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.