Becoming unemployed can be devastating for anyone, particularly those with a family to support. The stress of maintaining a home and ‘putting food on the table’ can cause great unhappiness and this can be compounded if finances are not taken care of during this difficult period.
Clearly, it will be necessary to review all expenditure and to prioritize spending as much as possible. Credit cards should not be seen as a source of ‘free’ money; indeed, it would be wise not to use these particular financial instruments during unemployment, as failure to keep-up with payments will result in substantial interest being accrued and possible damage to credit ratings in case you “default” on a loan, just like what most people would normally do in such situation.
Government help for job seekers
Many governments provide payments for people who become unemployed and are actively seeking further employment. There are also payments available for families with children or a family member with special needs.
It is important to make sure that you investigate all potential sources of financial help during unemployment periods.
Review all expenditure and outstanding loans
It may be possible that you have insurance that covers the basic payments for loans, mortgages and credit cards that you are unaware of. It is always best to be honest with the lenders and keep them updated with your employment prospects and current situation.
You may find that many lenders will have included a level of insurance within the loans they have made to you, you may need to contact them in order to benefit from this.
Prioritize your debts and expenditure
Keeping a roof over your head is vital so make sure that your mortgage lender or the person you rent your property from is kept aware of the situation. Failing to inform these people of any potential non-payment could result in serious consequences.
Job seekers and credit scores
It is reported that as many as twenty-five percent of Human Resource managers will use a credit search when considering potential new employees for a position with their organization.
Many HR personnel will use a healthy credit score as a recommendation that a prospective employee is able to manage their finances and therefore show a high level of responsibility. This also is an indicator of why it is important to keep lenders informed of your situation when seeking employment as you need to maintain your credit score as much as possible.
Make your ‘job’ looking for a new job
The need for a regular income is always there, looking for new employment should be a priority for all who are unemployed. This situation may lead to taking a position that is not perfectly suited to your skills, but it will bring in income, help in reducing any further increase in unpaid bills, and can be a stepping- stone towards finding more suitable employment at a future date.
Seek professional financial advice
You may feel rather ‘shy’ about being unemployed but this should not stop you form consulting with people who may be able to provide useful advice or offer assistance during this period. It should also be remembered that keeping your bank manager, mortgage lender and any loan or credit card providers you may have outstanding credit with would rather assist you to ‘get back on your feet’ than to have to take action to retrieve any outstanding amounts.
In the UK the Citizens Advice Bureau(CAB) will offer free advice on how to contact a reputable financial adviser and may be able to assist by providing information on other useful entities that might be appropriate to your situation.
The financial advice you receive when searching for employment may not be to your liking. However, as mentioned previously, credit scores are becoming increasingly important to employers so it is wise to keep any lenders up to date with your situation as you search for your next position.
The urge to ‘take on more debt’ during a period of unemployment should be resisted at all costs. The cost of borrowing ‘short term loans’ can be prohibitive and at no time should you take out a loan in order to make payments of another loan.