The Unemployment Survival Guide

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Keeping your financial house in order is important. It's even more crucial if you recently lost your job.

"Failing to manage your finances during unemployment could affect your credit report and hurt your chances of landing a new job," says Mechel Glass, director of education at the Consumer Credit Counseling Services of Greater Atlanta.

For the first time since 2001, the economy has lost more than a million jobs in a single year, which means a lot of people are struggling to make ends meet. Here are a few financial tips to consider if you've lost your job.

Cash vs. Credit

If you have an emergency reserve or a rainy day fund, use that to pay necessary expenses including medical and grocery bills before turning to credit cards or other debt. Taking on debt when you have lost your income stream is a recipe for disaster. It may seem like a viable solution in the short term, but it will leave you in a financial hole when you finally get back on your feet.

Re-Evaluate Expenses

Trim spending as much as possible. Food, medicine and regular bills such as mortgage and utility payments are essential expenses. Consider cutting anything you can do without, such as new clothes, movie tickets, eating out or even cable TV. Expenses related to your job search, however, should remain untouched. Even though you aren't getting paid for it, looking for work is now your full-time job and an essential expense.

Pay Your Debts

A third of your credit score is based on how promptly you pay off debt, and protecting that score is key to limiting the long-term damage of unemployment. Keeping up with minimum payments on existing credit-card balances not only protects your credit score, but also wards off penalties that could weigh you down even further. Make sure to keep current with mortgage payments.

Contact your lenders to explain the recent loss of income and find out if there is a way to defer or reduce payments. If you can no longer make your mortgage payments, contact a mortgage counselor at HopeNow (1-888-995-HOPE), a government-approved coalition of companies in the mortgage industry that provide free foreclosure-prevention assistance.

Seek Help

Before weeks turn into months, consider seeking help from an organization such as the CCCS of Greater Atlanta. A counselor can help set up a realistic budget and provide help working with creditors to avoid defaulting on loans. Counselors can help consumers who are in financial trouble as well as those at risk of getting into trouble.

Contact your town hall or county government to find out what social services are available. Residents of most states can also contact United Way's 211 by dialing 2-1-1 to get in touch with local food banks and low-cost services such as day care.

If you still have a job but are worried about job security, consider implementing some of these tactics before receiving a pink slip. Taking a more conservative line with your finances, including building up a bigger emergency fund, can make a few months of unemployment a lot easier to get through.

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