7 Tips for How to Survive Financially After Job Loss
Financial steps to take after you lose your job
If you’ve lost your job or are experiencing a financial hardship for any reason, worrying about your bills and finances is understandable. But there are practical steps you can take to survive financially after a job loss. Read on for what to do if you’re concerned about missing upcoming credit card and other payments, to get tips on how to budget and prioritize your bills, and more.
1. Reach out to Your Credit Card Company
Being suddenly unemployed is stressful enough as it is. Worrying about the possibility of not being able to pay your upcoming monthly credit card bill just adds to that stress.
The good news is, many credit card companies have programs designed specifically to help customers experiencing what is commonly known as a “financial hardship”—commonly defined as a drop in income caused by unexpected life events such as a job loss, injury or illness, or emergency event or natural disaster. Needless to say, no one chooses to be in a financial hardship.
If you find yourself in this situation, reach out to your credit card company directly as soon as possible because they may be willing to work with you. It’s always best to contact them to let them know if you believe you may miss upcoming payments.
2. Take a Hard Look at Your Budget
To make a budget you can work with during this financially challenging time, it’s helpful to consider these three areas:
How much income do you have from different sources, such as:
- Unemployment benefits eligibility
- Other government assistance programs or options
Determine how you spend your money
- Create a weekly or monthly budget with categories for bills and other necessities like housing and groceries
- Assign amounts to each category
- Determine your spending plan, and manage it closely
Cut back right away on things that aren’t necessities, but “nice to haves”, like:
- Cable television
- Dining out at restaurants
- Gym membership
- Magazine or streaming subscriptions
- House cleaning services
- Landscaping or lawn care
3. Consider Credit Counseling
It may be helpful to meet with a credit counselor to think through your finances and calculate your payment options. You can get a list of government approved credit counselors by calling 800-388-2227 (National Foundation for Credit Counseling) or visiting this list of counseling services from the Department of Justice.
4. Prioritize Your Bills
Once you’ve gotten a handle on your budget, you can prioritize your bills. Here’s a good way to think about that. First and foremost, consider the bills that have a required payment each billing cycle so your necessities are cared for.
Second, consider making at least the minimum payment on other bills, like credit cards.
If you can afford to do so, you can pay more than the minimum or pay your balance in full to minimize or avoid interest payments. Of course, during financially challenging times, that may not be possible. Making at least the minimum payment however, will keep you from going past due. This will avoid late payment fees and penalties
5. Avoid Taking on Any New Debt
Now is not the time to sign on for anything that adds a new, recurring payment to your monthly bills, or to make purchases you don’t absolutely need. And you should carefully consider applying for credit of any type, including any store credit cards, no matter how attractive the deal might seem at the time.
6. Consider Options to Consolidate or Refinance Your Debt
- If you have more than one loan or bill that you think you may not be able to make the monthly minimum payment on, you might consider consolidation. 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 with a single monthly payment.
- If you own your home, check to see if refinancing is an option to lower your monthly payment.
7. Other Important Things to Think About
- If you’ve experienced job loss, or job change and had a retirement plan, look into converting or rolling it over
- Research government benefit options
- Find out if you and your family are eligible for COBRA health insurance benefits
- Polish up your resume, network and collect references
Facing a job loss or financial hardship is stressful, and not a situation anyone chooses to be in. Just by reading this article and picking up some information on what you can do to help yourself, you’ve already taken an important first step.
We hope that you found this helpful. Our content is not intended to provide legal, investment, or financial advice or to indicate the Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.