Losing a government job is a dream come true, but doing something can help you take charge of your finances again. Either facing imminent job loss or you need to protect your future finances, this guide provides you with practical advice to navigate your difficult times. From paying bills and debt reduction to creating other sources of income, these tips will keep you in charge of your finances and ensure your financial stability.
1. Getting Back in Control If You’ve Lost Your Job
It is easy to get lost and bewildered after losing your job, particularly in the federal government. But by prioritizing your short-term needs and having a strategy, you are able to bring your situation under control. The most important thing is to take things one at a time and get first things first.
2. First Things First: Short-Term Needs
The first couple of weeks away from work are pivotal. Take the first few weeks off work focusing on attending to urgent financial needs and sourcing sources of survival.
Budgeting Necessities
Begin by allocating your absolute necessary expenditures, which include housing, utilities, and food. These are needs and ought to have top priority. Construct a budget of these mandatory items and in the absence of discretionary expenses.
Discuss with Lenders
If you are struggling to pay, let your lenders know right away. Payment deferment, hardship plans, or lower interest rates are offered by all credit card issuers and banks to customers who are in trouble. This will save you from paying penalties and allow you to maintain your credit score.
Request Assistance
Do not delay applying for unemployment benefits. Also, try to find alternative support programs such as SNAP (food stamps), food banks, or programs which assist with payments of utility bills. These should be able to help you eliminate some of the financial burden on you temporarily as you regain economic stability.
3. Stretch Your Money
With little money to go around, every dollar must be stretched. Reducing expense and wisely splurging money on saving could enable you to stretch your cash further.
Cut Unnecessary Expenses
Review your daily routines and look for areas to cut spending. For example, reduce dining out, stop unnecessary subscriptions, or cut back on discretionary expenses. Small decreases can add up and leave funds for necessities.
Negotiate Bills
Call the providers, be they internet, phone, or cable, and negotiate lower rates or switch to lower-priced options. Most businesses will negotiate with hurting consumers.
Use Savings Strategically
If you do have savings, plan how you are going to keep them. Save the essentials and avoid the utilization of the savings on discretionary purposes. If required, create an emergency fund for essentials as well.
4. Generate New Sources of Income
As you are looking for a job, try to get freelance or part-time work to maximize your income. Freelance or part-time work can help you earn money to have a financial backup and stay afloat while applying.
Freelance or Part-Time Work
Look for freelance or part-time work based on your experience and qualifications. Sites like Upwork, Fiverr, or job search websites can assist you in getting temporary work.
Sell Unused Items
Declutter your house and sell items you do not need. Sell unwanted items on websites like eBay, Facebook Marketplace, or Craigslist.
Gig Economy Jobs
Consider gig economy work like delivery, driving for a ride-sharing company, or pet sitting. These are temporary jobs which can give you a constant flow of cash while you look for a permanent job.
5. Steer Clear of Costly Debt Traps
When you have no money, you may want to resort to instant credits or high-interest loans. They will get you into trouble and debt.
Avoid Payday Loans
Payday loans look convenient, but they always have extremely high interest (400% and higher). The loans get you caught in debt spirals that you cannot break.
Consider Alternatives
Instead of borrowing high-interest loans, think about these options:
- Local emergency assistance programs
- Credit union personal loans (which tend to be lower interest)
- Borrowing money from friends or relatives
- Getting side jobs in order to earn some extra cash
Watch Out for Red Flags
Watch out for deals that are too good to be true. Steer clear of rent-to-own arrangements, credit card loans at high interest, or firms that claim to repair your credit overnight. These options have hidden fees and will worsen your predicament.
6. Debt Relief Alternatives
Once debt gets too much, you have various alternatives that you can use to stand on your feet again. All the alternatives come with both strengths and weaknesses, so you have to choose the one most appropriate for you.
Debt Settlement
Debt settlement is negotiating with your creditors to pay it all at once, less than what you owe. This lowers your debt but hurts your credit score and may have tax implications. This is ideal for people who cannot afford the minimum but do not want to declare bankruptcy.
Debt Consolidation
Consolidation of debt combines multiple debts into one loan with a single interest rate that is less than the multiple original rates. It conserves interest and payment. Reliable income and good credit are needed, however, to qualify.
Debt Management Plans (DMPs)
A DMP is when a credit counseling agency assists you in establishing a formal payment plan. Your creditors will lower interest rates or eliminate fees, so you can pay back more easily. You’ll be paying the amount you owe, as opposed to debt settlement.
Bankruptcy
As a last option, bankruptcy can give you a new beginning. Chapter 7 bankruptcy discharges most debts but can involve selling property. Chapter 13 sets up a plan of repayment but does permit you to retain your property. Both have long-term effects on your credit, so they must be carefully considered.
7. Final Thoughts
Dealing with financial difficulties after you’ve lost your job can be daunting, but there are ways out. By doing something—by budgeting, establishing other means of income, and consulting a professional—you can regain control of your finances and start building a better future.
If debt is causing you unnecessary anxiety, call Debtsfreehome for a complimentary consultation. They will lead you to the solution that is most appropriate for you and point you in the direction of financial independence.