[Image: finacial crisis]You’re not alone if you’re experiencing financial pain during these tough times. The number of people claiming unemployment benefits has reached a record number, according to the U.S. Department of Labor. Dozens of big businesses have announced massive layoffs. Some workers are keeping their jobs but finding their salaries cut. Retirees watch while their nest eggs dwindle in value.
Be prepared
If you haven’t lost your job yet but are suspecting a layoff, don’t wait for it to happen before acting. LSU AgCenter family economists recommend preparing now.
A good place to begin is to make sure you have about three to six months’ worth of salary in an emergency fund. If you don’t have it, start decreasing the contribution to your retirement account. Put the money into a savings account, a money market account or some other liquid account.
“Don’t stop retirement contributions altogether,” Jeanette Tucker said. “Don’t consider withdrawing money from it, but just reduce your level of contribution to it.”
If you have equity in your home, Tucker suggests that applying for an equity line of credit, but use it only if necessary to fund an emergency account.
Also, get your resume in order and see what other jobs are out there.
“Network,” Tucker said. “Put the word out to friends and family that you may be looking for something.”
Be resourceful
For some workers the losses have already started. How do you survive a cut in pay, or worse, a job loss?
Tucker says you are going to go through a grieving process, “and that’s OK.”
She says you can allow yourself some time to work through your grief.
“Just don’t make it your full-time job. Your full-time job is finding a new job,” Tucker said.
Before leaving a job, check into COBRA and extended health care options. The family economist says a job loss doesn’t mean you should let your insurance lapse.
Also do not delay in applying for unemployment benefits, and be sure federal taxes are withheld.
LSU AgCenter family economist Gloria Nye says accept assistance if you need it.
“Determine eligibility requirements for government agencies and contact nonprofit assistance programs that may be able to help you if necessary,” Nye said.
The next step is to rein in spending. Cutting expenses can be hard, but when income is lost, it becomes a necessity. Nye says to start by cutting things that aren’t necessary.
“Although you may want to go on with life as usual, you need to identify and prioritize what you spend for needs, and greatly reduce or eliminate what you spend for wants,” Nye said. “Do you really need all those premium cable channels?”
You can also cut your phone bill by canceling extra services such as caller ID or call waiting.
Nye recommends looking for discounts by bundling phone, cable and internet services, while Tucker recommends cutting the grocery bill by living off of stockpiled goods from the freezer and pantry for a while and by purchasing generic or less expensive brands.
You can also shave a few dollars off utility bills by using water, electricity and gas more conservatively.
“Unplug appliances no[Image: counting change]t in use. Take shorter showers; turn down your water heater and wash some laundry in cold water,” Nye said.
Another way to save money is to reevaluate childcare needs. You may still need daycare while job hunting, but look for inexpensive options. Nye offers these possibilities:
- Swap child care with another parent.
- Form a child care co-op with other parents.
- Check if job training programs offer child care to participants.
- See if you can qualify for a Head Start program.
- Get a trusted family member to babysit while you are job-hunting.
When you are unemployed, you are cash-poor, but time-rich, according to Tucker. She suggests cleaning out closets and attics and having a yard sale.
Job hunting can be frustrating. The family economists say it’s OK to treat yourself, just don’t go overboard.
“Take advantage of free activities like public parks, playgrounds, museums, concerts, church and school events,” Nye said. “Use the public library for free, especially for books, music, movies and access to the Internet.”
Be wise
Credit cards can get you into trouble. And when money is tight, you may be tempted to abuse available credit. Tucker says to contact your credit card company and inform them of your situation.
“If you can’t make the minimum payment, have a number in mind and try to negotiate a compromise with the creditor,” she said.
Nye says to avoid making late payments. Late payments lead to additional fees and can cause interest rate to increase.
“Late payments on one card can increase your interest rates on other cards and with other lenders,” Nye warned.
Also, avoid payday and tax refund loans at high interest rates.
The family economists encourage you to resist the urge, no matter how tempting or convenient, to continue your pre-unemployment life style and simply charge your way through the recession or your unemployment.
“Charging and spending might be good for the nation’s economy, but definitely not for you,” Nye said. “It may seem like you have few options, but doing without unnecessary wants in tough times is less painful in the long run than the damage to your financial well-being that will be caused by the abuse of credit.”
The recession and unemployment won’t last forever, but getting yourself out of a credit disaster could be extremely costly and last for many years.
The LSU AgCenter is one of 11 institutions of higher education in the Louisiana State University System. Headquartered in Baton Rouge, it provides educational services in every parish and conducts research that contributes to the economic development of the state. The LSU AgCenter does not grant degrees nor benefit from tuition increases. The LSU AgCenter plays an integral role in supporting agricultural industries, enhancing the environment, and improving the quality of life through its 4-H youth, family and community programs.