I lost my job. Now what?
After losing your job, it’s important to remember that it can happen to anyone. No one is immune to job insecurity. I know that doesn’t make the situation less stressful, but it I just wanted to remind you that you are not alone.
Fortunately, there are plenty of resources to help you cope mentally and financially when you’re dealt this stressful hand.
Review Annual Expenses and Total Debt
Assess your monthly expenses and total debt. Review your bank account transactions and credit card statements. You may find it useful to pull out statements and take an average of the past year’s monthly expenses. An awareness of your average annual and monthly expenses is a starting point for budgeting.
Financial Planning and Budgeting
Compare your assets and income (whether it be employment insurance, rental income, spousal support, etc.) to your expenses and debt in order to arrive at a budget and financial plan. Assess how long you can manage financially with the resources you have without incurring further debt. Determine the level of income you need to support your expenses and figure out the reverse; how much you must reduce your spending to manage through this period of unemployment.
Prepare a new monthly budget that eliminates as much discretionary spending as possible, revising expenses down to a lower amount if possible. Cutting back is a common sense strategy for debt management, and often the most viable approach for individuals after a layoff. Remember that this is simply a short-term cut back during your unemployment and not your long-term plan.
Explore New Employment & Retraining Opportunities
Once you’ve been home a short time, you will be keen to get back into your career groove and related income. You will also want to find out if there are employment opportunities available with your past employers and any competitor firms and where there is career counselling available, including assistance with your resume and interview skills. Take a retraining or skills upgrading course if you think it can help you with your job search as you may make new friends and contacts along the way and employers like to see that you are skilled with fresh information sources.
If you cannot manage your finances by reducing spending or working an interim job or contracting your skills, assess if there are other available options that you can take while continuing with your expense reduction plan. Many people facing a job loss make the mistake of liquidating retirement plans in order to make ends meet. This option can be most hurtful in the long run since it will reduce retirement savings and significant investment growth. Talk to us before depleting any retirement plans.
Other people borrow from their personal line of credit or other credit sources even though interest will be incurred. If you want to borrow funds, you need to be highly mindful of not only the interest costs but the extra debt burden generally (loans on top of loans).
If you cannot pay what you owe and can’t keep up with new bills, get expert debt financial advice first before trying to negotiate your situation with creditors. You will also want to obtain professional help to find out about all your options for dealing with the mounting debt you may be unable to pay.
If you’ve been laid off for a while and are struggling with debt, it’s best to seek help before you’re too far into debt. Contact us for a free, no-obligation consultation. We will review all options with you and come up with a solution that best suits you.