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Dorothy Rosen -- The Dollar Diva Ask the Dollar Diva

Survival tips for the unemployed

Dear Dollar Diva,
My company downsized, and I've been out of work for four months. The job market is tight, and although I'm looking very hard, I can't seem to find another job. If I don't find one after my unemployment compensation runs out, we'll have to tap into our savings.

My husband and I have $25,000 in certificates of deposit, and we owe $8,500 in credit card debt. My husband thinks we should use the cash to pay off the debt. I say we should hang on to the cash because we're going to need it if it takes a long time for me to find a job. What should we do?

Dear Cathy,
Hang on to the cash. You saved it for an emergency and this is it.

Your husband is smart to want to get rid of the credit card debt, and you should both work on cleaning it up as soon as this crisis is over.

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I don't know how much you'll have to take from savings each month when the unemployment runs out, but finding work in a tight job market can take a painfully long time and you want your savings to last. Here are some tips to help you stretch out your cash and get through this rough period:

1. Cut living expenses to the bone. Set up a spending plan to help you plan your cash flow. Also, check out the cost-cutting advice from another person who was laid off as well as a myriad of money-saving ideas at Frugal U.

2. Finding a job is a full-time job. Get up, get dressed for an interview, get on the phone or the Internet and make it happen -- every day. Buff up that resume and check out job fairs. Let friends, family and all of your professional contacts know you are on the hunt. Want to make a great first impression on potential employers? Bankrate offers 20 tips for a successful job interview.

3. Take night classes to improve your current skills or learn new ones. You can never be too smart and it'll boost your confidence to be out and involved.

4. If your savings get below your comfort level, look for part-time work. Industries that have peak periods, such as retail businesses during the holidays and tax-preparers during tax season, always need good help when the heat is on.

5. If things look bleak, and there's not enough cash to pay all the bills, pay the secured debt (mortgage and car loan) and hold off paying on the unsecured debt (credit cards and doctor bills) until your fortune turns around. Contact the creditors you can't pay, explain the situation and assure them you will resume payments as soon as you find a job.

Being unemployed for a long period is devastating, but it happens to the best of us. When life slaps us around it helps to remember that what doesn't kill us makes us stronger. And the stronger we get, the less we tend to get slapped around.


-- Updated: March 23, 2004

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