How To Financially Survive Unemployment

In today’s ever changing market, the possibility of job loss for many individuals is a fact of life. It’s important to plan for unfortunate events and to know how to handle it if it does happen.

It’s not often that someone will know that an employment loss is coming and so it’s best to plan ahead if at all possible. A good rule of thumb is to have six months’ worth of expenses put away in an Emergency Fund. Keep in mind that these are the expenses that you’ll need to pay. It doesn’t include those items that you can live without (i.e. movie tickets). But what does a person do if they haven’t been able to set aside those funds when a job loss occurs? Options can include any or all of the following:

1. Review the family budget. Determine what expenses are fixed or variable and what expenses are wants versus needs. Now is the time to take a long look at what expenses you cannot avoid paying and what you can do without. For example, you can’t avoid making your mortgage payment but you may be able to adjust your power and water consumption to help reduce your utility bills. Pay cash for all necessary expenses and avoid using credit cards. Try reducing your necessary expenses.
2. If you receive severance or termination pay, those funds should be deposited to the emergency fund so that monthly or weekly withdrawals can be budgeted for.
3. Reduce your debt payments to the minimum amount. The reduced amount will help save a few dollars every month without damaging credit.
4. Contact lenders such as credit card companies and explain the situation. If you expect the job loss to be temporary, you may have the ability to suspend one or more payments temporarily. Try and negotiate a stop payment or two or reduce the interest rate. Make sure to ask about any insurance you may have with the credit card or loan. Some people have job loss insurance as part of their monthly payment amount. It’s important that you avoid defaulting on any payments, especially to any secured creditors. Secured creditors have the right to repossess assets.
5. Contact Service Canada regarding Employment Insurance and apply for any benefits that are available.
6. Ask for help from friends and family. Some friends or family may be willing to provide a small short term loan to help during tough times. It’s important to use this money wisely though so that they don’t become resentful of being asked. And start paying it back as soon as possible - even if it’s only a little bit at a time. They will appreciate the effort.
7. Try to sell any assets that are no longer needed. Older cars that need some work can be sold in their current condition to someone who has funds to complete repairs. Items such as game consoles, electronics and furniture can also be sold successfully.
8. Rent out a room in your home for some additional income. Some rental contracts are for shorter periods of time especially for students in college or university.
9. Consider obtaining a part time / temporary job to cover some of the expenses that cannot be covered by the other changes being made. A part time job will still allow for flexibility to continue interviewing for more full time and permanent work and will help reduce the stress of the situation.
10. Try to do some networking and speaking with people in the same industry or field. People often know who might be hiring in other companies or even in their own. The potential for success is higher if someone already working there can put in a good word.
11. Seek the help of the local food bank. Food banks may limit your selections and food preferences, but they will reduce monthly expenses. Those saved dollars can be used to ensure creditors are paid. Just remember to give back once everything returns to normal.
12. As a last resort, consider cashing in investments/insurance. Some life insurance policies allow for withdrawal of cash in special circumstances. Call the Insurance provider and find out if there are any options open. RRSPs can also be cashed in as a last resort however it’s important to remember that there are tax consequences of this decision.

Sometimes, these suggestions aren’t enough and it might be time to seek the advice of a professional. A licenced Trustee office such as MNP will make sure that all of your options are considered and you understand the benefits and risks of each of those.MNP offers a free consultation and can provide some peace of mind by providing some options.