Losing your job can deal a financial blow to you and your family that makes it difficult to maintain your lifestyle, let alone keep up with your monthly bills. Are you prepared should the worst happen? It’s smart to anticipate unexpected financial burdens, such as unemployment.
Think about how much of your monthly savings you could dedicate to an emergency fund, to help you get through the tough times. Try to create a financial plan for dire straits that allows you to preserve your credit score, as it will be crucial to your cash flow and possibly finding a new job. Employers in some states use a candidate’s credit report to aid in hiring decisions.
To remain afloat you will have to think strategically and make some tough choices. Part of your new budget will involve exploring different ways to cut back on your current spending, while freeing up financial resources for your necessities and monthly obligations.
Staying on top of your payments during a period of unemployment is critical to protecting your good credit score. At this point, it’s perfectly acceptable to reduce your inflated loan or credit card payments down to the minimum. That said, do not miss a payment: this will cause a delinquency to appear on your credit report. The late payment is recorded as 30, 60, 90 or 180 days late, and may cause your credit score to severely drop. If at any point you worry you cannot meet the minimum payments – call your creditors and ask about their hardship options. Also, if you are just trying to plan ahead think about adding on payment protection insurance. Many banks and credit cards offer it for unemployment. You pay a small percentage of your monthly balance, so should you need to activate the benefit your payments are covered and so is your credit score.
A great way to deal with the financial stress and anxiety brought on by unemployment is to create a money management plan. Key to that plan will be preserving your good credit and relying on income from unemployment, as well as savings, rather than growing debt.