Home > Budgeting and Saving Money > 7 Ways to Manage Your Money While Unemployed

Comments 0 Comments
Advertiser Disclosure


Sometimes I get questions that I just have to share with you. My answers will benefit others because so many people face the same situation. I was asked how a mom who is unemployed can manage her finances. Here are my answers in interview style format.

1. If you lose your job abruptly, what’s the first thing you should do in regard to your finances and debts?

Review your expenses and cut/reduce costs beyond the basic necessities. Next, contact your creditors and tell them the situation and request a modification or reduction in payments. If it was a layoff, go file for unemployment immediately.

2. If you have good credit and want to keep that score high, how can you manage to pay the bills on time if you don’t have any money coming in?

Contact the creditor and make arrangements to reduce the payments, delay the payments for a couple of months, or stop using the cards until you are back on your feet. [Editor’s Note: You can keep an eye on your credit by viewing your two free credit scores each month on Credit.com.]

3. What type of help can a personal banker offer someone who is unemployed and needs to reduce their monthly expenses?

They can request help with creating a budget from the banker. They can also request a reduction in their personal loan interest rates or that their payment be processed at the end of any potential grace period thereby giving them a buffer for a few months.

4. If you have a retirement account, is it wise to dip into it at this time? If so, what’s the best way to go about it?

Getting money out of your retirement account is not conventionally recommended unless it is in case of an emergency. If you must take money out you can take out a portion and roll the rest over into an IRA account. All the money doesn’t have to be used unless the situation is dire but, if at all possible, leave 10-20% of it in an IRA account.

5. What’s the best thing to do in a scenario in which you’ve been unemployed for awhile, lived off your savings, and now those savings are dwindling?

Find a part-time position ASAP, sell what you can, and/or start a service business like cleaning, virtual assistance, painting, etc.

6. Are there any tactics people can use, such as negotiating with credit cards, the IRS (if they still owe taxes) and their mortgage company in times of unemployment? Is there such a thing as deferring payment on certain bills until you get back on your feet?

The best tactic is to be honest and direct about the situation. The reality is everyone, even the IRS, knows someone who has been affected by unemployment. Tell the truth and tell them you are willing to work out a plan during this phase of your life. Payment deferment will vary depending on the company. The reality is most companies just want to get paid so something is better than nothing.

7. What is the best way to reduce monthly expenses?

Reduce monthly expenses by eliminating non-critical expenses. This may include cable, subscription services, daily coffee runs, shopping sprees, etc. Stop using the credit cards you have and contact the creditor to amend the payment plan. Do your own hair instead of visiting the beauty salon/barber, make holiday gifts and cards, create and stick with a shopping list. Buy value items instead of brand name. Compare prices. Make it a game and know the situation is temporary.

Managing finances when you are unemployed can feel scary, frustrating, and impossible, but when you take a step back to assess the situation you can find workable solutions. The main thing to keep in mind is you have options and the situation is likely temporary. Stay on top of your finances, stay positive and pretty soon another job will be right around the corner.

More Money-Saving Reads:

Image: moodboard

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team