Losing your job, even temporarily, can be a huge hit to your finances. Millions of people have lost their jobs in the past few months, and the world continues to be an uncertain place. With unemployment continuing to hover around 10 percent, there are many people facing a prolonged period of income loss. If you’re one of them, try following these tips to your money and make it through unemployment.
File a Consumer Proposal or Bankruptcy
If you were already deeply indebted before the job loss occurred, losing your income can make it impossible to keep up. Unemployment benefits will be considerably less than your income, and it will be a struggle to cover costs, not to mention pay back loans.
Before the situation gets out of control, talk to a Licensed Insolvency Trustee about getting out of debt through filing a consumer proposal or bankruptcy. Once you start missing payments, your credit rating will take the hit anyway, and you could face further legal actions and collection calls. Licensed Insolvency Trustees like Debt Help BC can explain the pros and cons of a consumer proposal vs. bankruptcy.
Apply for Benefits
One of the first things you should do is apply for unemployment benefits. Unless you’re self-employed or work in the gig economy, you’ve been paying premiums for unemployment insurance on every paycheck. Now is the time to find out if you’re eligible and use those benefits to cover your expenses.
Use Your Emergency Savings
This is why financial planners tell you to save your money “for a rainy day.” Job loss is one of those occasions when it helps to have money set aside to help you out of a bind. Financial experts encourage people to save as much as 6 months or even a year’s salary because job loss is always a possibility.
From the start, you need to be careful with how you spend money now that you depend on benefits or savings. You want your emergency fund to last as long as possible.
Put Your Credit Cards Away
You don’t know how long you could be without an income. The job market is upside down right now, and there is a lot of uncertainty in the world. It can be tempting to reach for your credit card when you’re just a little short, but that will quickly come to haunt you. High-interest debt like credit card bills can quickly spiral out of control when you have no income. If you start missing payments, your credit score will suffer, and you could wind up in collections.
Gain New Skills and Credentials
The world is changing faster than anyone anticipated, and whole industries have found themselves suddenly shut down by government mandate. Realistically, many of those jobs may never come back.
Now is a great time to gain new skills and credentials to find new employment. It can be difficult to use savings, but preparing for a career change is a wise use of your time, and it will make you more resilient to market shifts in the future.
Making it through unemployment is tough. Be sure to budget your money carefully, apply for all the benefits you can, avoid using credit cards, and investigate your insolvency options if need be.