How to Manage Debt While Unemployed

Unemployment is on the rise, layoffs are becoming commonplace, and many Americans fear for their job or downsizing of their company. The best way to deal with debt while unemployed is to plan well for that eventuality before becoming unemployed. However, not everyone is able to do this, living paycheck to paycheck.

The Worst Has Happened - Unemployed

Should you find yourself unemployed, the first thing you have to do is sit down and see what money you have to work with, what bills you absolutely have to pay, and what resources you have available to pay them. Get all your information together, and then sit down at the dining table and start planning.

Make a Budget and Expenses List

First, make a list of all the money you have available to you or coming to you soon, including any severance pay you may have coming to you and accrued vacation or comp time earned.

Make a list of all your monthly expenses. Are there places where you can cut back? Let's look at a few places cutting back might help:

Insurance:

If your car is paid for, but you're still carrying full coverage insurance, consider lowering your insurance coverage or dropping your comp and collision coverage completely for straight liability. If you have a cash value life insurance policy, can you skip a few payments or borrow against it if you need to for extra cash? Would it be less expensive to pay for any medical care out of pocket until such time as you become employed again and have medical coverage through your new employer?

Elective Bills:

While a phone is an absolute necessity, do you really need both a home phone and a cell phone? Does everyone in the family have to have their own cellular phone? Cutting back on phone expenses for the family and/or consolidating minutes can help with day-to-day expenses while unemployed. Also, consider dropping special features on your home phone, such as call waiting or voice mail that charges every month.

Cable television is great for keeping you entertained, and it's a relatively inexpensive bill, but think about the extras you have that you might not need, such as premium channels, extra digital boxes or remotes, or pay-per-view movies. These things can really add up. Dropping back to regular basic or basic digital cable can save money on day-to-day expenses while unemployed.

Credit Cards:

While it's tempting to use credit cards to get you by in a pinch, whenever possible, avoid charging up the cards and the interest on top of it. Pay cash whenever you can. If you already have larger balances on your credit cards, transfer as much of you credit card balances as you can to the lowest interest rate card you have. In fact, if you call the credit card company and tell them you'd like to transfer your balances to from your other cards to their card, they may even give you 6 months with no interest or lower your interest payments as a thank you, and that can help you put off some debt while unemployed.

Food & Household Items:

The dollar stores usually carry the same cleaning products and household items that grocery stores do for much cheaper than the larger stores. So sometimes the packages aren't as pretty, but most of the products work just as good if not better.

If purchasing food is an issue, consider programs like Angel Food Ministries, where you can purchase food for very reasonable prices, while giving money to church programs that help needy families, too. This isn't charity, and it's not welfare: it's a way to help families extend their grocery budget and help make ends meet. There are no income qualifying guidelines.

Sell Stuff:

You probably have a lot of 'junk' laying around the house that you never use that could be sold to help make your day-to-day bills while unemployed. If you have a garage sale, yard sale, or put ads in the paper, you'd be amazed how much your junk might be of value to someone else.

Do Odd Jobs and Online Jobs:

Odd jobs can bring in money for day-to-day necessities, while still leaving you time to job search for a full-time career position. Anything from a part-time job at a grocery store where you get discounts on merchandise, to mowing lawns (which can be quite lucrative).

You can also pop into websites that pay people to write about things they know, how-to articles, informational articles and first-hand essays. These sites don't pay a huge amount of bucks, but they can definitely keep your family eating while unemployed, and if you're any good, they could turn into full-time pay.

Last Resort:

If money gets tight, and especially if you have children, there are state and federal welfare programs to help you through difficult times. These organizations offer things such as food stamps to help with food budgeting, cash assistance, and medical assistance. There is no shame in accepting help from these programs when it is really needed, to help through a hard time and keep you and your family going strong until you are once again gainfully employed.

These are all options available to you should you find yourself unemployed, and you're needing to find a way to make it day by day until that next job comes around. Best of luck in your job search!