Financial Recovery Articles
Some Financial Tips on Coping with Your Job Loss
Brampton Business Times
Lorraine Giroux
Shock. Anger. Frustration. Worry.
For many of the more than 1,000 DaimlerChrysler workers at the Bramalea plant who are losing their jobs, these are the emotions they may be feeling right now.
But if you are ‘losin’ it,’ following are some steps to help you take control of the situation and preserve your financial health while you focus on your future.
First up: apply immediately for Employment Insurance benefits. It can be several weeks before you receive your first cheque and you don’t want to find yourself having to scramble for cash.
Find out all of the entitlements for which you are eligible from your employer and follow up to make sure you receive them. These might include severance pay, unused vacation pay, continuation of medical/dental benefits, expense reimbursement, and job search counselling. And be sure to ask for a letter of recommendation that you can use when applying for other jobs.
Sit down with your family members and discuss your impending job loss and the impact this will have on the family’s finances. Don’t let money issues be the cause of disagreements – involve your spouse and children in financial discussions and encourage everyone to work together.
Start by talking about your goals. Over the coming year you might, for example, want to “reduce expenses so that we can live within our means until I find another job” or “save enough money to replace our old car by December.” Then work together to develop a budget for the family’s reduced income. Start by calculating your current monthly income and then estimating what this will be when you are laid off.
Now, estimate your monthly expenses for the coming six months. If you don’t know what you currently spend on household expenses, track them for one month by keeping receipts and writing down all of the bills you pay and everything you and your family members spend – even the smallest purchases like coffee or snacks. At the end of the month, group expenses into categories and total each category.
Project these monthly expenses for six months, adjusting each month for variable items such as property taxes, memberships and so on. Now review your six-month projection and discuss with your spouse and children the differences between needs (such as groceries) and wants (such as a winter vacation). Mark the expenses that you need with an ‘N’ and those items that you want with a ‘W.’ Then discuss which of the ‘wants’ you can reduce or eliminate in order to manage on a reduced income.
If your revised budget shows that you won’t have enough income to achieve your goals or meet your needs, then you have a couple of options. If the shortfall is major, get help from a financial counsellor who can help you gain control of your finances. Professionals can offer you valuable advice regarding a variety of potential solutions such as mortgage refinancing, loan consolidation, negotiating with creditors, credit counselling and consumer proposals. You don’t pay for an initial consultation, so you have nothing to lose by scheduling a meeting.
If your budget shortfall is minor, start saving to build a reserve fund that will help to support you during a period of unemployment. For example, you could immediately begin living on your reduced budget and deposit the money you save into a bank account. Maybe you have major assets, such as a cottage or vehicle that you could sell. Or perhaps you could take on a part-time job while you’re still employed.
It’s also important to reduce high-interest debts. If you are carrying balances on credit cards, for example, or have expensive loans, consider paying them down/off with the vacation pay or severance package you receive. Alternatively, you could consolidate all of your debts into a line of credit at a lower rate of interest.
Once you have the confidence of knowing that you can cope financially, focus on your future. By taking responsibility for your situation early, creating a plan and adopting practical money habits, you’ll be well prepared to transition from losin’ it to lovin’ it – your new future, that is!
This article was originally published in Brampton Business Times, Sep 2008.
