If you haven’t been a victim of a layoff, you probably know someone who has. There are a number of steps you can take to prepare for the possibility of long-term unemployment and emerge in a stronger financial position once you get back on your feet.
The National Foundation for Credit Counseling (NFCC) recommends that consumers take the following steps to strengthen their financial footing before a job loss becomes a reality:
Don’t be caught off-guard. Listen to the buzz around the cafeteria. Industry trends become painful personal realities. You don’t want to be the last to know about a pending layoff.
Make yourself indispensable. Arrive at work early and stay late. Volunteer for special projects. Seek face-time with your immediate supervisor. Doing these things is not a guarantee that you will survive a layoff, but they are a step in a positive direction.
Update your resume. If you’ve been at your current job for a while, you may need professional help updating your resume. Today resumes are often reviewed by computers and scanned for key words, so you’ll want to be certain that your resume is an accurate reflection of your skills and responsive to the jobs you may be seeking.
Find out about job loss assistance your workplace offers. Many companies provide job placement assistance, retraining services and severance packages. Make sure you are aware of all benefits offered, putting yourself in a stronger position if the bad news comes.
Learn about government benefits. Your human resources representative at work should be an excellent resource of available government benefits. Stay up-to-date on recent benefits changes for which you may be eligible.
Address any current medical issues and research medical insurance options. If you have been delaying root canal or your annual physical, be sure to take advantage of insurance coverage while you still have it. The loss of medical insurance can be devastating. If you’re married, you may qualify for coverage through your spouse’s insurance, so find out your options to ease the transition. Also inquire about COBRA, a costly option for most, but is better than going without health insurance.
Monitor your spending. The only way you can know where your income is going is to write down every dollar you spend. Do this for at least 30 days. The goal is to discover any areas where you can save. The daily stop at Starbucks and gym membership that you don’t really use can add up to substantial savings.
Build adequate savings. How did you pay for your last emergency — whether it was something to your house or your car. If it was with a credit card, that’s a red flag. Begin putting at least 10 percent of each paycheck into a savings account. If you receive any unexpected windfall, such as an inheritance or a tax refund,deposit it right into your savings account.
Create a budget. You want to be in charge of your money, not the other way around. The only way to do that is with a budget or spending plan. After you’ve tracked your spending, you’ll be able to assign dollar amounts to each spending category. This can assist you in using your money to your best advantage.
Involve your family. Make all financial decisions family decisions, and your likelihood of success will increase exponentially. Talk about everything from the bills to the budget. The home is a great place to teach your children about financial issues, including the inevitable problems. Remembering when parents worked through the hard times will be helpful when it’s their turn.
Obtain your most recent credit report. Review it for accuracy and address any errors. Why? It is common for employers to obtain credit reports as a part of the interviewing process. You don’t want an error on your credit report or an unpaid bill from several years ago to stand between you and that new job. Consumers are allowed one free credit report from each of the three bureaus every 12 months from www.annualcreditreport.com.
Pay down debt. Find the money to dedicate to debt reduction by learning to live below your means. If you’ve created a lifestyle that is not realistic for your income, you are going to have to make some serious adjustments. Consider taking on a second job and dedicate that paycheck to debt reduction. As difficult as that may sound, becoming debt free has tremendous perks: it frees you from stress and allows you to build your savings account, begin investing and meet your financial goals. If you were to lose your job, your ability to service your debt obligations would obviously be compromised. Pay down debt while you still have the income to do so.
Get help. Take action at the first hint that you may be the next one in the unemployment line. Delaying only makes it harder to find a solution. There are many reputable credit counseling agencies with trained and certified counselors waiting to help you. Be prepared by sitting down with a counselor and getting your finances in order before you need it.
To connect with the NFCC Member Agency closest to you, dial (800) 388-2227, or go online to www.DebtAdvice.org. For assistance in Spanish, call (800) 682-9832.