The Harsh Reality
“Long-term unemployment is the highest today since the Great Depression,” said Dawn Teo, founder of Rescue American Jobs Foundation. “The government is not helping the long-term unemployed. There are no more unemployment compensation extensions, and funding has been cut from other social programs that traditionally helped these people to retrain and get back into the workforce.”
The stark picture painted by Teo is being lived by more and more Americans as they find themselves cutting their expenses to the bare bone. “Live a Spartan life. Just pay the bills and get rid of the frills,” advises Ronald Peter Ciras, host of BellaOnline’s Job Search Site. This won't be easy but has to be done so that you don't end up homeless or worse during long-term unemployment.”
Unfortunately, cutting expenses is often easier said than done as many Americans find themselves paying ordinary living expenses with their credit cards and then scrambling to pay the credit card bills when they come due. More and more Americans are finding themselves buried in a black hole of debt from which there is no escape and end up filing bankruptcy or losing their homes to foreclosure. Teo said that bankpruptcy and foreclosure rates are higher today than during the Great Depression.
Adjust, Adjust, Adjust
Not being able to pay your bills is scary and humiliating, but you have to face up to the fact that the problem will not go away if you ignore it. If you’re not careful, you’re going to end up farther and farther behind each month. The first thing you need to do is honestly evaluate your spending and identify where you can cut your spending.
“When you lose your job, cut all unnecessary expenses, as soon as possible,” said Valerie Sessa, who set up a blog about her prolonged unemployment. “Check everything! We got rid of one of our cars (saving on parking and insurance as we had already paid both off), we cut cable back to the basics, etc.”
Possible candidates for the chopping block include:
- Eating out
- Insurance expenses—You may be able to cut these costs by reducing coverage and raising deductibles.
- Extras like magazines and cable TV
Once you’ve pared your expenses to the bone, prepare a list of your creditors and start calling them to explain your situation. Many creditors will be willing to suspend your interest payments and / or reduce your monthly payments if you are upfront and honest with them. That can help you eliminate the stress of collections calls too.
My article, Handling Debt During Unemployment , provides additional tips on managing your finances during periods of unemployment.
Ask for Help
American is a nation of independence and asking for help asks many of us uncomfortable. However, if it is a choice between our pride and food in our children’s bellies, most of us will choose to go and ask for help. Possible sources of assistance include:
- Church charities—These often provide assistance to meet basic living expenses.
- Food pantries—Many communities have food pantries that will provide bags of groceries.
The Salvation Army—The Salvation Army has access to a wealth of resources and can help you with groceries, help you sign up for energy assistance programs, and more.
- The Low Income Energy Assistance Program The Low Income Energy Assistance Program—This federally funded program helps low income families pay their heating bills during the winter.
The one key to remember when applying for assistance, is that you’re not the only one in tight financial straits right now, there are millions of other Americans feeling the economic pinch as well.
Bring in Some Extra Cash
The other key to surviving touch economic conditions is to be creative in your search for additional sources of income. Writing freelance articles for a Web site or delivering phone books might not bring in a lot of cash, but when you’re struggling to pay your bills, every little bit helps.
Part time jobs can be found listed in your local newspaper, through signs posted in store windows, or at any of the following Web sites:
The other alternative for bringing in some much needed extra cash is to find work through a temp agency, which I cover in-depth in my article Temping for A Living.
Plan for Unemployment
We’re all advised to plan for major changes in our lives such as retirement, college, etc. and for contingencies such as car repairs and unexpected illnesses. But planning for unemployment and living beneath your means while employed isn’t something we think about, but could mean the difference between surviving unemployment and falling through the cracks.
“I cannot express enough the importance of living well within your means while you are employed,” Sessa said. “When I became unemployed, while we were nervous, our only bills to pay were our mortgage and our utilities. We had no outstanding balance on our credit cards, our cars were paid off, we had no loans, etc.”
She added, “In this market, assume that you ARE going to be laid off and ensure that you have considerable savings put away. If you aren't, you are lucky and ahead of the game for your retirement.”