When you have overcome the shock of losing your job — and, likely, your main source of income — organizing your finances can have a calming effect. The sooner you make a plan, the easier it will be to cope with your change of circumstances.Despite being near the top of the list of life’s biggest stressors, being fired, being demoted or seeing a change in your financial state does not have to spell doom and gloom.
Recent jobs numbers from the U.S. Department of Labor show a marked decline in unemployment, a signal that opportunities do exist for you to reclaim your space in the work force.In the meantime, use these tactics to deal with short-term demands on your wallet and longer-term financial obligations and ease this stressful financial situation.
FILE FOR UNEMPLOYMENT INSURANCE PAYMENTS
This action item belongs at the top of your To Do list. There is a two-to-three week time lapse between the time you file for unemployment and when you receive your first payment, so don’t delay contacting your state unemployment office.The amount you receive is based on a percentage of your earnings over the last year, and there is a top limit determined separately by each state. While the payments are unlikely to completely replace your income, they can make a big difference in your ability to pay critical bills on time.Mark your calendar to file again every week, or bi-weekly in some states. This can often be done by phone or online, but it can’t be missed or the payments will stop abruptly.
MAKE ADJUSTMENTS TO YOUR HEALTH INSURANCE COVERAGE
If you’ve been on your employer’s healthcare plan, you might qualify for a COBRA extension of benefits. But be aware that it’s pricey. You’ll pay your portion and the employer portion of the premiums, plus an additional percentage for administration fees.An insurance agent can help you find more affordable healthcare options. Losing a job is considered a “special enrollment event,” so you have leeway to enroll in a spouse’s plan or sign up for plan through the Health Insurance Marketplace and take advantage of tax credits and reduced out-of-pocket expenses.Put this on your action plan right away.
You have 60 days to make a decision on a new Marketplace policy or COBRA, but you only have 30 days if you sign up for another employment-based plan, such as your spouse’s coverage.
DECIDE WHAT TO DO WITH YOUR 401K
It might be tempting to simply cash out your 401k when you’re feeling the financial pressure of unemployment, but don’t make a hasty move until you know all your options. Cashing out the retirement savings before you’re 59.5 years old means you’ll have to pay income taxes on the money as well as a hefty penalty for early withdrawal.Although it seems counterproductive to spend money when you don’t have an income,