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In times of turmoil, it’s easy to panic. Whether it’s due a global pandemic, recession, natural disaster or plain old capitalism, losing your job is a legitimate fear for many. If you’re preparing yourself for the worst or have recently lost your job, we have some tips to help you through.

1. Apply for Unemployment

If you were laid off, file for unemployment immediately. You’ll need to demonstrate that you qualify, and you’ll need to apply for a certain number of jobs each week while receiving benefits. Even if you don’t think you’ll qualify, it’s worth it to try. Under certain circumstances, you may still qualify for unemployment if you quit or were fired. Check with your state’s department of labor for specific requirements and the process you’ll need to follow.

2. Review and Reduce Your Expenses

Review your expenses and reduce costs where you can. Reduce monthly expenses by eliminating noncritical expenses. We recognize that what some consider “noncritical” are in fact very critical to others. A few years ago, the internet was considered a luxury—but we know it’s a necessary connection for most people today. Look for expenses that are noncritical to you. This could be as small as giving up your morning coffee or as big as selling your car. Take stock of your expenses and determine which ones you can reduce, even if just for a little while.

Don’t take away every splurge, though. You’re still human, and you still deserve a latte and avocado toast or a new pair of shoes every once in a while. We’re not here to judge.

3. Contact Your Creditors

Creditors is just a fancy word for the people you owe money to. They can seem intimidating, but they aren’t unapproachable. If you’ve cut down on expenses but still have bills you can’t pay, contact your creditors and start negotiating. Make arrangements to reduce payments or delay payments until you are back on your feet.

The best tactic is to be honest and direct about the situation. 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, but every little bit can help.

Can’t Afford to Pay Your Bills?

4. Create a Budget

Once you’ve looked for ways to reduce your expenses and—hopefully—payments to your creditors, make a monthly budget. Don’t forget to take into consideration those times you’ll want a pint of Ben and Jerry’s. While you’d normally start with the 50/30/20 rule (50% of your take-home pay dedicated to your needs, 30% for wants, and 20% for savings) your budget may be 85% needs, 10% savings, 5% wants right now.

Remember that a budget is a living document. Your financial situation doesn’t remain static and neither should your budget. Your budget should work for you, not the other way around. Adjust as necessary to find a budget that works for you during this time.

5. Leave Your Retirement Account Alone

If you have a retirement account, it can be tempting to dip into it during a period of unemployment. Unless it’s an emergency, an early 401K withdrawal—subject to an early withdrawal fee—is not recommended. Some plans provide for hardship distributions, which exempt the early withdrawal penalty, but eligibility is narrow. Make sure you consult a professional before deciding to take out anything. 

6. Find a Part-Time Job

Finding a full-time job is stressful and, depending on the economy and your personal situation, incredibly difficult. In the meantime, consider looking for a part-time job or starting a service business like cleaning, virtual assistance, or painting. Any little bit of additional income you can bring in during this time can help.

7. Breathe

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 that you have options. Take a breath and don’t be afraid to ask for help when you need it. Stay on top of your finances, try to stay positive, and pretty soon another opportunity will be right around the corner.

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