Managing Debt while Unemployed

Financial analysts are calling it a financial meltdown; pundits say we are in a recession, but none of these words hit home until you are faced with unemployment yourself. Managing day to day debt while unemployed may seem insurmountable, but with some fiscal responsibility, tight budgeting and diligence you can make it through the rocky times.

Watching television you will see that financial analysts hope that everyone has savings in case they become unemployed, however for most Americans living paycheck to paycheck is more of a reality. There is help available for those who do not have any savings and the faster you act on getting help, the quicker you and your family will see some relief. The following are a list of steps to follow if you or a family member becomes unemployed.

1. Make a list of your all the money you have going out and all the money you have coming in.

This is the first thing you should do to balance you financial life. Make a column for your monthly expenses going out and another column of any money you have left from savings, your last check, severance package, or unemployment benefits that are coming in. Do this on a monthly basis so you can have a clear picture of what your financial status is. Make sure you include money you spend on groceries, food, daycare and other basic necessities.

2. Prioritize your bill payments.

If you are unable to pay all your bills at the current time, make a list with your top priorities. Obviously you need a place to live so make sure your rent or mortgage is at the top of this list. If you are paying on credit cards consider making the minimum payment instead of a larger one. Talk to your creditors about late payments. Some creditors have minor fees for paying late. If you find these companies on your list weigh the late payments and try to prioritize this way.

3. If you are having trouble paying your bills, talk to your creditors, don’t stop paying without explanation.

Companies are all too aware of the financial crisis going on in our country. Many have developed programs specifically for their clients when they experience financial hardship. They don’t want to lose your business. Call and explain your situation and see what programs are available to help you pay your debt. Some companies may give you 2 or 3 months to make a payment with little or no late fee. Just make sure to call. At the very least you can make payment arrangements and keep yourself out of major trouble.

4. Put a tight rope on your disposable income.

Once you become unemployed you have probably lost your disposable income, make sure you account for that in your day to day actions. If you considered eating out on your list, you should take it off. While you are unemployed you need to cut back on any expenses that are not necessary, like eating out, taking vacations, and going to movies or amusement parks. Evaluate your need for cable or excessive expenses on a phone or cellular bill. Perhaps you may need to switch to a plan that costs less money.

5. Look into your utility companies and their community assistance programs.

In the winter many electric and gas companies will offer families facing financial hardship some sort of assistance. They may help you go on a budget plan, or promise not to disconnect your service until the temperature reaches over 60 degrees outside. Look at their websites or call directly to see what is available in your area. Phone companies will usually work with you as well.

6. If you do not see a job in the foreseeable future file for unemployment benefits.

If you have paid taxes in your life, then you inevitably paid into these unemployment programs. Contact your local office of workforce development to get started. The process can take upwards of two weeks to begin receiving benefits and money so make sure you apply as soon as you become unemployed.

7. If you are still having troubles making ends meet, contact your state’s Division of Family Resources.

Here you can sign up for food stamps, health coverage and temporary assistance for needy families which gives some eligible families cash assistance. As with unemployment this can be a lengthy process, apply as soon as you know you may need the help.

Managing your debt while unemployed can seem overwhelming. Take a good, long, hard look at your expenses and make the necessary choices to ensure your families survival. Most importantly if you need help, ask for it. Government programs are designed to help people get back on their feet, if you need the help take it.