5 Tips to Manage Your Finances After Losing Your Job

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Last updated on February 15th, 2021

The realities of life in a COVID-19 world are startling. Record numbers of Americans are finding their hours cut dramatically, or out of work entirely. Because of the havoc wrought by the coronavirus pandemic, taking care of your finances has never been more critical. This is especially true for those experiencing job loss. Here are five tips for helping you manage your finances after losing your job.

Examine Your Budget

The first thing you should do if you find yourself unemployed is to scrutinize your current budget. See what you are currently spending most of your money on each month and try to divide those costs into separate categories. These groups might include:

  • Bills (internet, cable, phone bills, etc.)
  • Housing (including mortgage or rent)
  • Groceries
  • Nice-to-Haves (pool cleaning, gym memberships, dining out, etc.)

Of course, budgeting isn’t limited to what you’re spending money on but also where your money is coming from. Carefully look at how much you have in savings and checking accounts, plus investments. You should also immediately research and apply for unemployment benefits or any other government assistance programs for which you qualify.

Once you understand what your budget looks like, cut back on all your spending that is not essential. This slashing of costs should include those items in your nice-to-have categories. Cutting costs can significantly improve your financial situation.

Consider Consolidating Existing Debts

Debts, such as mortgages, personal loans, and credit cards, can pose threats to personal finance. This is especially true if you are out of work. The first thing you should do is contact your lender to see if there are any forbearance options available to you.

Debt consolidation is another excellent option. It involves opening a new line of credit to pay off existing loans, and combining them into one, easily manageable payment. There is a vast number of debt consolidation programs available, with some of the more popular options being:

Tackle Credit Card Debt

The average credit card debt for an American is around $5,700, according to the Survey of Consumer Finances conducted by the U.S. Federal Reserve. When unemployed, servicing a debt that large can seem impossible. In these circumstances, refinancing credit card debt is essential.

Balance transfer cards are a popular option for combining card debts and repaying them at a reduced interest rate (typically 0% for a set time). Once these introductory 0% APR periods end, however, balance transfer cards don’t offer the same level of savings, which can lead to a vicious cycle of debt.

Hybrid installment credit cards, like the Upgrade Card, provide a sensible solution to the issue of eliminating credit card debt with a lower rate than found on a balance transfer card.

Upgrade Card works by providing up to $20,000 in initial credit lines. This credit line operates just like a regular credit card. Rather uniquely, however, cardholders can also transfer that line of credit into existing accounts to pay off balances, consolidating them into one small payment. This balance is converted into installment payments of between 12 and 60 months, payable at an extremely low interest rate, starting at just 8.99%.

Studies show that hybrid cards, like the Upgrade Card, can reduce the time – and money – needed to repay a credit card balance significantly.

Related Article: Is Now the Right Time to Eliminate Your Credit Card Debt?

Check Eligibility for Government Programs

Losing your job can have severe ramifications for necessities like healthcare. Fortunately, there are steps you can take concerning concerning insurance and the like. Check to see if you are eligible for COBRA Health Coverage. This program offers short-term coverage for qualified plans for those who are experiencing a “qualifying event.” These events include:

  • Job loss
  • Reduction in hours
  • Transition in jobs
  • Death
  • Divorce

Keep Your Head Up

The most important thing you can do if you lose your job is to keep your head up. This is especially true when it comes to managing your finances after being let go. Staying positive is critical, as getting down can negatively impact every phase of your potential recovery. It’s important to remember that you aren’t alone in experiencing these events and that there are systems in place to help you get by. Even more importantly, you have friends and family who are there for you and will help you succeed.

Related Article: Coronavirus & Unemployment: Can You Get a Credit Card If You’re Laid Off?

About: Cory
Cory Santos

Cory is BestCards.com's "Jack of all trades" and resident credit expert, covering all facets of the credit card space. Cory holds academic degrees in both the U.S. and U.K. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.

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