Managing your credit during unemployment is critical because many employers require good credit. Despite having plenty of experience and strong references, some people will hurt their chances for their next position if they can’t pay their bills on time.
For most people, finances are tight when they aren’t working. Here are some money management tips to help you through a period of unemployment, as well as long-term tactics to implement once you have a new job.
Short-term money management tips
People who have recently lost a job should determine if they are eligible for unemployment benefits from their state department of labor. Even those who received a severance package may be eligible after waiting for a certain period of time to apply based on the amount of severance received and the guidelines for the state in which they reside.
Once you have lost a job, consider the following:
- Make looking for a new job your full-time job and have an action plan that involves selling yourself to potential employers.
- As sales is a numbers game, set a goal for the number of people you will contact or network with or jobs that you will apply for in a day or during a week. Striving to reach that goal is a way to motivate you that will lead to a job offer.
- Contact Angel Food Ministries to obtain food at the lowest possible cost. The organization can be reached at 1.877.366.3646, or you can order online at angelfoodministries.com.
- Call United Way at 211 to find out about other low-cost services, such as day care.
- If you are paying off a student loan, contact the financial company servicing the loan to find out if you can defer or reduce your payments.
- Contact the financial company servicing your automobile loan to see if you can make a similar arrangement.
- Make at least the minimum monthly payments on your credit card accounts. If that is impossible, contact your creditor, explain your loss of income, and state when you expect to be able to resume making payments.
- If you cannot make your mortgage payment, contact a mortgage counselor at CredAbility at 800.251.2227.
- Consider downsizing your lifestyle by reducing expenses such as club and gym memberships, cable television, bottled water, and movies. Find ways to reduce “everyday” expenses, such as telephone use and dining out at restaurants. For example, families with cell phones for each person may not need a landline, and cooking all meals at home could easily save a family hundreds of dollars each month.
Long-term money management tips
Many people who are now unemployed formerly worked in high-income professional jobs, such as those in the mortgage, real estate, or securities industries. If you find yourself in this situation, you should understand that you may not find a new job paying as much money and that a lifestyle change may be required to meet your longer-term financial obligations.
While looking for a new job, you may want to:
- Develop a new, realistic budget that will enable you to pay for essential expenses and bills before any extra or luxury items. Consider developing a budget so you can live on 70 percent of your new income, with the remaining 30 percent used for savings and long-term investments.
- Consider selling your car, especially if you have a high monthly payment, and purchasing a less expensive model with smaller monthly payments.
- If it’s difficult to make your mortgage payment each month, and you can live in a smaller home, consider putting your home up for sale. While home prices are depressed, it may be a better long-term solution to live in a home you can afford.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.