The writing is on the wall. You know it is just a matter of time before you lose your job. Rather than waiting for the other shoe to drop, you can prepare yourself ahead of time. The tips we provide here can be used whether you leave voluntarily or it is a forced decision. Either way, the sooner you react, the more prepared you will be for the outcome.
Look at Your Financial Life
Start by sitting down and figuring out your debts. When was the last time you did this? Do you even realize how much money you pay out each month? Oftentimes it just becomes second nature to write the checks. Before you know it, you are in over your head in debt. When you think you might lose your job, stop and take inventory of your debts. What can you pay off? Do you have anything you can sell? Now is the time to think about these things before you become unable to pay the bills.
A few things you can do include:
- Pay off credit card debt
- Sell your car for a cheaper one if you have a car payment
- Pay off or down any personal loans
Starting your jobless life without credit card debt and car payments can really help you start on the right foot.
Cut Services to Cut Your Bills Down
Next, take a look at the services you pay for on a monthly basis. Think of things like:
- DVD or movie services like Netflix
- Expensive internet
- Cell phone bills and data packages
Think of any service you pay for that you can live without. You obviously need a phone, but maybe you do not need to pay for a cell phone and home phone line. Internet is something that you may be able to trim down, too. Maybe you pay for a speedy internet and can save some money by opting for a slower package. Look closely at any monthly service you pay for and honestly determine if you need it. The more you cut now, the easier it will be to transition into unemployed life.
Save as Much as you Can Now
Hopefully, you already have an emergency fund established before you lose your job. If you think your job loss is imminent, start socking away more money in that account. You should have at least 6 months set aside for emergencies, but in the face of job loss, it is not a bad idea to have more money set aside. While you still have a job, put as much money as you can in the account. This way you are prepared for the worst-case scenario. You never know how long it will take you to find another job.
Refinance Your Mortgage
Before you lose your job, consider refinancing your mortgage. If interest rates are lower now, you might save some money each month. The time to refinance is now, though, while you still have a job. Once you are unemployed, you will not be able to qualify for any mortgage program. Other reasons to refinance include:
- Remove PMI from your mortgage if you put less than 20% down on it
- Lengthen your term to make your payments lower
The one reason you should not refinance if you think you might lose your job, though, is to take cash out of the equity of your home. While it might make sense to have money handy, especially if you don’t have an emergency fund, this increases your mortgage payment. Right now your goal should be to keep your bills as low as possible. There are other ways to fund your emergency fund without touching your home equity. When you tap into your equity, you put your home up as collateral. If you become unable to make the payments, the bank could take your home.
Look at Your Insurance Policies
Don’t become insurance poor. If you pay a lot of premiums, consider paring down while you are unemployed. You probably shouldn’t give up things like medical insurance, but other insurance policies might either be able to be pared down or eliminated altogether. This does not have to be a permanent change in your life, but it could help you save money temporarily until you find a new job.
Look for Additional Income Opportunities
Just because you might lose your full-time job doesn’t mean you can’t make side money. You can start even before you lose your job. Think of hobbies or things you enjoy. There are numerous opportunities to make money online or in your community. You may even be able to freelance your services doing something similar to what you do now. The sky is the limit, but you have to be willing to put in the work to find something. Ask around and let others know of your plight – you never know when the right opportunity will pop up.
Start Looking for Another Job
The most important thing to do when you think you might lose your job is don’t give up. Start looking for another job right away. You don’t know how long it may take you to find one. The longer you remain unemployed, the easier it is to lose motivation to find another one. Whether you stay in the same industry or you try something else, put the steps in motion now to make something happen.
The more you plan at the first sign of losing your job, the better off you will be. Consider it planning for the worst-case scenario. If you don’t end up losing your job and you read the signs wrong, then you will be better off in the end. However, you can never be too careful. Having a plan in place and putting it into action right away can help you stay finically secure no matter how bad things might get. The last thing you want to worry about is losing your home. The lower you make your bills, the easier it will be to afford your housing payment, which is likely the largest payment you have each month.