Real Talk: Sudden job loss

Losing your job feels awful, but with a little bit of planning there are steps you can take to ensure you’re financially prepared to figure out your next move.

There’s no way around it—losing your job feels awful.Whether you’re living paycheque to paycheque, or you have savings to fall backon, losing your steady source of income can impact your life and packs anemotional punch. But there’s no need to panic. With a little bit of planning,there are steps you can take to manage your budget and ensure you’refinancially prepared to take a breath and figure out your next move. 

We spoke with Lisa Purchase from Leading Edge Credit Unionfor some honest advice about how to manage financially after the sudden loss ofa job.  

The first thing to think about—once you recover from theinitial shock— is to ask about a severance package. This includes the pay andbenefits some employees are entitled to receive when they leave their place ofwork. Severance pay acts as a nice financial cushion for the near-term, and dependingon the circumstances of your termination, you may qualify. From there, it’slikely that employment insurance is an option. Depending on what you weremaking previously, this could be a significant pay cut—but that doesn’t mean youcan pull the plug on loan payments, mortgages, and other important bills. 

“The last thing we want is for you to lose your credit”,says Purchase. “Sit down with a financial expert and work out a plan together.It might seem tedious, but start by mapping out your monthly expenses andmaking a budget.”

Once you’ve identified all of your key costs, it’s time tolook at where you can find some wiggle room. Purchase explains there are waysto take the pressure off when it comes to your loan payments. “Let’s say youhave a loan payment of $600 bi-weekly. If you aren’t able to cover that whileon employment insurance, your financial institution can set you up withtemporary interest-only payments. And if you’re in a mortgage, we’ll always ask if you’ve purchased job loss insurance.”

Even when things are tight, it’s important to keep yourcredit in decent standing. Having a poor credit score can impact your ability to make decisions and purchases down the road. By decreasing your loanpayments, you can keep your credit rating in check until you have a new job, or are feeling more financially stable. Until then, look at all of the ways youcan make budget adjustments. Can you scale back your cell phone plan? What about other non-essential expenses like entertainment and eating out?

“Don’t stretch yourself so much each month that you can afford your debt payments”, says Purchase. “We always want to make sure clients have cash flow and that their debt ratio is manageable.”

Scaling back is never easy, but with a few lifestyle tweaks, and little advice from a financial expert, you can make it work while you figure out what’s next. 

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