Losing a job is never easy, it disrupts your daily routine and causes your budget to stretch even farther. If your finances are already tight, being laid off can make it hard to make ends meet. It might be tempting to resort to credit, or to take out another mortgage on your home, but these steps can cause you more harm than good. With a little creativity, you can avoid going into a lot of debt in the event you find yourself unemployed.
The best thing you can do to avoid going into debt if you laid off if to have an emergency fund to fall back on, but this is not something that everyone is able to accomplish while they are working. In most cases paychecks are barely covering expenses, so it is hard to put money into a savings account to be there for an emergency like losing a job. This means you will have to come up with other solutions to avoid falling too far behind if you become unemployed. Five things you can do include:
- Advise your credit cards you are no longer authorizing certain automatic drafts. If your car insurance or another recurring expense comes through a credit card (even on you pay off monthly), now is the time to stop using that card for this expense. Doing so will help save you interest and other fees that may accrue if you are no longer able to make payments on the card.
- Reevaluate your budget and cut out what you can, even if it is just a temporary cut.
- Pay only the minimum payment when possible, putting more into savings than to your existing debt. This may seem counterintuitive, but you can resume a payoff plan once you find a new job while ensuring you have enough money for your necessary expenses.
- Call or write your creditors and ask for a deferment or a reduced interest rate so you can manage your payments.
- Cancel vacations and other prepaid events, if you can get a refund.
You should also shop around for better rates on phone service and other monthly expenses that can be adjusted. Clipping coupons and shopping for generic brands will also save you money. If you are lucky enough to find a new job before you hit your financial bottom you will be able to start saving and repaying debt. But if you are not able to do so you do have options. Call us to find out if bankruptcy is right for you, or if negotiating settlements with your lenders will work.
For more information about money, budgets, and bankruptcy contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.
