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Mayday: What to do when the checks stop coming in

Pamphlets sit on a table during the Senior Job Fair at the Arcadia Community Center.

Over one million Americans lost their unemployment benefits at the end of December 2013 and millions more are looking at benefits ending soon. When those checks stop coming, you may throw up your hands and say something unprintable. I don't blame you. I've been there myself. But, as a pro at turning lemons into lemon-gimlets, I know that there are things you can do to keep your head above water and to hopefully maintain your home and lifestyle as long as possible.  All, of course, to get you to that next job:
  1. Cut back.  Now. More like yesterday. I've talked too many folks who lost their jobs but didn't pare back on spending and expenses. Soon enough, you end up staring down a very big financial hole. If your income stops, your habits and needs should change. It's hard to not eat out or drive less or miss vacations — I've had to do it several times myself — and you may already feel down about being out of work. But know that the changes you need to make now are temporary and incredibly helpful. Think Sandra Bullock in "Gravity": Depleting oxygen reserves requires slower breathing to make the air last. Same with your bank accounts. If you were going at 100 percent or even 80 percent when the checks were coming in, now it's time to get as close to 50 percent as you can. Spend shallow.
  2. Know what bills to pay first. When the housing crisis hit, many Americans in financial distress started paying their credit card bills before their mortgages. Thankfully that trend has reversed itself. Keeping a roof over your head, particularly if it's an asset worth something to you in equity, is vital. Credit cards can be a lifeline during tough money times but if you're falling behind  with payments, contact lenders before they contact you to talk about your options. And if they give you no flexibility, consider meeting with a nonprofit credit counselor (find one at www.NFCC.org) to help you with negotiations. Essentially, keep paying what would cost you dearly, personally and professionally, if repossessed or foreclosed like your home and your vehicle. In general, prioritize: mortgage or rent; auto loan and insurance; cell phone service (so you have access to recruiters and job connections; then other loans.
  3. Create and get comfortable with Plans B, C, and D. You need to ask and answer many questions with this one: What is your Plan B? What are your options in terms of worst-case scenario? This is not only about planning strategically about where you may need to head next for either money or a home, but also (and just as importantly), preparing yourself psychologically for what can be a temporary lifestyle adjustment. Lay out your options, including researching the possible need to apply for a hardship withdrawal from a retirement account and if you're willing and able to relocate for a new job. What does that look like? How much will it cost? What can you do to make a possible transition easier?
  4. Work! It doesn't have to be full-time work or work necessarily in your field. While you're applying for more stable positions on a career track, at the same time bring money in via other ways. If you're at a point in your career where you can be hired on a contract basis, reach out and offer yourself up. Two plusses here: First, it keeps you busy in the field and your resume continues to build. And of course, it brings in money and possibly could turn into a fulltime spot. Contracting isn't just for engineers. Look at sites like TaskRabbit.com, Fiverr.com, or Elance.com. They offer up short-term gigs from copy writing to assembling furniture.  The plus here is also psychological and social, not only financial. You keep busy and you meet new people, each who could be much more than a temp gig, it could be the connection you need to land that full-time job.
  5. Stay connected or get connected. What are the affinity groups or career groups open to you? For example, are you an accountant? What’s your local chapter of the National Society of Accountants up to? You don't have to be employed to be a member of many of these groups and they are fantastic places to meet people who can offer leads for new work. I'm on the board of a couple of nonprofit groups, professional and community-based and it's amazing the connections you make that can open new doors. And just as worthy are volunteer opportunities. We know that in this day of computers 'reading' thousands of resumes, the best way to the top of the pile is who you know. Is it fair? Not necessarily. But it's helpful. And if you feel icky about all the schmoozing, remember to reach a hand behind you once you land somewhere, pulling others out of unemployment just as someone may do for you.

About the author

Carmen Wong Ulrich is the former host of Marketplace Money, APM’s weekend personal finance program.

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