything – your rent or house payment, utilities, phone, car payments, car insurance, other insurance, credit cards, and everything else you pay each month. Look at what you spend on average per month on groceries and gas for the car. And yes, the beer you drink on the weekend counts too. Write it all down.
Once you know how much money you have on hand and all the expenses you have to pay each month, you have a good overview of the situation. If you find that you have enough money to survive for longer than you think it will realistically take to find a new job, then that in black and white can be a lot of comfort.
On the other hand, if your money is seriously lacking and replacing your job could take longer than you can afford, the sooner you know, the sooner you can get the situation under control.
3. Formulate a survival plan
Now that you have your budget all set in front of you where you can get a good look at it, you are in a position of power. It may not feel like it, but I assure you it is true. Once you have a firm grip on the money you spend, you are in the perfect position to think strategically and come up with a plan.
Grab that handy pen and paper again. Now it’s time to look at your expenses one by one and categorize them in terms of priority. This isn’t always as easy as it may sound, and you are the only one who can truly determine which expenses should be prioritized in your life. But an example breakdown might look something like this:
You may be wondering why I listed things the way I did them. For example, why would I put “Rent” and “Car Insurance” in the Mandatory list and “Car Payment” and “House Payment” on the flexible side?
This is where you really need to think about the payments you make. Rent is in the Mandatory side because landlords are often very unwilling to work with you for a long time if you are late with the rent.
On the other hand, loan companies are much more likely to work with you if you are behind on a house payment and usually you can get three full months before they seize.
They really don’t want your house back. They lose money when they have to pawn and resell a house. It is in their interest to work with you. So, depending on your current situation, you can have a lot of flexibility with some of your accounts.
Store credit cards and furniture purchases you’ve charged can usually be safely placed on the “Last Priority” list. Yes, missing payments affect your credit, but if you’re looking for practical ways to feed your kids for as long as possible, you can let credit history slide a bit.
It is almost the same as the major credit cards. It is certainly true if you have one that is already maxed out. Put that on the “Last Priority” list for now. If they have to live without your money for a few months, they’ll be fine.
However, if you have a credit card with a large enough balance that it can make a difference in your survival, pay that bill. Protect that well, just in case.
Once you’ve prioritized all of your items, you’ll have the start of a plan. You know which bills to pay and which you can safely set aside for later.
4. Think Creatively to Reduce Expenses
Save gas by looking for a job online as much as possible. If you must shut down the internet, go online at your local library and combine the trip with other chores as often as possible. Simplify your grocery bill to basic staples and items you’ll find on sale. Avoid ready meals and snacks as much as possible.
5. Bring in money where you can
If you need more money than you have, look for opportunities to earn. Collectibles and collections of books and other items often sell well on Ebay. Put away some of your gently used items of clothing, books, movies, jewelry, and other treasures that you can part with while making some money.
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6. Be gentle with yourself and have faith
It is important that you have confidence. Every ending is a new beginning. That sounds like a trite “feel good” statement, but it’s true. Regardless, losing a job hurts — even if you weren’t wildly off the job to begin with. Rejection hurts.
Do what you can to nurture yourself. Take practical steps to give yourself as much time as possible to find a new job. Take positive steps every day and one moment at a time you can find your way.
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