Did you just received the dreaded layoff notices that are being distributed all across the country? It seems as if no industry is invincible. Hospitals, schools, auto factories, construction companies, and retail stores, are all cutting back costs. Unfortunately, that means a rise in unemployment. If you are laid off from your job, as opposed to fired, you will get unemployment benefits. Nevertheless, these benefits do not equal your former paycheck. For that reason, many unemployed Americans are concerned with debt. It should be a concern of yours too. Luckily, you can take steps to avoid it.
So, how can you avoid debt after being laid off from your job?
Determine how much you have available to spend. After getting your first unemployment check, you will know how much you will get each week for the remainder of your allotted time. There are four weeks in each month. Therefore, if you receive $300 in unemployment, your monthly income is now $1,200. This is how much you have available to spend. Most laid off workers who fall into debt do not take the time to know how much money they have available each week or each month. Instead of trying to live within their means, they continue with their normal spending habits. Only, they arenít brining home a normal paycheck.
Make a list of your monthly necessary expenses. These are limited only to things you need. They include rent or mortgage, car payments, auto insurance payments, gas, and food. As for your utilities, aside from heat, electricity, and water, only include your phone right now. Television and internet are nice, but should be looked at as extras. We will focus on these in a minute. Returning back, total your necessary expenses for each month. For example, rent is $400, electricity including heat is $150, auto insurance is $100, gas is $40, and food is an average of $200. Right there is $890. Subtract that from the above mentioned $1,200 a month and you have $400 left. Remember, this total will fluctuate based on your savings and unemployment benefits.
Eliminate impulse purchases by tracking your spending for one or two weeks. Above, you created a generalized monthly expense list. You based this on the necessities, such as rent or mortgage, utilities, car insurance, car payments, and food. Many Americans waste money on unnecessary purchases and impulse purchases without giving it any thought. You need to give it thought. Be aware of your spending. Buy a small pocket notebook from the dollar store and carry it and a pen with you everyday for one or two weeks. Each time you spend money, even on a coffee, write down the purchase. Review the list at the end of the week. What could you do without or make alternatives for? Instead of buying a coffee from Starbucks or the local gas station, make yours at home and so forth.
Cut back on extras at home. As previously stated, aside from heat, water, and electricity, you should only include your telephone as a necessary utility. Television and internet is nice, but not necessary. Luckily, you should still have money leftover. Unfortunately, it may not be enough to cover the current cost of your television, internet, or cell phone bills. If that is the case, try cutting back before doing without. Practice talking on your cell phone less and lower your minutes or replace your land-line with your cell phone. Do without the movie channels and lower your cable or satellite bill. For internet, revert back to dial-up or see if a lower and cheaper internet speed is available.
In short, the best way to avoid debt after being laid off from work is to live within your means. You have less financial resources, so you can no longer keep your former spending habits. As soon as you receive an exact dollar amount for your unemployment benefits, create a budget. If your expenses total more than the funds available, work on cutting costs. Do so and you will avoid debt.