A Reader Writes:
There is a lot of gossip about lay offs at my company. I’ve seen cuts in our budget and a lot of focus has been on finding ways to reduce expenses in recent weeks. HR and management have been working behind closed doors around the clock. I’ve tried asking my supervisor about the rumors, but she won’t answer my questions directly – although she did strongly infer that I may want to “start looking.” I’m really worried! I have a daughter in college, a mortgage, and a car payment. The thought of losing my job is terrifying. The writing is clearly on the wall and I feel like I need to do something. Searching for a new job will be stressful enough, but what more can I do to prepare for this next chapter?
The best preparation for tomorrow is doing your best today. – H. Jackson Brown, Jr
The prospect of losing a job is definitely a scary one. For many of us, our livelihood depends on one primary source of income. If taken away, it can be devastating for many. You could be fortunate and find a fantastic new role in a few weeks. However, you should make financial plans based on the worst case scenario. Therefore, the best thing for you to do now is a bit of financial preparation in anticipation of a job loss. This includes knowing how many months you can reasonably afford to live at your current level of expenses. Here are some simple steps that you can do now to help you feel more in control of your financial situation.
Managing monthly expenses
Now is the time to get a clear picture of your monthly debt obligations. You mentioned your daughter’s college tuition, a mortgage, and car payment. Are there other debts you are incurring? What are the interest rates you are currently paying? Can you pay down some of your debt right away? Transfer to another, lower rate credit card? Should you refinance your mortgage or home equity loan? Your mortgage holder may also be willing to accept “interest only” payments during a period of unemployment. Now would be the time to understand available options, not after your employment ends.