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What To Do When You Go Back To Work Again

Video thumbnail for youtube video 9 Things Your Boss May Not Be Telling YouIf you’ve been the victim of long-term unemployment – usually defined as being jobless for 27 weeks or more – you’re not alone. The number of people in this category peaked in 2010 at 45% of the unemployed. And it’s not just young people who suffered this. In fact, 37% of people between the ages of 35 and 44 and 41% of people age 45 to 54 or about 1.4 million people suffered long-term unemployment.

Things are getting better

Fortunately, the economy is getting better and the rate of unemployment has fallen to 6.6% in January from 7.9% just a year ago. This means that a lot of newly employed Americans are having to pick up the pieces when the Great Recession threw their financial lives off track. In the event you’re starting over at age 30, you have a lot of time to recover. But what if you’re 50? In this case, you will not have as much time to make up for those earnings you lost and those retirement contributions you forfeited. However, there are things you can do to get your finances back on track and here are six of them.

Celebrate but only a little

When you are rehired, you deserve a celebration but make it a little one. Enjoy a small pleasure such as a massage, a five-dollar cup of coffee or a trip to the driving range. Keep things simple. For example, you might hug the one you love and then go out to nice dinner. But don’t use this as an excuse to blow money on a new set of golf clubs or to lease a new car.

Create a new budget

Start by inventorying your current assets and debts. Put together all of your past due bills so you can see where you stand. Next, “reality test” your new earnings. In the event the job is temporary or as a contractor, create a larger cash reserve. If you are now underemployed, meaning that you had to take a pay cut, create a minimum budget that reflects your new income and expenses.

Tackle your debt

You may have good intentions to get your debts paid off and then begin saving. The problem here is that debt often just never seems to go away. Once you’re back to being employed, focus on paying down debt and rebuilding your emergency fund – simultaneously. You need to have an emergency fund that’s the equivalent to three to six months’ worth of your living experiences. Postpone all of your discretionary spending until you have saved this much money. You may not be able to pay off all of your debts so you will need to prioritize which ones to pay off first. As an example of this, if you have debt on multiple credit cards think about paying off those with the highest interest rates first while paying a bit more than the minimum payments on your other cards. In the event you were forced to borrow money from friends or family, be sure to explain to them that you’re working on paying off other debts but haven’t forgotten them and would like to work with them to develop a payment plan.

Get a checkup

You’ve probably been without health insurance while you were unemployed so you need to see your doctor to get your cholesterol, blood pressure and other vitals checked. A visit to your dentist might also be in order and you might want to get a colonoscopy or a mammogram. That time when you were searching for a job and worrying about money was probably the most stressful period in your life so you need to make sure it didn’t ruin you health. Does your new employer have a flexible spending account where you could contribute money in pretax dollars to pay for medical expenses? If so, make sure you start putting money into it. This would be true even if you have to defer doctor visits for a while.

Play catch-up

You probably have not been able to fund your retirement accounts so now is the time to begin. If your employer has a 401(k) plan, contribute as much as you can to get 100% of your employer match. Are you 50 or older? In this case, you might be able to take advantage of some “catch up” provisions in your 401(k) and/or your IRA. This would be to make up for the savings you were not able to make while you were between jobs. If you don’t have a Roth IRA, you should think about beginning one. This is different from a traditional IRA because you deposit after tax money but then are able to withdraw it tax free. In comparison, a traditional IRA is where you deposit the money tax free but then pay taxes when you withdraw it. There are two good things about a Roth IRA in that it can serve as both retirement savings and as a cash reserve.

If you aren’t familiar with a Roth IRA and would like to know more, just watch this video.

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Plan for it to happen again

If you do find yourself underemployed and have been required to take a job that isn’t one you had hoped for, you need to look for training to get the type of job that would be better for you in the long run. Taking classes, networking and attending professional association meetings can be a great way to expand your skills and would be a smart investment. There is still uncertainty in the labor market and it’s important that you understand this. In the event you are now earning enough that you would be able to ultimately afford your formal lifestyle, be sure to should think twice about this before returning to it. Whether you like to face this or not, if you were unemployed once, you need to understand that it could happen again. This would be especially true if you are a contract worker. If you’re on a contract, you’re probably earning more money than for similar work in a permanent job. But don’t forget that you need to pay your own benefits as well as the self-employment tax and your contract no matter how permanent it might seem could end with only a few weeks’ warning.

If you’re an older worker

If you’re an older worker, say 60 years or older, and are starting to work again – either by necessity or choice – you might want to find a new career path. Passion is usually the key to happiness for older workers. This means finding a career path or job instead of just a paycheck. This would be especially true if you are going back to work during what you thought would be your golden years.

The fact is that it’s hard for older workers to stay motivated when they feel they are not appreciated or are not making significant contributions. However, it’s important that you do what you can to maximize your situation. A good first step in the process is to consider that working could exist side-by-side with playing and learning as you get older. You might find that working provides the chance to do things that are well matched to your values. Working again can also be a reason to get up every morning and join a community of people in which you would operate – as being isolated can be deadly to older folks.

Be sure to keep engaged. There are numerous examples of people who worked into their 70s and even their 80s and outlived those who had fully retired.

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