Managing Money When You’ve Lost Your Job
At one point or another, most of us will experience some form of job loss. Make bouncing back easier with these tips
In the best of times, juggling your finances can be a challenge. If you’ve recently faced reduced hours at work, a furlough, or even the loss of your job altogether, it can be even harder to make ends meet. It’s important to reassess your spending behaviors, shift your money mindset, and tighten your budget until things improve.
Stay proactive and limit the impact of the financial loss with these practical, proactive steps.
First, figure out what income and benefits you can secure
- Will you get a severance? If your job has been eliminated or you’ve been laid off, you might receive a severance package that can include pay and/or benefits. Ask how much severance pay you will receive, whether your health insurance will continue and for how long, and whether your company provides counseling, resume service, retraining or other help in finding a new job.
- Are you eligible for unemployment? Unemployment eligibility and rates vary depending on what state you live. Visit this site to get direct links to information and claim applications for each state. You’ll be able to see if you qualify and how long you can receive benefits. Remember: Unemployment doesn’t come without a catch; in some states, you’re required to receive regular job counseling, and you’ll have to pay taxes on any unemployment compensation you receive.
- Are you receiving any other payments? Do you receive Social Security benefits or other assistance?
- Sort out health insurance coverage. If you lost job-based health insurance coverage, you might be able to remain covered under the Consolidated Omnibus Budget Reconciliation Act (COBRA). You may also qualify for a Special Enrollment Period, which allows you to enroll in (or switch to) an affordable Marketplace plan any time of year.
Then, assess what (if anything) you owe at the moment
Once you’ve sized up what you’re working with, it’s time to look at any current debts: car payments, credit cards, mortgages, and more. Note any bills that need to be paid in full, and those that you can defer with minimum payments. If you think you may have trouble paying any of your bills—even making minimum payments—call your creditors right away about your situation. The earlier you make the call, the more options you will have to protect your credit.
If you own a home, would refinancing be helpful to lower your monthly payment? If you rent a home or apartment, check your lease agreement and talk to your landlord. You don’t want to get evicted for missing payments when you could have negotiated different terms.
Next, see where you can cut back on spending—and where you can’t
How are you spending your money? Start prioritizing your bills and adding up the necessities including food, housing, and medical coverage. See how you can cut back on phone and internet bills so you’re only paying for what you need, but be sure not to limit your ability to search for jobs online and receive calls from potential opportunities.
Now, weed out the “nice to have” items you can live without until things improve. Consider temporarily canceling non-necessities and luxuries like cable television, online subscriptions, dining out, your gym membership, house cleaning services or lawn care, and other personal care services. You’ll want to avoid dipping into your savings or 401(k) unless you have to, and also limit putting too much on credit cards until you’ve got the income to pay them off.
Consolidate any existing debt
Would consolidating your debt lower your payments? Debt consolidation might help you save money by lowering your interest rate and monthly payment. It might also be helpful for you track and manage your finances by giving you a single monthly payment.
Learn more about Capital One’s response to the coronavirus situation and how customers can get help if affected at capitalone.com/coronavirus. For information about the coronavirus (COVID-19), head over to the Centers for Disease Control and Prevention (CDC).
This site is for education purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.
Capital One does not provide, endorse, or guarantee any third-party product, service, information or recommendation listed above. The third parties listed are solely responsible for their products and services, and all trademarks listed are the property of their respective owners.