Few things in life are more traumatic than being unexpectedly subjected to unemployment, particularly if you have little savings. And, it’s hard to focus on getting a new position when the bills keep coming in. However, there are some concrete steps you can take to survive and get out of debt without a job.
Let’s take a look.
Make A Budget
Your situation calls for a “survival budget.” That means, first and foremost, you must put the needs of yourself and your family before those of your creditors. It also means you must assess your finances.
Begin by adding up all of your liquid assets, including savings, severance pay, and unemployment benefits. Next, kill all non-essential spending. That could mean things like your cable service, a magazine subscription, a food delivery service, or even WiFi. You should also stop eating restaurant food and start using coupons at the grocery store.
Make Some Choices
If your budget evaluation shows you have more money going out than coming in, you’re going to have to prioritize your debts. You also might have to skip a couple of mortgage payments to buy food and pay utilities. And yes, we know, such decisions are not easy, but they are key to figuring out how to get out of debt without a job.
To conserve cash, make minimum payments on your credit cards, taking care not to max out your plastic. Ideally, you’ll choose to not use your cards at all, to minimize your indebtedness.
Contact Your Creditors
If you simply can’t pay your debts, you’ll have to tell your creditors. Explain your situation and see if they can offer you lower interest charges or a deferred payment schedule. There’s a decent chance your mortgage holder will agree to a modification request. You may also be able to get a forbearance plan from your auto lender.
Federal student loans have several payment programs available for people going through tough times, including joblessness. Check with the U.S. Department of Education or contact your loan officer.
If you have a federally backed student loan, the government has many payment options available during times of economic duress. Contact your loan servicer for details or check with the U.S. Department of Education for guidelines.
If still have enough income to keep paying your monthly debts, you might want to enroll in a debt management program, or a debt settlement program to negotiate with your creditors to eliminate a percentage of your debt.
Even though you’re going through a hard time now, you could just emerge debt-free, or close to it.
Find More Income
Due to stiff tax penalties and consequences, it’s not advisable to hit up a retirement account such as a 401(k) unless it’s 100% necessary. But it’s good you have that option. If you have a life insurance policy from which you can draw, perhaps you should consider doing so. If you still have some of that cash when you return to work, perhaps after replenishing your retirement fund or other account, you can use it to pay down debt.
If you’re jobless for longer than expected or your savings are nearly gone, you might have to apply for public assistance, particularly if you’re facing a medical emergency. Contact the U.S. Department of Health and Human Services.
Now that you know how to survive AND get out of debt without a job, you may recover from your situation better than you expected.
