Losing your job can be incredibly hard on you and your family, particularly if you already have a significant amount of debt. Without your regular income, it can be difficult to meet your regular repayments as you normally do. Here are some strategies that can help you stay afloat during this difficult time.
The first step is to take a look at what you have saved up to cover emergencies. Ideally, you should have enough money in your emergency fund to cover at least six months of expenses, but any amount will be greatly helpful.
Without your primary income generator, you may still have some money coming in. Add up any pension or severance pay, your spouse or partner’s income (if you have one), and any income you expect to receive from part-time work or side gigs.
Based on your projected income and expenses, work out how long you can afford to pay your bills. If it is less than the time you expect to be unemployed, you’ll need to make some changes. It also helps to include a bit of a cushion for unexpected emergencies or your job search taking longer than expected.
Start by paying any secured debt first, like your mortgage and car loan, so that the bank cannot reclaim your property. Next, you can pay your unsecured credit card debt and personal loans. While you may be accustomed to making large debt payments, you’ll likely need to pay just the minimum while you are unemployed.
During unemployment, you may need to sacrifice certain luxuries, like premium cable, gym memberships and subscription services. If you explain your situation to your service providers, you may be able to suspend your services temporarily, rather than cancelling them outright.
If you have a strong repayment history and credit score, your lenders will be more likely to be willing to work with you during your time of need. You may be able to defer your payments or make interest-only payments for a short period. You’ll never know if you don’t ask!
When you are unemployed, finding a new job becomes your job. Get to work on your CV right away, and take every opportunity you can to apply for work. You may also wish to look outside your typical field of work, particularly if there are not many jobs available in your industry. Supplementing your income with part-time work and side gigs can help you get through this difficult time without digging yourself as much of a financial hole.