More and more all around we are hearing news of employer layoffs and reductions in workforce. Some states are seeing double digit unemployment rates and there are talks of this being a potential double dip recession. The good news is that the best time to prepare for cutbacks is while you are still employed. Here are some of the actions you can take now to prepare for the future:
1. Know your condition: You need to know what you have to work with in order to take objective actions.
a. Take an assessment of what you have and what you owe.You can do this for free using a software tool offered by the Foundation for Financial Planning called "Money 101". For self service: http://financial-assessment.com/money101-fpa.html use referral code 95204. If you would like someone to help you get started, just email me at virginiasaves@gmail.com and request a volunteer mentor.
b. Get your free annual credit report: Your credit report can impact your qualifications for your next position. Know what it says and correct any errors now before you go into job seeker mode. The only "free" credit report can be found at www.annualcreditreport.com; you are entitled to one free report from each of the three credit reporting agencies. This website is your portal to get all three reports.
2. Cut back on spending now! You will need to reign in your expenses as soon as possible. You may need to live on less for a while until you can find employment again. Unemployment will not replace your income, so you will need to increase savings to help you sustain your needs.
3. Credit Cards no more: If you are using credit cards for monthly purchases, you will need to abolish that practice right now. You will need to establish the discipline of living on less for a time.
4. Involve the family: Every member of the family can be a part of your new frugality reality. Children have great creative ideas for cost cutting and with everyone involved, there is both support and accountability for spending decisions.
5. Stockpile Savings: Save as much as you can in preparation for your lean season. Even if the feared reduction doesn't happen having the savings in place can provide your family security for the future and can be redirected for larger purchases in the future (like replacing your car at the end of its life). Financial Advisors recommend having enough savings to replace your income for the anticipated time of unemployment. Historically 3 -6 months of income was the recommendation, but statistics indicate that the average unemployment period can be up to 9 months. Every bit you save will help reduce your financial stress during your job seeking time. For encouragement and help with getting started in savings join the savers club at www.virginiasaves.org
6. Position yourself for job search: Update your resume and familiarize yourself with the employment options available. Seek out additional training if needed to upgrade your job opportunities. You can post your resume on line at Virginia Employment Commission's website http://www.vec.virginia.gov/vecportal/seeker/seeker.cfm. Also consider visiting a local workforce development center and brush up on the interviewing techniques you will need.
7. Pay your bills on time: A factor often overlooked is the impact of your credit score on employment options. Many candidates who would otherwise be candidates for employment may be eliminated from consideration because of negative factors on their credit report. Unemployment is not an excuse to not pay bills; but you may want to see if your credit cards or your loans have provisions in them for unemployment.
8. Stay in touch: Networking among your friends and coworkers may give leads to potential opportunities for jobs. Many jobs are not posted, but are found by word of mouth. Let your circle of friends know that you are looking and let them look for you. As jobs are made available, they will be thinking of you and let you know.
If you are faced with the prospect of cut backs, now is the time to shore up your condition and prepare yourself for the future. It is always good to have a plan "B" just in case and now is the time to build that plan to position yourself for a short recovery period and a launch into even greater future success.
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