It seems there is a disconnect from what is being covered by financial news and what the public is really concerned about. You can’t turn on the financial news networks without hearing questions such as the following:
“Will the US raise its debt ceiling?”
“Will the tax cuts for the rich be extended?”
“Will the price of gas continue to increase?”
Not to say that these questions aren’t important, but as the unemployment rate holds steady above 9 percent and the real rate of unemployment is over 16 percent people are less concerned about taxes, debt ceilings, and gas prices than they are concerned about keeping their jobs or finding one. So with that in mind, I wanted to dedicate this article to those who are unemployed by giving them some financial tips/strategies to employ in this hard economic market.
Whenever I discuss financial tips/strategies for the unemployed, many in the audience respond with bewildered looks coupled with a “huh?!” Or I get the classic oversimplified response which states, “FIND A JOB!” This is great advice, but there are other financial strategies for those who find themselves unwillingly placed into the ranks of the unemployed.
1. Get rid of foolish pride – Many people feel that their job is an integral part of their identity. They take pride in their career and being laid off or fired can be a huge blow to the ego. I have spoken with many who experience a sense of shame upon finding themselves unemployed. This shame can lead to medical ailments such as depression or stress. Going into a shell or becoming the life of the party to mask the reality of your situation from your friends are both very normal occurrences. Picking up the dinner tab with friends, shopping sprees, and trying to put on the facade that things are still normal is a very destructive and expensive habit. Not only are you using money which should be kept in your savings, but you are depriving yourself of a very important resource — your network.
Your network of family, friends and acquaintances who can help you find employment is often more expansive than you realize. Very often your friends and family are more likely to work harder for you to find employment than random strangers who read your resume on websites and with employment agencies. The more people who know about your situation, the more support you will have from those willing to go the extra mile to provide assistance. Warm referrals, placing resumes directly into the hands of people who can make hiring decisions, and constantly monitoring the employment scene are more likely to occur by people who care about your future. In addition, using social networking sites like Linkedin, Facebook, and Myspace can magnify your outreach to others who can assist you in your search.
2. File for benefits – There are some who are unemployed who feel so disillusioned and embarrassed by their situation that they are reluctant to file for unemployment benefits. You have been paying for someone else to get these benefits whenever you pay your taxes, so you might as well obtain some assistance for yourself in your time of need.
3. Join the ranks of the “Under Employed” – Having “a” job is better than having “no” job. The mortgage company or your landlord will not stop collecting rent just because you lost your job. If you find it hard to find a job in your first field of choice, you must begin to look for the next best thing. There are thousands in my hometown of Detroit who are in this very predicament. They were laid off from the automobile industry and have no other training but that which applies to a suffering industry. If you can, find a job that will at least help pay bills so you can remain above water. While you are working as an “under-employed” individual, consider other options that you might pursue while you are working – options that will expand your scope of career choices and therefore make you more marketable. For example, community colleges offer inexpensive classes and training, non-profits offer free and inexpensive certification courses (consult your local politicians office for a list of community resources), and the internet has made the new education and training search much easier. Never look at a temporary job as a negative or a step backwards; think of it as a positive event that buys you the time to look for the job of your first choice while allowing you to pay your bills.
4. Get CHEAP! – Your pot of funds now has a finite ending and every penny spent gets you one penny closer to that scary ZERO figure! Now is the time to design a budget for your household, tighten your belt, use coupons, buy food in bulk, use only your ATM machine to avoid charges, and eliminate all impulse spending.
Lowering your interest rates can assist in lowering your monthly bills so inquire about lowering your interest rates on your credit cards or your eligibility to refinance your home. Fannie Mae has reported that up to 50 percent of individuals who own a loan from Freddie Mac or Fannie Mae — and who are eligible for a loan refinance — have not taken advantage of the opportunity to get a lower interest rate.
Here are a few other quick tips that will allow you to cut costs:
- Cut all unnecessary luxury spending that create monthly bills such as cell phone bills (use a house phone and carry two quarters), gym memberships (work out at home), garage parking in the city (park on side streets), and magazine subscriptions (read articles on the internet for free at the library).
- Only take on additional debt in the case of an emergency.
- Talk to your accountant about researching all legal tax strategies that you can utilize.
- No more loans or money gifts to family members and/or loved ones.
5. Make job searching a job – If you are unemployed, your new job is to find a job. Create an organized database listing all places that have received your resumes, the primary contact person and and an expected date to hear from them. Rank them in your database according to the likelihood of receiving a yes. Start your search early in the morning and set as many appointments as possible. Schedule meetings and appointments on a daily basis since the more time that you spend away from home — the more productive you will be — and less time will be spent watching daily talk shows.
6. Stay healthy – Even with the 65% COBRA subsidy from the government, maintaining health insurance can be costly. Whether you elect to maintain health insurance or not (I always advise against going without health insurance), make sure you are taking every precaution to remain healthy. Eat healthier. As we all know, junk food is not only high in calories but it is usually filled with sugar which leads to more costly trips to the dentist. Work out at least three times per week for a minimum of 30 minutes per day, wash your hands regularly, get plenty of sleep, and take up yoga at home. Staying healthy is not only good for the body, but it helps to maintain a positive/confident outlook that will make for a more impressive job interview.
7. Don’t touch your 401k (if you can help it) – Try your best not to have a knee jerk reaction to raid your 401K or company retirement plan. Keep in mind, just because your statement reads “$50,000” does not mean you have that much to withdraw. If you consider the federal, state, and perhaps city taxes on the funds that you have invested along with the 10% early withdrawal penalty; and the possibility of deducting any matching funds contributed by your company (if you are not fully vested); that $50,000 could easily turn into $25,000. Raiding the company retirement plan should be the absolute last option.
8. Investing is Not a Priority – If you have other investments, don’t use this as a time to check your portfolio every minute hoping that the $10 stock turns into the next Google. This is unnecessary stress in your life. If you were putting funds into an account monthly, those funds should now be diverted into your checking or savings account with the most access. Liquidity is your best friend in these times of hardship and stocks are not liquid. Even if you have your funds in a standard, non-qualified brokerage account you may not have to pay a penalty for the sale of a stock, but you have tax liabilities if you have gains. As with the 401K, stop your investing in these funds, but don’t rush to liquidate them at first. However, if you are forced with the choice between paying rent and keeping a position in a stock, and you have exalted ALL other options, feel free to sell the stock.
9. Decide which bills to pay first – After you have exhausted all options, if you are still unemployed, there may be a time to make hard decisions about which bills take priority. This should not be determined by which collection agencies are the most annoying or seem to yell the loudest. If you cannot pay your light bill, you may lose your lights. If you cannot pay your phone bill, you may lose your phone. However, if you cannot pay your rent or mortgage, you will lose your home. Losing your phone or lights might be a tremendous loss, but not as big of a loss as having to sleep on the street. I am not suggesting that it is okay to skip any bill payment that you owe as this is irresponsible and negatively impacts your credit; however, when hard times are upon us, we must keep things in proper perspective.
Here are a few things to consider BEFORE you decide to skip a bill payment:
- Have you called the companies before to negotiate a payment plan?
- Have you checked your budget and cut all luxury expenditures to see if you can squeeze out a few extra dollars?
- Do you have any items around the home of value that you would consider selling? Is it time to host that yard sale that you have been considering?
10. Don’t Get Suckered – When desperation sits in, financial offers that you would not have considered before now begin to look more attractive. The financial predators are constantly swimming in the waters trying to attract those who are worried, anxious, and concerned that using “traditional” strategies of working hard will not be effective. These are the commercials that only play during the middle of the day or late at night when the typical employed person will never see them. They offer you overnight fame by purchasing the most effective real estate system ever created; or magical options trading software that can never be incorrect. For a small fee, you will be able to purchase your financial freedom — what a deal! Your money is too valuable to waste on false notions of fast prosperity.
11. Have Faith! – What other choice do you have? Faith is not waiting on a unicorn to prance into your life or a rainbow to form which signifies the end of your misery. Faith is half believing and half acting on that belief. People behave according to what they believe will happen. So if you believe that things will continue to be bleak, your job search will weaken and this will lessen the chances of finding a job. However, if you believe that your future will be bright, and you hold onto this positive outlook, you will be more likely to do the work that is necessary to find employment. I promise this to you, if you hold on to the belief that you will find a job, and aggressively pursue that belief, you will survive these hard times!
Ryan Mack, Author of Living in the Village and President of Optimum Capital Management, LLC
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