Guest post by Kate Furlong
When a job loss hits, it can be terrifying for everyone involved. Not having a steady paycheck is a very difficult thing to adjust to and it can be much worse if you are already living paycheck to paycheck or have a family to support. However, there are some things you can do both before and after you lose your income to help you through the ordeal.
How to Prepare
Build a cash cushion. In the event that you are anticipating a job loss or just wanting to prepare for the possibility in general, the best thing you can do is beef up your emergency fund. Make a point to put away extra cash from each paycheck so that you have a cushion that can help you handle most of your fixed expenses (mortgage, car payments, student loan payments, etc.) for 3-6 months while you look for a new job. If you think a job loss is imminent, you should do the best you can to increase your savings even more.
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Have your resume ready. If you think you’re going to find yourself job-hunting soon, you should make sure that your resume is updated so that you can seize any opportunity to apply for a job opening as quickly as possible.
How to Respond
If you’re facing a job loss without the benefit of preparedness, here are some things you can do to manage through this difficult time.
Reduce your expenses. When you lose your job, the first thing you’ll want to do is evaluate your expenses and cut out as many as you can. Start clipping coupons and packing lunches to reduce your food expenses. Meals out, out-of-town trips, even cable, should also be eliminated to help compensate for your reduced income.
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Cut back on extra payments. While you never want to pay only the minimum on a credit card if you can avoid it, a job loss may be an exception to the rule if things get really tight. You’ll want to preserve cash as best you can while you get back on your feet so it might be wise to pay a reduced amount on your credit card bills for a little while and preserve cash instead. Just make sure you have a plan to pay down the debt as soon as your income is replaced. Similarly, any extra payments you were trying to make to eliminate other debt (student loans, car loans, etc.) should be put on hold until you get things under control.
Look for alternate income. If you are the main breadwinner in your family, the bulk of your time and attention should be spent hunting for a new job that will help replace your lost income as quickly as possible. However, in the meantime, if you can take on some freelance work or have your spouse look to make extra money through activities like childcare or office cleaning.
Sell some possessions. Now may be a good time to clear out some possessions you have been meaning to get rid of. If you have old furniture that you think could make you some money or a third car that you’ve kept around for your kids to use, you may want to look at liquidating those assets to help improve your cash flow.
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Utilize your network. As mentioned, the first priority after a job loss should be replacing that income. Often the best way to do that is to get your resume into the hands of someone who can refer you within their company. Although you may feel a sense of embarrassment or a lack of confidence after losing your job, it’s important to let people know you are looking so that you are top of mind whenever they hear about a potential opportunity.
Job losses can be scary and cause a bit of a financial setback but many people are able to successfully navigate them. Just remember to take things one day at a .
Kate Furlong is a financial contributor to The Manilla Folder at Manilla.com, the leading, free and secure service that helps you simplify and organize your daily life. Using just one password, Manilla lets you manage your finances, utilities, daily deals, travel and rewards programs, Netflix and magazine subscriptions, and more -- all through Manilla.com or the top-rated iOS and mobile apps.