The official national unemployment rate for the country is 9.7 percent. Millions of Americans are out of work and trying to figure out how to survive without a job. One of the biggest casualties of joblessness is not just the frustration and anger that accompanies fruitless job searches, but also the seemingly imminent financial disaster that almost always follows long-term unemployment. And with that thought, how does an unemployed worker avoid financial disaster after losing their job?
Let’s take a look at a few tips:
- Get honest about your situation. Take an honest look at how much you need to pay out each month and assess how far your unemployment check and other resources will stretch before you begin to run out of cash.
- Let your creditors know that you are unemployed and see if they will be willing to give you a forbearance for a few months. While a few months may not be enough to find another job, it will buy you a little time.
- Do not use your 401(k) or other retirement funds to repay credit card bills or even to pay for your everyday expenses. Remember, early withdrawal of your retirement account will cost you at tax time and you will be stealing resources from your future.
- Consider your bankruptcy options immediately after you suffer a job loss. Even if you choose not to file bankruptcy at that point you will at least know how bankruptcy can help you if your need it later. Many debtors who suffer long-term unemployment consider bankruptcy because it significantly reduces their cash needs by discharging most, if not all of their unsecured debt.