Coping With Unemployment- Part 2
This post continues last week’s discussion of action steps to take as a result of unemployment. Below are four recommendations to consider:
¨ Negotiate With an Employer– Find out if a soon-to-be-ex-employer provides severance pay, which is money paid to employees who are dismissed for reasons beyond their control (e,g., as the result of company downsizing). Set aside about 30 percent of severance pay for estimated income tax payments. Another option to discuss might be remote telecommuting. Many jobs today can be done anywhere in the world.
¨ Contact Your Creditors– Explain your job loss and request reduced payments or an extension of time to pay bills if you anticipate difficulty paying debts and/or household expenses. If you own a home, you may be able to arrange a forbearance agreement with your mortgage lender that enables you to pay nothing, or make partial payments, for a set period of time. A forbearance gives homeowners time to get “back on their feet” financially and bring their mortgage current.
¨ Contact a Credit Counselor– Reach out to a non-profit credit counseling agency that can provide budget counseling and negotiate with creditors on your behalf for concessions such as waived fees or reduced interest rates. Many of these counseling agencies are affiliated with the National Foundation for Credit Counseling ( ), which has an “agency locator” search function on its web site.
¨ Keep Retirement Savings Tax-Deferred- Try not to cash in tax-deferred retirement plan assets to pay living expenses while you are unemployed. A job loss is usually a temporary situation while retirement can last for decades. If you must tap this money, repay it within 60 days to avoid income taxes and the 10 percent penalty on premature withdrawals before age 59 ½. In addition, withdraw only what is truly needed.
The NC State ExtensionWhat to Do If You Lose Your Job has additional information about coping with unemployment.