Laid Off? Here’s How To Manage Rent and Other Bills, According to Experts
Losing your job can be scary, but don’t panic.
There are several things you can do right away to help you stay afloat while you are looking for work. From negotiating your bills to getting unemployment income to help with your immediate expenses, taking action quickly can help you avoid a financial mess after being laid off.
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We found several financial experts who offered some timely tips on what to do if you lose your job. And while your rent and bills are still due, there are a few ways to ease the burden while you’re searching for new employment.
Keep reading to find out exactly what to do if you get laid off.
Apply for Unemployment ASAP
If you lost your job through no fault of your own (layoffs, etc.), then you can qualify for state unemployment benefits.
Grant Maddox, CFP, says, “One of the first things anyone should do when laid off is to review their state’s unemployment benefits. Every company is required to pay unemployment insurance, and when you are laid off, you can actually take advantage of this benefit. Unemployment, in conjunction with emergency fund assets, is a great resource to help cover day-to-day spending and keep you afloat until you find your next job.”
Most states offer unemployment benefits for up to 12 weeks, with many offering up to 26 weeks of payments. While unemployment typically only pays you a small percentage of what you used to make, it can help you manage the transition to a new job.
Create an Emergency Budget
With a sudden loss in income, you can’t spend money on the things you used to — at least until you find a new job.
The best way to figure out how to allocate any savings or income you do have is by creating an emergency budget. This is a term I coined to refer to budgeting only for essential expenses — housing, food, utilities, and transportation.
It’s best to review your current expenses and write everything on paper (or in a spreadsheet). Add up your total expenses only in essential categories (sorry, Netflix is no longer essential), and figure out the minimum amount you can live on during this financial emergency.
Joe Dunat of Sturkie Wealth Management Group says that it is important to “assess your finances and your budget.” He added, “This is the time to get granular about any funds coming in (like unemployment benefits or severance payments) and funds going out (like rent, utilities, car payments, etc.).”
You may need to pause your subscriptions while searching for a job, and stop spending on things like clothing and restaurants. Remember, this is only temporary, and you can add back in the fun items when you find your next job.
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Call Your Creditors
Whether it’s your landlord or your credit card company, getting on the phone and talking to an actual human being is the best way to come to an agreement on a plan for handling your lost income.
Jorey Bernstein of Bernstein Investment Consultants says, “You should contact your landlord or property manager and explain your situation honestly. They may be willing to work with you on some options, such as deferring rent, paying partial rent, breaking up payments, or using your security deposit.”
Other creditors may allow you to defer payments or reduce the cost of your services for a short period to help you as well. Credit card companies might be able to lower your interest rate, or help you surf your debt balances to a balance transfer card to help lower your monthly payments.
Bottom line: Call your creditors, explain your situation, and see what options are available.
Review Your Health Insurance Options
If you had health insurance through your work plan, you need to review your options for staying covered without spending a huge amount out of pocket. While most employers offer COBRA coverage to keep your old health plan, this can be prohibitively expensive.
You can browse plans on healthcare.gov to find a lower-cost option that fits your needs for the time being, as losing your job allows you to sign up for a plan outside of the normal enrollment period. If you focus on a high-deductible plan, it can lower your monthly costs while you are looking for work.
Also, if you are 26 or younger, you might be able to hop back on your parents’ insurance plan for a little while.
Focus on Your Most Important Bills First
Some bills might need to take a back seat if you don’t have the money to pay them.
You need to pay for utilities and your transportation (car payment, insurance), but some bills may need to be delayed. While missed payments can hurt your credit, it’s important to make sure you focus on what is important for you and your family while you are looking for work.
Pausing or canceling services that you don’t need is a good first step, but you also may need to negotiate a deferred payment on other services that you can’t just cancel. Remember, talking to a human on the phone is much more powerful then email, so pick up the phone and call.
Bottom Line
Losing your job doesn’t have to be the end of the world. In fact, there are several smart moves you can make right away to help you ease the burden. By being upfront and honest with your lenders and service providers, you can avoid bad marks on your credit, and help keep your lights on.
But the experts all agree — you need to get on a budget, manage the money you DO have carefully, and avoid wasteful spending while you are unemployed. And while you might get a great job within a week, it’s better to hope for the best, but plan for the worst.
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