Do you need to strengthen your finances after unexpectedly being laid off from work? That can be a serious problem that will take a lot of effort to overcome. According to an article published on CNBC.com, there was a surge in layoffs during the first month of 2016. This was said to be the highest level since July of 2015.
The article revealed that there were 75,114 job cuts planned by US based companies. This is 200% more than December. It is 42% higher compared to the same month last year. Among the various sectors that announced their plans to layoff workers, the biggest percentage came from retailers. Although this sector gained almost 8% thanks to the holiday sales, they still laid off more than 22,000 positions. Challenger, Gray & Christmas, the global outplacement firm that conducted the study, also revealed that the shift to online shopping prompted a lot of retailers to cut back on their manpower investments.
Being unemployed at a time when you are financially weak is not the best position to be in. With the unstable stock market and the predictions of an impending economic crash, being financially stressed is a common occurrence among the unemployed.
If you think about it, the reason to lay off workers is reliant on a lot of things. 10 years ago, you would not think that online shopping will cause a lot of people to lose their jobs. After all, why would you retain so much manpower when the online store do not really need a lot of workers to function? It seems like the digital age is rendering some careers insignificant and this is causing a lot of layoffs all over the country.
5 tips to help your finances survive a sudden job loss
Whether your unemployment is caused by internal or external factors, one thing is for sure: you are in a very scary situation. If you do nothing to strengthen your finances, you might end up losing everything that you built for the past few years that you had been employed.
According to the data published on BLS.gov, 3.7 million workers lost their job in February 2016. The data labeled these people as job losers. The Bureau of Labor Statistics defines job losers as those who involuntarily lost their jobs – or at least, completed a temporary employment contract. This is a huge number of people who do not have a stable income to depend on for the next few weeks or months.
If you find yourself in this position, there are 5 different tasks that you should do in order to help strengthen your finances.
Analyze your current financial position.
This is actually something that you need to do as soon as you realize that you are getting laid off from work. It is your decision if you want to study your finances on your own or you will include your family. That is up to you. The important thing is to look at your finances as soon as possible. You specifically want to look at your savings and your expenses. Your goal is to define your financial position so you can plan how to stretch it as far as it can go. After all, you never know how long it will take before you can find another job.
Create a frugal budget.
Once you know your financial position, it is time for you to create a frugal budget. Take note that a budget plan will help you organize your finances but a frugal budget can help ensure that it will last as long as possible without you feeling too deprived or restricted. Frugality is all about knowing the expenses that are necessary and those that are not. It is also taking into consideration what is important to you and finding a way to make ends meet regardless of how much money you are dealing with. Concentrate on the bare basic necessities and identify the expenses that you need to let go. This will help you strengthen your finances because it encourages you to use every penny wisely.
Communicate with your service providers.
With the creation of the frugal budget, you should now have a list of expenses that you can retain and those that you have to let go. Now is the time for you to talk to your service providers. You want to inform them of your unemployed status. You should cancel subscriptions that you can live without and you can talk to the companies to help you lower your monthly expenses.
Negotiate with your creditors/lenders.
Being in debt while unemployed is a scary predicament. Nobody really wants to declare bankruptcy willingly. But if you have debts after losing your job, then you are one step closer to declaring yourself bankrupt. To keep this from happening, you have to muster the courage to talk and negotiate with your creditors and lenders. Inform them of your recent job loss so you can both make plans on how you can avoid defaulting on your loans. If you have student loans, you can apply for deferment. If you have credit card debts, you can go for debt settlement. If you have a mortgage, you can ask for a lower rate or you can sell your home and buy a smaller one that you can afford to pay off. It is possible for you to reduce your payments or delay it for a couple of months. All you have to do is to ask. You should never put your debts in the backseat just because you do not have a job. This will help you strengthen your finances by taking care of your credit score. Taking your debts into consideration will allow you to keep your credit score from suffering too much.
Research the benefits you can receive while unemployed.
Finally, you have to research the different benefits that you can receive as an unemployed individual. File your unemployment so you can get financial support from the government. If you have a family, you may be eligible to receive food stamps. At the very least, this can help you lower your food expenses. Take note that there are other benefits that you can receive. It is advised that you act on it fast.
If you find that your savings are dangerously low and you still do not have a job, you need to accept any type of job in the meantime. Get a part-time position as soon as you can – regardless of your status in life. You can also sell off some of your things so you can use that cash to pay for your basic necessities.
3 financial tools to help you survive unemployment
When you find yourself suddenly unemployed, it is very important that you gather all the tools that will help you strengthen your finances. You may feel like drowning in self-pity but the truth is, you cannot even afford that. You have to get up and do something about your situation so you are not left in a desperate situation.
Of all the tools, here are the three financial tools that you need to have.
Emergency fund. There are many reasons to have an emergency fund and unemployment is one of them. This is actually one of the situations when you should be thankful that you have a reserve fund. You have some money put aside for your expenses. But just in case you do not have an emergency fund, you need to tap into something else – like your retirement fund. Ideally, this is not encouraged because you do not want to risk your financial future. But if this is your only savings, then you can probably withdraw a portion of it. Take note that you should strictly get only what is necessary. For instance, withdraw only what you need to survive for a month – and only the bare basic necessities. During that month, use the time wisely to look for a part-time job or to sell off some of your possessions so you can strengthen your finances further.
Frugal budget. The other thing that you need is a frugal budget. A typical budget is not enough. You have to use your limited finances on expenses that are important. This is why you need to adapt a frugal state of mind so you can choose your expenses wisely. You will not really deprive yourself of entertainment expenses – you just have to select what these expenses are and decide which of the other expenses you will let go.
Financial goals. Finally, you also need to have financial goals even if you are unemployed. This is the best way for you to stay motivated. You need this motivation because being unemployed places you at a higher risk of depression. An article published on HuffingtonPost.com, the writer, Janice Harper, talked about her unemployment stint. She said that she survived not because family or friends helped – but because she did not allow herself to worry and she believed in her own capabilities. She motivated herself and that fueled her survival instincts while she was unemployed. You should do the same. One of the ways you can do this is by holding on to your financial goals. This, at the very least, will encourage you to strengthen your finances.
In case you need more tips to help you survive unemployment, here is a video from Howcast with tips that will help you during this difficult time.