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Marc A. Hebert's Money Sense: What are the keys to financial survival after a job loss?

March 23. 2018 8:42PM

 (Metro Creative Connection)

You might have lost your job at some point, or becoming unemployed is something you're concerned about. Either way, the keys to surviving a job loss financially are to plan ahead, evaluate your income and cut your expenses. Now is the time to plan. Here are a few suggestions to help you do so:

Review your budget. This will give you an overview of your finances today and provide clues to areas where expenses could be cut tomorrow. This also will give you a picture of your survival budget, which is the bare-bones version of your regular budget. A survival budget should include only expenses that are necessary.

Establish an emergency reserve. Your budget can help you in this area as well. Knowing how much you spend every month will give you an idea of how much of an emergency reserve you need. Depending on your lifestyle and job description, planners usually suggest at least three to six months of expenses set aside in a readily-accessible, conservatively invested account like a savings account or money market fund.

Take control of your debt. Now is the time to review your credit card and other debt balances. Make a plan to get out of debt. Can debt be consolidated or refinanced at a lower rate? Can any outstanding student loans be put on forbearance? Will the credit card companies work with you on a payment plan? Does your mortgage qualify for any of the refinancing programs?

At some point, you might have to admit to your creditors that you're facing some financial difficulty due to your job loss. If your credit is good, it is time to make the calls - not when you fall behind on your payments.

Consider part-time employment/other income sources. A part-time or temporary job will provide extra income while job hunting. You might consider alternative income sources, such as renting a room. Multiple income sources are a good idea, and you might be surprised at how creative you can be at finding some opportunities.

Determine unemployment benefits. Call your state unemployment office and ask for an estimate of your benefits if you were out of work. This will give you some idea of the amount of money you will have to work with and how the benefits compare to your budget.

Research health care costs. Determine if your company provides COBRA and the cost of coverage. If COBRA is not available, research the costs of an alternative health insurance plan. Once again, this cost can be reviewed against your budget to see how it fits in.

Prepare a severance package. If given the opportunity, be prepared to negotiate a severance package, and, if you do succeed in obtaining one, use the money wisely.

Talk with your spouse. If your household includes two earners, it might be time to see if you could live on just one income and save the funds from the other. If one spouse currently stays at home, is he or she willing to find employment during the hard times? Can you work as a team to get through this period?

These suggestions are the start to facing a potential job loss and the financial implications it holds. Although tough, a job loss is not the end of the world if you have your own financial strategy for job loss survival.

Marc A. Hebert, M.S., CFP, is a senior member and president of the wealth management and financial planning firm The Harbor Group of Bedford. Email questions to Marc at Your question and his response might appear in a future column.

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