You got a pink slip. Your head reels from the shock and there's a knot of fear in the pit of your stomach. Figuring out the answer to the question, "Now, what?" seems like the hardest job you've ever faced. Take a deep breath. You can take steps to ensure your financial survival during this period.
Get to the unemployment office fastIdeally, before you left you received a briefing from someone in the human resources department at your former employer about how to apply for unemployment benefits. In fact, Bruce McClary, spokesman for ClearPoint Credit Counseling Solutions, headquartered in Richmond, Va., says the best time to bone up on the process is while you still have a job.
Generally you are eligible for a maximum of 26 weeks of unemployment benefits in most states, but the economic stimulus bill signed into law in February 2009 extends the benefit period to an additional 33 weeks through the end of 2009. (Earlier legislation had provided for the same benefit extension but only until March 2009.) The new law also provides for an extra $25 per week in benefits and exempts the first $2,400 from income tax.
It usually takes two to three weeks after filing a claim to receive your first check, but the recent accelerated pace of layoffs has made it hard for many state unemployment offices to keep up -- so be prepared for some delay. The stimulus bill tries to address this issue by providing funds to help with application processing.
- Get to the unemployment office fast
- Bring your family in on the plan
- Manage your mortgage payments
- Put the credit cards away
- Know your health insurance options
- Don't touch your retirement fund
- Commit to saving money
Bring your family in on the planThis is not the time to put on a brave face for the rest of the family. Even the kids need to be part of the discussion of this life-changing event.
"First of all, you've got to tell them that things are changing," says Sharon Danes, professor and family economist in the College of Education and Human Development at the University of Minnesota. "You don't have to give them lots of detail, but you let them know that mom or dad has lost a job, and what that means is that we're not able to spend as much money. Younger children may not know what's going on, but they're going to sense that something is wrong."
The next step is to gather everyone around the table and talk about how the family spends money, says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling, or NFCC, headquartered in Silver Spring, Md. Then, for 30 days, Cunningham says, "have anybody in the house that spends money track their spending."
At the end of the 30 days, have a discussion about how the family can reduce spending. "If you can take $10 out of 10 (spending) categories, you'll never feel it," Cunningham says.