In today's failing economy, unemployment is fast becoming a reality for more and more innodividuals. Some let unemployment crush them, while others manage to persevere through their tough circumstances. To survive an unemployment crisis, it is necessary to understand the best way to handle the situation and skillfully manage finances until gainful employment is found.
Apply for Unemployment
You should apply for unemployment the minute you lose your job. Most states will allow you to complete the application online. The approval process takes approximately three weeks Therefore it is not in your best interest to procrastinate. Apply as soon as you can. If approved, you will not receive the same amount of money previously received from regular paychecks. Only a percentage of your previous income will be applied. However, any money coming into the household will help during this time.
Be Willing to Lower your Expectations
Your bills will not wait just because you are no longer employed. Now is the time to throw pride out the window and accept any job that you are offered. This may be difficult for highly skilled innodividuals who realize they are overqualified for certain positions. However, until you are able to once again utilize your skills for maximum pay, you must be willing to lower your expectations. You need to bring in an income. If it helps, continue to reassure yourself that it is only temporary.
Cut Unnecessary Expenses
Now is the time to eliminate unnecessary expenses and cut costs in every way possible. Consider cutting expenses that are not absolutely necessary. You should think about dropping your cable service, cancelling your cell phone service, and getting rid of that home movie subscription. You can always restore these convenient services once you are fully employed and back on your feet. Look for bargains and discounts when grocery shopping. Only purchase what is absolutely necessary.
Avoid Dipping into Reserved Funds
Do everything in your power not to touch your 401K or other retirement fund money. You may be forced to eventually, but avoid it if you can. There are stiff financial penalties applied to withdrawing this money early. If at all possible, draw your income from other sources and simply leave your retirement funds where they are.
Prioritize your bills. Determine which bills need to be paid off first. Think about the consequences associated with each expense and what you stand to lose if you are late on payment. For example, your mortgage or rent should be at the very top of the list, followed by your automobile payments. These are two necessary items. Utilities such as water, electricity, and gas should be next. Items such as a home phone, Internet access, cable television, and cell phone service should be at the very bottom of the list.
Unsecured debts, such as credit cards and personal loans, are a tricky area. While you should never pay them above your home, car, and utilities, you may want to rank them higher than your unnecessary items. Paying as many of these as possible will protect your credit score. If your credit score suffers during this time, it will take a while to get your credit back on track.
Avoiding your creditors' phone calls and letters will only cause you extra stress. Call them and explain your situation. It may be possible to defer payments for a month or so. In some cases, you may be able to negotiate a payment plan that will better fit your current financial situation. Creditors want their money and may be willing to work with you if they know the situation. If they do not negotiate arrangements, the most you have wasted is the time it took to make the phone call.
Don't panic if you suddenly become unemployed. Instead, immediately formulate a plan that will help you get through this time in the best way possible. This will be a trying time for you. Managing the situation to the best of your ability by making smart decisions will help you come out on top.