What do you do when faced with an unexpected loss of income that may trigger a financial emergency? Without realizing it, you may have done something or failed to do something to lose your job, or the company you are working for decided to downsize and you’re one of the people they let go.
After a job loss, it’s only too easy to panic. Your mind goes through all sorts of worst case scenarios very quickly:
- · You wonder how long it will take to find comparable employment.
- · You wonder how you are going to manage your health care expenses.
- · You wonder how you are going to pay your rent or mortgage and your utilities.
- · You wonder how long you can get away without paying your phone bill.
- · You wonder how you are going to put food on the table and gas in the car.
In addition, there will be costs linked to finding a new job. You will have to get a haircut, buy some professional clothes for interviews, get a professional writer to revamp your out-of-date resume, and drive around town for various appointments.
How to Get Out Of the Mess
First, you need a short term plan to get your hands on some immediate cash to tide you over for any pressing expenses like groceries and rent. Second, create a long-term backup plan so that you don’t get into a financial fix again. Let’s explore these two solutions:
1 – Short Term Solutions
Assuming you have no way of getting your hands on some money, like liquidating your stocks or selling a car, what should you do?
- Beg or borrow. You may be fortunate enough to know someone who is willing to help you out. Although this might seem like a quick solution, it’s not easy to put into practice. For one thing, you may feel too humiliated to ask for help. For another, you may not know anybody who is willing to bail you out.
- Look for alternatives to payday loan companies. Payday loans usually require you to have a job so that you can borrow against your future paycheck, but what do you do if you’ve lost your job? As an alternative option to payday lending, MaxLend.com provides personal cash loans and installment loans in amounts up to $1250. Qualified applicants must have a social security number, an active checking account, and a verifiable source of income. Benefits include minimal eligibility requirements, fast funding, and flexible repayment.
2 – Long Term Solutions
How do you prevent having another financial emergency? Create a back-up plan. This means creating an emergency fund.
We live in a time when wages are shrinking and the cost of living is going up. It may be unfair, but that’s our current reality. In the future, there may be a financial recovery, a new cultural renaissance, but for now you have to deal with how things are rather than how you think they ought to be.
Here are two realistic ideas on how to build a financial safety nest by setting aside 6 to 8 months income in a savings account.
- Get skilled up to earn more. No matter how good a job you are doing in your job, there is always room for improvement. The reality of the marketplace is that 20% of the workforce earns more than the remaining 80%. The reason a few people earn more than others is because they are at the top of their field. People pay more for specialists than they do for generalists. By improving your professional knowledge and skill-sets, you’ll be able to join the best in your field and increase your income. This will give you the surplus money you need to set aside in your emergency fund.If this is not realistic for you, then develop enough expertise in something to create a second income source.
- Spend less than you earn. Keep track of your expenses and see where you are spending things that you don’t need. Look for ways you can cut back on unessential purchases.
A Broad Financial Emergency Strategy
These short-term and long-term solutions will also work if you have some other kind of financial emergency. In this uncertain economy, a job loss is not the only way you could have a financial emergency. You might simply be earning too little to pay for a new tire after a blowout on the freeway, or you might have to cope with a major health crisis.
Many families in America today are only one paycheck away from handling a problem that can lead to a complete financial collapse. No matter how conservatively you live, almost anything can catch you off guard from a busted pipe in your car to a broken valve in your car engine, from serious illness to an unexpected death in the family.
Additionally, the idea of a job-for-life is no longer an economic reality. Having a job does not guarantee continued financial solvency. You could be living well today and lose it all tomorrow.
Keep Your Chin Up
After you’ve managed to get back on your feet, you are undoubtedly a little shaken up. However, don’t let your fears get the best of you, making you fall into a state of learned helplessness. Cynicism about a bad economy, untrustworthy elected representatives, and the curse of living in a world that worships money are not going to help you out. Instead, some hard-headed pragmatism will save the day and prevent you from going into a crisis the next time you’re short on money.