7 tips for staying out of debt when unemployed

7 tips for staying out of debt when unemployed

While nothing will remove the sting of unemployment, there are still things you can do to weather job loss in a down economy. According to Statistics Canada, the unemployment rate hit 8.7 percent in August 2009. Although this is only a slight increase from July 2009, it is still a concern, especially since it's during tough economic times that unemployed people become consumed by debt.

Financial experts such as retired financial consultant and personal accountant Bill Christie suggest that people prepare for unexpected events such as unemployment well before they occur. "Folks should have at least three months of expenses saved up just in case. That way they are prepared for the initial blows of unexpected hard times, and won't turn to credit to pay regular bills."

But what can most of us, who don't prepare ahead of time, do? The following seven tips can help you cope in hard economic times, and help you stay out of debt while you're out of work.

1. Make a budget and stick to it. Figure out how much money you'll have to work with, and how much money you'll need for your bills. You aren't going to be able to maintain whatever lifestyle you had before you lost work, but you can still get by. And remember, you'll need to factor in such things as transportation, stamps and other things that you use while you're looking for work.

2. Create a food plan. To stay within your budget, create weekly menus where you can use items as leftovers, or even freeze food for future meals. Watch for grocery sales in your local newspaper, and be sure to buy nutritious foods that have a longer shelf life and fill you up (e.g., pastas, canned/frozen fruits and veggies, beans), rather than food that spoils easily, or is cheap but not healthy. See if you qualify for any sort of food assistance through community assistance programs or your E.I. office. Food is a basic necessity we all need to survive. Just because you are enduring tough times shouldn't mean you have to starve.

3. Take those odd jobs nobody thinks of. Remember those neighborhood jobs the teenagers did? Look for some of those jobs. Mow people's lawns, house/dog/babysit, do handy work or fix cars, if you have a talent for such things. You can also start a small business based on the talents you had at your last job, or try making a bit of pocket cash from that hobby you enjoy.

4. Don't be too proud to take a part-time job. Places like McDonald's, Subway, Wal-Mart and others are always hiring. It may not be the career job you're looking for, but it's an income to help pay the bills until you get another job in your field. Don't turn down jobs that aren't "up where you worked." It will feel better to be able to pay your bills than to let them pile up.

5. Don't use credit. Cut up those cards, take that line of credit off your bank card, and avoid using any other form of credit during unemployment. It's way too easy to put your mortgage or rent payment on your credit card. Sure, it'll be paid, but what about next month? Accumulating rent on your credit cards or line of credit will only create more stress. And when you do get a job, you'll be spending most of your earnings paying off what you stuck on credit instead of getting yourself back on your feet. Another tip Christie offers: "Call any of your creditors and ask them to put your account on hold or cancel it completely if you have a card with an annual fee. You may not use the cards at all, but you'll still be charged that fee and -- guess what -- that will accumulate interest, too. You don't want your credit reports messed up for a small charge."

6. Accept outside help. If people reach out to you offering food, meals or child care while you go to interviews, accept it. People who offer help do so because they genuinely want to help you in some way. We all need help during tough times, so don't turn any open hands away.

7. Seek counseling if you need it. A lot of us experience depression when we're out of work for a long time. Do what you can to stay positive, including seeking some sort of counseling. Most E.I. offices offer such services, and there are places in the community that will listen, too, including churches, drop-in centers or similar locations.

One of the most stressful things in our lives is to lose our livelihood. It can be scary to wonder where the money will come from to pull us through, but never turn to credit for solutions, as that will only create more problems. Stay positive, watch your spending, and seek whatever counseling you need to get by.
Published: September 9, 2009