Some Thoughts About Finances and Losing Your Job

Feb 21, 2009 Sat0Unemployment

Finances will probably cause more stress for you during a lay off than any other challenge you face. I had been expecting a lay off for years so my finances are in decent shape. But on Jan 14 when I heard the Nortel CEO say that all severance payments would end immediately I was a little panicked. No. Very panicked. Sick at my stomach panicked.

But over the next couple of days I got very motivated about finances. I worked out a plan and soon realized how far a dollar can be stretched. I can survive for a while before having to dip into any serious savings. Here are some of the things I did:

  1. Sign up for state unemployment benefits. Determine what your weekly benefit will be. Remember that you have to pay federal and state taxes on the benefit.
  2. If you have children, get them on free or reduced lunches. You've paid taxes for years. If you have no income you are entitled to this benefit. Just do it.
  3. You are not driving your vehicle to work every day. Call your insurance company. Your insurance cost will be reduced. I already had the deductibles as high as allowed on autos and home.
  4. I have a couple of loans through my credit union and I have been making extra payments on them. I called the credit union and explained my situation. They immediately lowered my monthly payments by $500 for 3 months and will evaluate again at that time.
  5. Before your medical benefits expire, get fixed. Get a dental checkup. When was your last physical? How are your eyes? Can you get new glasses?
  6. You have to have a realistic budget. But don't make it complicated. List the fixed cost you have every month such as mortgage, loans, insurance, electric, water, phone, cable, internet. Look hard at those to determine if any can be reduced or eliminated. Do you really need a land line phone and a cell phone? How about cable TV? Can you get loan payments reduced?
  7. After the fixed costs I only have three other categories of expense. Food, fuel and misc. Determine a realistic value for these and add to the fixed costs. This is what you need each month to survive. Now subtract from this your monthly unemployment benefit. This is your monthly cash burn. I was surprised at this number. It was much lower than I thought. This is the point where that panicked feeling went away. I now had a realistic plan and knew I would be ok for several months.
  8. You have to track expenses to determine if your budget is valid. Don't spend based on how much money is in the bank. Ignore the fixed costs but track every other expense. I carry a small bag everyplace I go with my resume, business cards, small netbook PC and a small notebook to track every penny I spend. Everything falls under food, fuel or misc. Keep a running total or do like I do and update a spread sheet on your computer every few days. This helps motivate you to not spend money. Also I just hit 30 days on my survival budget and I nailed it to within less than $10. A budget is worthless if you don't track expenses to determine if you can live on the budget.
  9. Get temporary health insurance. Not a normal plan, you can't afford that. Just something to cover you in case of serious illness. I found a plan to cover myself and my two sons for $181/month. It has a $2500 deductible but then covers everything at %100. It does not cover preventive medicine, but that is not what I need for now. My family is healthy. I can handle an office visit for something fairly routine. And I can always come up with $2500. But a serious illness without health insurance would put me and probably you into bankruptcy. If you have children you can probably get an accident policy through the school. I got the boys covered for a one time $80 payment/each until the start of the next school year. That will cover things like sprains and broken bones without having to pay out the $2500 deductible on the temporary health insurance policy.
This is my plan. I hope something here helped you. Can you add anything?
My Brother and I Found a Very Ugly Horse




TagsConfederate Statues  (32),Motorcycle  (97),National Parks  (9),Odd  (1),Route 66  (33),Unemployment  (6),Zombies  (1)