In modern American culture a steady income stream is critical for survival. In fact, most adults rely on not just one but multiple streams of income to support their families and lifestyles. The gaps between socioeconomic brackets are growing wider and wider and it is becoming more difficult to “make it” on one income alone. While some are able to save and plan for future expenditures others are doing their very best just to make ends meet. Whether you are financially comfortable or earning just enough, unemployment is the one thing that levels the playing field for us all.
The loss of a job or income stream is unpredictable and uncertain and therefore frightening in most cases. Not knowing how your financial responsibilities will be met is a stressful state to be in to say the least. When facing unemployment, essentials such as housing, food, and clothing become apparent as urgent priorities. Important considerations such as maintaining a healthy credit score can quickly fall by the wayside. However, there are some things that you can do despite the loss of income to protect and maintain your LuxuriousCREDIT during this difficult time.
1) Finding a new job IS your job.
The most effective way to avoid falling behind on your financial responsibilities, bills, credit cards, and debt is to find a new way to support yourself financially. The sooner you find a new job, the lesser the impact to your credit. Although many adults who find themselves without a job have the benefit of being able to draw from unemployment benefits for a time, this is only a percentage of your previous income and will not be nearly enough to maintain your pre-unemployed lifestyle.
“It typically takes about a month of job searching to replace each $10,000 of a lost salary -- five months to find a $50,000-a-year job”, says Gail Cunningham, vice president of public relations for the National Foundation for Credit Counseling.
Experts recommend spending at least four or five hours a day prospecting, sending out resumes and going to interviews.
2) Prioritize essentials over debt.
After beginning your new job search, the next most important step is to put things into perspective. While your credit and financial future are important, do not prioritize your credit score above your needs and the needs of those who depend on you. You will need to pay for housing, utilities, food, medication, and transportation, then you should consider making payments towards outstanding debt. Falling behind financially creates a strain and pressure from creditors can make you feel as though you should pay them first. However, what good is a happy creditor if your electricity is cut off? This prioritization is not without consequence. If you must make your payments late, expect a potentially significant increase in interest rates.
3) Time for the number crunch.
Before you actually spend any money, a precious and scarce commodity during unemployment, you need to know exactly where you stand. According to financial planner Raymond Lucia, “One of the main mistakes consumers make is we have no idea where all of our money goes.” Take the time to gather unemployment benefit documents and information, bank statements, and any other income information and look for opportunities to cut expenses. Cutting out non-essentials such as cable with premium channels and unnecessary trips in the car due to poor planning can give you the financial leeway that you need to be sure that your credit survives this challenging time.
4) Avoid racking up more debt.
If you don’t have the luxury of having a savings to fall back on during this tough time it may be tempting to rely on credit cards and loans to buy groceries, pay utilities, and cover other expenses. Resist the urge as this will only create more debt that you may or may not be able to afford to pay off and can ultimately hurt your credit score. Instead, consider selling any assets you may have such as an extra vehicle or jewelry.
Regardless of how you decide to manage your unemployment try to think of this challenge as a learning experience. Losing a job can sometimes feel like failure. Remember that you are not a failure, you are just in a difficult situation. The best thing you can do is accept it, survive it, and look ahead.