What happens if I am laid off next week/month?

Can you answer this question?  Are you prepared for this?  Do you have a plan in place to impliment survival until you can obtain employment elsewhere?  If the question is no, let’s not stick our head in the sand, let’s get a plan in place so you can rest assured that you will be okay if that job is lost.  Referring back to the Money Challenge “Buckets”, we would catagorize this as a Security/Safety Net question.   But to get more specific to the loss of job.  We should have access to 6 months of expenses.   First question being, what is the total amount of my monthly expenses, go to your Financial Statement and look at the Total Expenses line and then multiply it by 6, if we haven’t made you a Financial Statement you can do it by hand by totaling all bills, but in addition add in all the everyday stuff you spend money on.  Once you get the base line for total expenses and have multiplied it by 6, this is the “nest egg” you are needing to access.  In an idle world we would have that in a savings account…ha,ha, now for reality to set in.  Look at it again “access”, this could be an equity line….no equity line or no house, or you have no equity in your house or your equity line is maxed.  Onto the next line of defense, do you have credit cards, untouched and able to access money through “balance transfer” deals?  If you don’t know, start by making a list of all credit cards, or you can refer to your Input Sheet, which is what feeds the financial statement.  Call all your credit cards, your list should include, name of card, what the balance transfer APR is, the transaction fee, credit limit on the card and if you can get one lump sum into your bank account.     Once this exercise is done, you should know where you stand as far as access to cash.   Also don’t forget most will get a serverance package, fight hard for all you can get, typically you get vacation time, 1 week for each year worked and 2 weeks notice, try to get any accumulated sick time if possible.  If there have already been lay-off’s in your company know what has been offered so you can plan accordingly.    Of course once you know where you stand financially, now you know what you have to work with, you may need to revisit you budget and see where you can shave expenses, start calling all your creditors and talk with them explaining your situation and you would like to see if payments can be reduced or suspended for a period of time until another job can be found, so your credit isn’t destroyed in the mean time.  Working proactively will go miles for your credit and your peace of mind.   Don’t wait for a job loss to start thinking of these things, find out where you stand today. 

If you don’t have an equity line or it is maxed and your credit cards are maxed….it is time to start cutting now, serious cutting is needed, you are most likely living above your means and will be unable to sustain your lifestyle with any sort of downturn, so the cutting must commence now.  If you are in this situation, please call/email and we can see if I can help brainstorm some ways to start hacking away at the accumulated debt, and remember I don’t charge my $150 yearly membership if you are not in a position to pay me.

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~ by debt2dreams on October 13, 2008.

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