How to Protect Your Budget and Your Credit If You Lose a Job

February 27th, 2017 | Author:

[A] job loss can happen at any time, even in a flourishing economy. In a less than stellar time, it can even be expected. The challenge of staying afloat while you search for a new job can be difficult. Make the wrong decisions and you may be unable to pay your bills and ruin your credit before you have a new income.

Cut All Nonessential Expenses

As soon as you receive notice at your job or if you suspect it’s coming, start cutting all nonessential expenses. This includes cable TV, eating out, even internet. For some, a cell phone is a necessity, but the landline isn’t needed. When you cut these expenses immediately, you keep more of your savings for the essential expenses so it can last longer until you can replace your income.

Build a New Budget

Once you know what expenses you still have to pay, you can create a new budget. This helps you figure out how much money you will need to pull from savings and how long that money will last. If your spouse still has a job, you will only need to supplement the income with money from savings. Or, if you’re lucky, cutting out the nonessential expenses may mean the other income covers everything temporarily.

Look at Temporary Work

Finding a new job may not be easy, but you may be able to earn money until you get hired. Look for other ways to bring in money, such as a part-time or temporary job. Offer to babysit or mow lawns. Look at skills you have that could provide a source of income. You might be surprised to discover you can earn enough money to keep going and even turn it into your own business. Many successful entrepreneurs found out they could earn money from a skill through desperation.

Losing your job can be devastating, but it doesn’t have to devastate your finances or your credit if you take the right steps. With a little foresight and diligence, you can weather this storm and even come out ahead.

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