Losing your job can be emotionally and financially traumatic. Whether you boss fires you or lays you off, you may struggle to cope. You may feel lost and helpless without the financial stability and daily routine of an occupation.
No matter how scared you feel, try to remember that you can survive this. Financial recovery is possible. Here are some tips to follow after you lose your job:
1. Assess your finances
The first step you need to take is to review your financial situation; it is necessary to prepare yourself for living without a steady income. Create a baseline budget for these necessities:
After you build a budget and cut non-essential expenses, check to see if you qualify for any unemployment insurance. Then, figure out how much money you will need to take out of any savings you have.
2. Use credit wisely
While you do not want to max out your credit cards or take out a ton of loans, borrowing some money may be necessary. If you are having a hard time covering your bills during this time of unemployment, use your credit card before you tap into your retirement accounts, which will likely be a balancing act. Limit your use of credit as much as possible, but utilize it when it is needed.
3. Consider filing bankruptcy
Even if you develop a smart budget and carefully use your credit cards, a job loss may be too much to handle on your own. If the expenses are getting unbearable and you are tempted to drain your 401(k) or retirement account, wait. Do not make any drastic decisions before exploring all your options. While declaring bankruptcy may seem like an intimidating process, it can wipe out or restructure all your debt.
Losing a job may send you reeling, but take this advice to heart and you are sure to have a better chance of surviving the storm.