Question: I recently was laid off. I am actively looking for a job, but I do not want to lose my car or my home. Nor do I want to ruin my credit score. Can you help me?
Answer: I am very sorry for the loss of your job.
Losing a job often comes with little to no warning and is very stressful.
This is a situation that is happening not only locally but nationwide. If you recall last year the federal government put many of its employees on furlough. It was not quite resolved and possible furloughs could happen again. Unfortunately on Guam, there are no government benefits or unemployment for those who lose a job.
There are some things you should do to help the situation:
• Re-evaluate your budget. Sit down and streamline your budget. See where you can cut corners temporarily. Consider turning your cable off, going to a prepaid cell phone, terminating subscriptions or cutting back on your power consumption.
Tally up your monthly expenses and see how long you can survive on your savings. Are there any investments that you can liquidate? Look for available lines of credit and equity in your home. You may find that you can survive several months.
• Discuss with everyone. Discuss the new budget with your spouse and children. Many feel that they don’t need to discuss finances with their children when in fact you have to as it affects them, too. They will notice the changes that need to be made.
• Prioritize your bills. Try not to let your bills go unpaid. Your first priority should be your rent/mortgage, then utility bills, food, insurance and medicine, in that order, but still pay all your bills.
• Call your creditors. Let your lenders know that you have lost your job. Waiting till your debts and loans are in default will hurt your credit score, which takes a long time to repair even after you are employed. Besides, many employers look at your credit score; you do not want that tarnished. Some creditors will work out a payment plan by reducing your payments or even holding them off for a few months.
• Check your credit score. As mentioned previously, employers may ask to check your credit score. Take a look at your score and make sure there are no surprises. If there are, fix them as soon as possible.
• Do not touch your 401(k). This should be your very last resort. You will incur a hefty tax and penalty for withdrawing from your account early. If you take out a loan against your 401(k) that will be one more expense to pay for. Besides your plan is still growing and compounding from the interest.
• Network. It is best not to burn bridges with your past employers. You may use them to network with prospective employers or even as a reference on your resume.
• Check your social media profiles. Prospective employers can and search for your profiles on social media sites. Be sure that what you have on your profile is appropriate.
• Hold out if you can. Make looking for a job your full-time job. It’s OK to be somewhat picky finding a job if you can hold out a while. Maybe start off with a part-time job. This may be an opportunity to start a new business or even a new career.
Most importantly, don’t get discouraged. Being unemployed is difficult, especially when you have bills that need to be paid. If you are overlooked for a job, learn why. Be patient, eventually you will find employment. Good luck.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at firstname.lastname@example.org and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.