Laid Off? Six Steps to Manage Your Finances
December 19, 2008
by Lee Miller | Monster Contributing Writer
No one is immune from layoffs. Whether you’re 22 or 52, odds are that sooner or later you will find yourself, often through no fault of your own, out of work. So it makes sense to plan ahead. Most financial advisers suggest saving the equivalent of six months’ salary to tide you over if you lose your job. You will probably need more, especially if you have a family and are the primary wage earner.
However, most of us do not think about that possibility until we are actually laid off. So what should you do if you haven’t prepared?
Here are six tips:
Determine How You Are Spending Your Money
When times are good, most people do not think about how they spend money. We know how much the mortgage or rent and monthly car payments are, but we don’t pay attention to daily spending. How much do we spend going out to eat? What is our weekly grocery bill? What about utilities and insurance? Being more aware of how you spend your money will cause you to spend it more carefully.
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See Where You Can Cut Back
If you’re facing a layoff, you need to come up with a plan for cutting expenses. Develop a budget that eliminates most unnecessary expenses, but don’t completely cut entertainment. You need to maintain your spirits and keep up with contacts. However, you can cut back on those expenses substantially. Locate inexpensive places to go out to eat and drink. Go to movies instead of plays, and look for discount admissions. Don’t give up the gym but consider joining a less expensive one, unless you use the gym to make business contacts. Turn your thermostat down in the winter and up in summer.
Avoid Major Purchases
This is no time to buy that new car or DVD player. If you are already in debt, particularly credit card debt, you may want to consolidate your loans into a single monthly payment with a lower interest rate. If you own a home, consider a low-interest home equity loan.