While you’re employed: With the unemployment rate climbing to over 7%, now is not the time to bury your head in the sand. Prepare for the unexpected…

Ÿ Be sure you have an emergency fund. Work two jobs if you have to while you establish a safety fund in case you become unemployed. Start with $1000, but plan to save 3-6 months worth of “untouchable money” to cover your necessary expenses while you’re looking for work.

Ÿ Stop using your credit cards. Learn to live on what you make NOW so you’re not running up debt you’d be crushed under if you lose your job.

Ÿ Look for ways to cut back on your household spending and commit that savings to a savings account. DO THE MATH and be creative with ways to preserve your income (generic vs. brand; home coffee vs. specialty shop; quit smoking; modify cable service; increase your homeowners or auto insurance deductible, etc.).

Ÿ Think through Plan A, Plan B, etc. Think about what you would do and what alternatives you would have if you became unemployed. What skills do you currently have or should you be honing that would make you more marketable? What alternatives would you pursue?

If You’re Jobless, Remember You’re Not Helpless

It’s said that misery loves company, but when you’ve lost your job, being one of 11 million out-of-work Americans is cold comfort. Job hunting becomes a full-time job. Look at it that way.

Resist the natural inclination to panic and begin with the basics:

Ÿ Review your “work papers” for details regarding continuation of benefits, accessing 401(k) savings, and similar.

Ÿ Check with alternate sources for benefits information including benefits available through a spouse or through a reputable carrier (Humana, Blue Cross, and Unicare all offer well-priced individual medical policies).

Ÿ Request a Service Letter to use in your job hunt. The Team Services office is happy to provide it.

Ÿ Call your local Auto Dealer Association to see if they know of any openings with competitors that you would be suited to.

Ÿ Take a sample resume off the web that looks good to you and use it as a template for updating your own for your job search. A resume creates a good opening for any position and gives you a good reason to “drop in” and possibly catch a manager who is hiring.

Ÿ If you’re laid off, remember to contact the state unemployment office to check about unemployment benefits.

Ÿ If you have fixed expenses—the rent or the mortgage, the auto loan, credit card minimums—that cannot be cut and cannot be paid in the short term, talk to your creditors. Explain your unemployment situation and ask if alternative payment arrangements might be considered. Here is where being one of millions of newly unemployed may help. Your creditors are quite aware of what is going on in the economy and know, too, that we all have to work together to recover.

Be realistic—the job search is going to take time. This is the time to know your financial numbers inside and out. What does it cost you to live each month? Of those expenses, which are fixed (must be paid in a given amount), which are variable but nondiscretionary, and which are purely discretionary? Focus on the last two categories, and consider this: every $10 you can cut from your budget is equivalent to approximately $12 - $20 of earnings. When you have no outside income, you can at least “pay yourself” by slashing your expenses.

If your former job wasn’t great—not exactly what you wanted to do and not what you needed (and deserved) to be paid—now is the time to get ready for the right job. Whom do you need to talk to? Don’t forget to keep your family up-to-date about your situation. If you were previously working so hard there was no time for family meetings, now is the time to hold frequent and regular talks around the kitchen table. Enlist your family’s support for your efforts; telling them how you will go about finding another job will make you accountable and thereby more motivated. Children will want to know how your job loss impacts them: does this mean a move or new school? Will their activities with their friends be affected? Be optimistic, but also be factual and specific. Don’t sugarcoat the situation. Make sure the family understands the need for some belt-tightening. Ask them for their ideas on how the family can work together to get through this time. Ask your spouse and kids to be your job scouts and champion marketers. The other day I had lunch with a colleague who handed me not one, but two, cards with her out-of-work husband’s number and email. “I think he can help you,” she said, “or someone else you may know.”

Finally, seek professional advice, particularly if you are thinking of making any big changes—moving, selling assets, dropping insurance coverage, defaulting on debt—as a result of losing your income. To find a financial planning professional qualified by experience, education, and ethical standards, go to CFP Board’s Web site www.CFP.net where you can search for a CERTIFIED FINANCIAL PLANNER™ professional in good standing and close to where you live. Your friends and family can give you sympathy and encouragement, but a CFP® professional can help you look clearly and realistically at what you have and what you need to get back to financial stability.

Eleanor Blayney, CFP®
CFP Board’s Consumer Advocate