Losing a job is never easy, regardless of whether or not you knew the end was coming. For most people, a job is more than just a way to earn a living – it is an important part of how they identify themselves. When you lose your job, you may feel rudderless, like you are adrift with no clear plans for the future.
Without proper planning, you can quickly get into financial trouble. Fortunately, there are steps that you can take to protect yourself. The information below provides a roadmap that you can follow to minimize the financial impact of losing your job.
Sign Up For Unemployment
Filing for unemployment after a job loss is essential. In most states, an online application can be accessed through the website of the Department of Labor.
The sooner you apply for unemployment, the more quickly you will start getting payments. In many states, there is a required waiting period. That is why it is better to submit your application right away rather than waiting. Otherwise, your money may run out before you get your first payment.
Even though the amount of money you receive from unemployment will be lower than what you made at your job, payments like these can help you cover your basic expenses without using up all of your savings.
Figure Out How To Handle Your Retirement Plan
If you had a 401(k) or some other type of retirement plan that was sponsored by your employer, it is important to explore your options. Depending on the situation, you may want to take one of the following steps:
– Roll the money into an individual retirement account (IRA). This allows you to transfer the money from your old retirement plan into a new account without having to pay any taxes or fees.
– Transfer the money to a plan provided by your new employer. If you are planning on going to work for another company that offers retirement plans, wait to transfer the funds until your new plan is set up. The plan administrator for your new employer can work with your old employer to transfer the money directly into your new account. Again, this keeps you from having to pay any fees or taxes.
Unless it is absolutely necessary, you should try not to take money out of your retirement plan. Any money you withdraw will be taxed. Additionally, you may also have to pay penalties or fees.
Adjust Your Budget
Take an honest look at your spending habits, eliminating any needless expenses. Ideally, you should try to get your monthly costs low enough that you can cover them with your unemployment payments. That way, you won't have to use your savings or add it to your debt.
When reviewing your budget, look at six months' worth of bank statements and credit card statements. This will give you a clearer picture of where your money is going. It will also help you identify expenses that you only pay once or twice a year so that you can budget for them accordingly. These expenses could include everything from car insurance to taxes.
Take a close look at every expense to determine whether or not it is necessary. After figuring out which expenses you have to keep paying, add everything up to determine your average monthly expenses. This will give you a better idea of whether or not your unemployment payments are high enough to cover your expenses, if not consider pink slip loans perhaps.
Now is the perfect time to check your emergency fund, as well. If your costs exceed the amount that you are going to be getting from unemployment, you need to figure out how long you can live off of your savings. With any luck, you will have at least a few months' worth of money in savings so that you don't have to worry too much if you can't find another job right away.
Get On A Regular Schedule
Staying focused is hard when you don't have a routine. When you get up in the morning, you probably have big plans for everything that you are going to accomplish. Before you know it, however, you may have wasted a lot of time on Facebook or watching videos on YouTube. By the time the end of the day rolls around, you may find it shocking how little you accomplished.
Although it seems counterintuitive, having more time available often leads to lower productivity. The best way to stay on track is by setting a schedule for yourself. If you have too much free time, you are more likely to procrastinate.
To avoid this problem, it is important to establish a schedule or daily routine. Plan out your day in advance, much like you would if you were still employed. Here is an example of how you might schedule your time:
– 9 AM to 12 PM – look for jobs and apply for any that seem promising.
– 12 PM to 1 PM – lunch
– 1 PM to 2 PM – exercise
– 2 PM to 4 PM – work on networking
– 4 PM to 5 PM – polish your resume, clean up your website, or work on building skills related to your job
Try To Avoid Taking On Too Much Debt
Ideally, you should try to avoid going into debt while you are unemployed. If you aren't making enough with unemployment and if you don't have an adequate amount in savings, however, you may be forced to borrow money.
In most cases, consumers start putting their expenses onto credit cards. Keep in mind, however, that most credit cards have high interest rates. Some other options that you may want to check out include:
– Taking out a personal loan. Loans like these often have lower interest than credit cards.
– Using a credit card with a 0% introductory rate. There are a lot of credit card offers out there where you don't have to pay any interest during the initial period that you have the card. Although the interest rate will eventually go up, if you can pay the card off during the introductory period, you may be able to avoid paying interest.
It may be more difficult to get approved for a credit card or loan when you are unemployed. If you have a little bit of money coming in, however, you can still qualify for most offers. Lenders often view unemployment benefits as income, which means that you most likely will be able to qualify.
Getting Through A Rough Patch
Nobody likes being out of work. Unfortunately, many people experience job loss. If you find yourself in a situation like this, try using the suggestions above. These strategies will help you find a job as quickly as possible while still protecting your financial future.