Ways to Handle Your Finances if You Lose Your Job

As of May 2020, there were an estimated 21 million people who were unemployed. While this was a result of the pandemic, that doesn’t take away the stress that you feel when you are in this situation. During the first quarter of 2020, the estimated household debt for Americans hit $14.3 trillion. These are scary numbers to some people, but if you recently lost your job, these numbers hit close to home, and it is a stressful time, and knowing what your next steps are can help you out.

What You Can Do if You Lose Your Job

If you are worried about your credit when you lose your job, this is entirely normal. Being unemployed in itself isn’t going to hurt your credit. Your credit gets hurt when you start to fall behind on bills as a result of your unemployment. Your next steps after you lose your job are crucial in ensuring that your credit doesn’t suffer or suffers as little as possible. It’s a good idea to try to save as much money as possible should something happen like this. Unfortunately, not everyone has that ability. This article will show you what to do if you lose your job.

Filing for Unemployment and Other Benefits

The best thing that you should do is to apply for unemployment. This action can be a great way to help you pay your bills while you are looking for a new job. Every state has its programs and regulations, so be sure to check out the unemployment regulations for your state.

The exact amount of money you will get from unemployment can depend on several factors,determined by where you live and how much you earned from working before your unemployment. Unfortunately, you aren’t guaranteed unemployment benefits, which is why it is vital to check out your local unemployment office or research on how to qualify for unemployment benefits in your state. In addition to unemployment, you also may be eligible for other benefits like SNAP or Medicaid as well, so it’s essential to look into all of these programs. The more help that you can get, the less you have to worry about fixing your credit in the aftermath of unemployment.

It’s essential that you begin looking for a new job as soon as possible. Programs like unemployment are only temporary programs that help keep you afloat while you find a new job.

Assess Your Budget

Most households have some budget in place, but if you don’t, you need to get started on one as soon as possible. When you have a limited budget while you’re on unemployment and other assistance, you need to be sure every penny is accounted for and used wisely. If you don’t have any budget, pull three months of credit card and bank statements and start categorizing all of your expenses into two categories: variable (things like gas or groceries) and fixed expenses (mortgage/rent, utilities, and the like).

Once you do this, you should start to see where you can save money. Maybe you go out to dine too much and can save a fortune by cutting those expenses down. Maybe there are subscriptions that you don’t use. Take a very close look and start figuring out where you can cut your expenses to stretch your money as far as possible. If any money remains after your priority bills, then you should save it rather than using it as fun money. This strategy helps in case you are in this situation longer than you planned.

Prioritize Debt Payments

Back to prioritizing your payments, you need to take a look at your debts and prioritize what needs to be paid. Secured debt, such as car payments or mortgages, is a significant priority because you can lose these assets if you fail to make your payments. If possible, you should try paying at least the minimum payment on your credit card debt. You may even find that some credit companies are willing to work with you too, so don’t be afraid to contact them. Since your payment history can make up around 35% of your credit score, it can hurt your credit if you ignore these bills.