Suddenly and unexpectedly losing your job can be a devastating experience for your finances and your self-esteem. But don’t bury your head in the sand, as I’m sure you would like to do. This may seem easy and even comforting at first, but it won’t help you move on and keep your family and yourself fed, clothed, and happy.
Instead, you should pick yourself up, dust yourself off, and face the situation head on. I know that’s easier said than done, so here are 6 emergency financial steps to take after a job loss that can help you get back on your feet and headed in the right direction.
Evaluating your situation is one of the hardest things to do after the shock of losing your job, but it is necessary. You need to take immediate stock of your financial situation (check out the free tool from Personal Capital) if you haven’t done so already, so don’t put it off.
Figure out what your absolute necessities are, and create a bare bones budget. This should including things like your rent, minimum car payment, utilities, etc. It should not including anything that is a luxury, such as trips to the salon, eating out, or cable. A bare bones budget may not even include debt payments for things other than your rent or mortgage and you car payment. Those are the first two debts you should pay if you can so you can stay in your home and keep your car. Having your vehicle will make it easier to go on new job interviews.
Avoiding expenses that are not absolutely necessary can be difficult but it could make the difference between you and the street. What you decide is necessary and what isn’t can be different for each person or family. Only you know what you can live without in your bare bones budget.
2. Unemployment Benefits
Don’t be too proud to file for your unemployment benefits. Even if you have an emergency fund, you should still file for your unemployment benefits if you qualify for them. You need to be able to pay your bills for an undetermined amount of time, while you search for a new job, so use every resource you have available to bring in needed income and keep your bills paid.
3. Inform your Family
If you have a spouse and kids, have a family discussion and let them know what is happening. Your new financial situation affects everyone, so all family members need to know and be on board with cutting expenses and helping out during this difficult time. How old your kids are will determine just how much they need to know. Older kids need to know more than younger kids.
4. Contact Your Bill Collectors
Some bills can be negotiated if your creditors know you have lost your job and will be unable to make your payments for a temporary period of time. Inform them of your situation and stay in their good graces. They will usually try to work with you because some money is better than no money.
5. Get a Part-time Job
If you haven’t already, update your resume. Obviously the best situation would be finding a full-time job to replace your income, but that may not always be possible. If you can’t find work right away, you may have to take a part-time job or a lower paying full-time job to bring in some income while you continue to hunt for a better position. This can have an effect on unemployment benefits you might be receiving, so make sure you take that into account.
6. Health Insurance
The Human Resources Department of your former employer should be able to give you some information to help you decide whether or not to continue your health insurance. You should try to keep your insurance if it is at all possible, or find out if your spouse can add you and any other family members to their plan. If that does not work for you, check online to find the health insurance marketplace in your state for other more affordable options.
Have you ever lost your job unexpectedly? What steps did you take to make sure you were financially secure?