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I'm dealing with the stress of unemployment. What should I do first?

Through no fault of your own, you find yourself suddenly out of a job. Now what?

The first question to answer is: Is this unemployment temporary — or permanent? If you’re out of work due to the Coronavirus pandemic, your employer may have furloughed you temporarily. If that’s the case, your efforts will be focused on getting through this temporary period of unemployment.

If, however, your employer has permanently closed, or if you’re looking to change jobs or change careers, you’ll have different actions to focus on.

Your First Step: Secure Your Finances

Regardless of whether the unemployment is temporary or permanent, your first step is to assess your financial situation. This includes both your personal finances as well as identifying any benefits due to you, either from your company or government sources.

Personal Finances

One of the biggest mistakes many people make after losing their job is not making immediate adjustments in their finances. With the uncertainty of the full impact of the Coronavirus pandemic, you could be out of work for four weeks, or four months. No one knows right now.

However, if you were already living paycheck-to-paycheck, there will likely be some impact on your finances. So the first thing you should do is adjust your lifestyle to fit your new financial reality … at least temporarily. Conserve as much cash as you can.

Make a list of your current expenses (review your checkbook register, credit card statements, and/or online banking profile) and see what you can cut out. Determine which of your current monthly expenses must be maintained (mortgage and car payments, utilities, groceries) and which ones you can do without for now. The sooner you make these adjustments, the better off you will be.

Once you know what you’ll have to live on (unemployment benefits and savings, for example), you can determine if you need to find other sources of income — for example, a part-time job. (This income may have an impact on your unemployment benefits, but you may need the money to carry you though until your unemployment compensation comes in, which could be 2-4 weeks or longer.)

If your unemployment stretches on for a while, you may need to cut back to only making minimum payments on your bills. While now is not the time to be holding a garage sale, you may find some things that you can sell for cash on Facebook Marketplace, buy/sell/trade groups, or Craigslist. (Be sure to minimize contact with buyers — for example, taking payment by PayPal, Facebook payments, or Venmo and doing porch pickup.)

Try to avoid tapping into your retirement accounts or selling stocks or mutual funds while the stock market is down. If you have a cash-value life insurance policy, you might consider tapping it for emergency cash, but remember you will have to pay interest on any loans you take out, and you’ll want to pay the loan back when you are able to.

If you will have trouble making your mortgage payment or paying other bills (credit cards, auto loans, student loans), contact your lender. Many of them have forbearance programs which allow you to make reduced payments or skip payments (adding the missed payments to the end of the loan period).

You may also be eligible for special programs for the unemployed. For example, the “Home Affordable Unemployment Program” may reduce your mortgage payments or suspend them altogether for a period of time.

Your credit card company may reduce your interest rate or lower your required minimum payment due to a job loss. (If you have involuntary unemployment credit card insurance, your credit card company may cover the minimum payment if you are laid off for a specific period of time. However, charges incurred after the layoff are excluded.) Don’t wait to explore your eligibility for these programs.

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