You had it all planned out. 2017 was the year you would get your finances in order. You planned out your budget and had some new strategies to pay off outstanding debts. Yet, with all of our best laid plans, life somehow always finds a way to throw a wrench in our plans. Many can tell you of the varied unplanned happenings quickly ravish the finances of even those with an emergency fund. Because let’s face it, emergencies have two wild card factors, being unexpected and needing urgent remediation.
Some of the most common unexpected emergencies that derail budgets are things such as an auto repair, a serious illness, or a job loss. So what do you do when life happens? In this article we evaluate the immediate steps to take in response to a job loss so that the unexpected won’t derail you.
1. Time to Review the Budget
You’ve just received the unfortunate news that you’ve been let go. Although your mind is a-whirl with what-ifs and why mes, take heart and find peace because you’re not completely without a plan. First things first, grab your pen and paper or your computer, and go-to math software (such as MS Excel). Start by performing a thorough review of your budget.
What budget? Some of you may as. Don’t panic! Budget or no budget, start by listing out your bank account balances and your monthly bills. For your credit/loan balances note your minimum payments as your monthly expense. The idea is to create a contingency plan. If you had to live off of your savings balance for a few months, would you be able to afford it? If you’re lucky enough to have a savings account or emergency fund that facilitates covering your cost of living for 6 months or more, you’re in a great position.
2. Keep only the Essential Bills
It may be hard to determine which of your bills are considered life necessities. Especially since you’ve lived with your gym membership, and so many other membership programs for months that you just can’t live without. Well it’s time to start. According to Maslow’s psychology theory of need, which places human needs of existence in a hierarchy, the basic needs for survival in categories at the foundation of its pyramid. Take a look at the categories below. These are considered essential, but even items within these categories can be trimmed without causing much more effect than a mere inconvenience.
- Housing
- Rent/Mortgage for your residence
- Utilities such as lights, heat, even as far as including your Wi-Fi service.
- Food
- The cost of groceries
- Grocery lists should include items necessary for meals
- View eating out as a luxury expense.
- Water
- Safety
This does not include your movie streaming service or even cable TV, but you choose.
These are items that allow you to feel safe in your environment and to establish a routine.
This category may include items like a reliable mode of transportation, etc.
3. Don’t sink with your debt
Now that you’ve reviewed your bills and made a contingency plan. It’s time to put the plan into action. Call up your creditors and exercise the payment protection plans that most credit cards have in place. These account protection plans are typically administered by an affiliate service, and unbeknownst to many card holders they have been paying for this insurance plan monthly since the inception of their credit card account. So why not use it.
Once you speak to the credit account protection coordinator and find out what the stipulations are (as with all insurance companies there will be specified conditions you must meet to use the service), then you can activate the service. This will allow the payment protection service to make your next 3 to 6 months of minimum credit card payments.
Another good option is to exercise any balance transfer offers that are available on your cards, such as transferring a balance from a higher interest rate to one with a lower rate. This will consolidate your balances and minimum payments, as well as lower your monthly interest rate charges.
4. Filing for Unemployment
When you lose a job, you can file to receive unemployment benefits through your state’s labor department. The main eligibility requirement is “…that only past workers who meet eligibility for unemployment – namely, those who have lost their job through no fault of their own and who have worked and were paid the minimum wage requirement during at least two calendar quarters of the base period – will be given benefits.”
If you reside in New York and were laid off due to company downsizing you would likely qualify to receive unemployment benefits, provided you were employed for the last 6 months or longer. These benefits would then last for 26 weeks as long as you meet specified eligibility requirements, such as proof of your job searching activities.
According to the New York Department of Labor, it’s best to apply for unemployment benefits within the same week that you lose your job, since there is a minimum one week period of delay before your benefits will take effect. The weekly benefit payout is determined by reviewing your income from the last two years. The highest period of income is then divided by 26, with the maximum payout being $425 a week. Each state has its own regulations and set of requirements, so it’s best to seek out your local department of labor.
5. Savings
If you are faced with a recent job loss, and you had the foresight and wherewithal to have stashed away an emergency fund. You are in a good position. Review your budget and see how many months of your living expenses you can cover utilizing your unemployment benefits and by rationing your savings fund. Be prudent and frugal with how much you use from your savings account. You may be able to ride out this unemployment period without emptying your bank account in the process.
Again, these are some financial survival tips to help your through when an unexpected job loss happens. What are some other tools or strategies you’ve had to use in the past to remain financially solvent while going through a tough life situation?
