Coping With Unemployment-
post continues last week’s discussion of action steps to take as a result of
Below are four recommendations to consider:
With an Employer
- Find out if a soon-to-be-ex-employer provides severance
pay, which is money paid to employees who are dismissed for reasons beyond
their control (e,g., as the result of company downsizing).
Set aside about 30 percent of severance pay
for estimated income tax payments. Another option to discuss might be remote
telecommuting. Many jobs today can be done anywhere in the world.
- Explain your job loss and request reduced payments or an
extension of time to pay bills if you anticipate difficulty paying debts and/or
household expenses. If you own a home, you may be able to arrange a forbearance
agreement with your mortgage lender that enables you to pay nothing, or make
partial payments, for a set period of time.
A forbearance gives homeowners time to get “back on their feet”
financially and bring their mortgage current.
- Reach out to a non-profit credit counseling agency that
can provide budget counseling and negotiate with creditors on your behalf for
concessions such as waived fees or reduced interest rates. Many of these
counseling agencies are affiliated with the National Foundation for Credit
which has an “agency locator” search function on its web site.
Retirement Savings Tax-Deferred-
Try not to cash in tax-deferred retirement
plan assets to pay living expenses while you are unemployed. A job loss is
usually a temporary situation while retirement can last for decades. If you
must tap this money, repay it within 60 days to avoid income taxes and the 10
percent penalty on premature withdrawals before age 59 ½. In addition, withdraw
only what is truly needed.
The NC State Extension Publication
What to Do If You Lose Your Job
additional information about coping with unemployment.