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Personal Finance

Job Interrupted—A To-Do List When Times Get Tough

FINRA Staff
Struggling with Debt

It’s the rare and lucky worker who does not at some point experience a break in employment, reduction in salary or a period when paychecks are put on hold for one reason or another.

The situation is the same in all cases: You must live with less.

Here is a short to-do list to get you through situations in which employment is interrupted and income curtailed.

When it comes to paying
your bills, if you think you
will be late with a payment,
contact those you owe to
discuss your situation.

1. Take control of your finances. Quickly design a revised budget and track spending closely. Cut where you can—as quickly as you can. This will help avoid falling behind on bills or buying on credit. Your employer, union (if you belong to one) and local public job center may offer guidance and advice related to budgeting and bill paying. Start here to remake your budget: How to Create a Budget and Stick to It in 7 Steps.

2. Manage bills and debt wisely. Even with responsible budgeting, costs can exceed expenses. When it comes to paying your bills, if you think you will be late with a payment, contact those you owe to discuss your situation. It may be possible to work out terms that offer you financial flexibility, whether it's an extension on when the rent or mortgage is due or waiving a late charge. Be sure you clearly understand what you are committing to—and get the terms in writing.

3. Borrow with care. Tough times can sometimes result in costly borrowing decisions. Understand the risks and costs of taking a withdrawal or borrowing against your 401(k). Avoid payday loans and other high-cost forms of borrowing. How? By first talking with banks and credit unions: explain your situation and get their best loan offers first. Another option is to turn to friends or family. It's often best to keep this loan a business transaction: come to the family table with an amount you need, what the money is for and a payback plan.

4. Find out quickly if you qualify for unemployment insurance (UI) benefits. Each state operates its own unemployment insurance program. Click here to find your state's benefits. Many states require you to file for unemployment benefits online and some provide toll-free numbers or other ways to obtain assistance in filing. Also, take advantage of your state's employment services. To find your state workforce agency use this helpful map, which also includes employment opportunities and other resources.

5. Protect yourself from job-search scams and financial fraud. Financial duress can make you more vulnerable not only to employment scams but financial fraud. Be extremely wary of cold calls pitching “guaranteed” investment returns or messages to your phone or computer touting hot stocks offering high returns and low risk. Use FINRA's Scam Meter to check if a financial pitch carries some of the warning signs of fraud.

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