Preparing for Life Events

Employment

Surviving a Layoff

Losing a job is one of life’s most stressful events. You are faced with question of how you will pay your bills and find a new job. It is easy to become overwhelmed and take actions that may affect you for years to come.

On the other hand, in the long run, a job loss may provide the opportunity for you and your family to pull together to start the financial planning process necessary to help overcome this obstacle.

Financial Strategies

Many people underestimate the time it will take to recover financially from a job loss. They continue with their current spending, often using credit cards to fill in the gaps. Those debts can quickly add up and become unmanageable if it takes longer than expected to regain employment at your previous pay.

Here are some financial steps you need to take to protect yourself in a job loss situation:

1. Employment insurance benefits

• Are you entitled to Employment Insurance Benefits?
• If so, how much and when will the payments begin
• Visit www.hrsdc.gc.ca for a detailed explanation

2. Check your financial benefits

• Are you entitled to severance
• Are you able to keep funds accrued in the company pension plan or do you have to move it to another financial institution
• Do you have unpaid overtime or vacation pay that you’ve earned.

3. Create a new budget

• Determine your sources of income
• Review your flexible and discretionary spending areas paying particular attention to those expenses you are able to reduce or eliminate
• Visit Consolidated Credit’s Learning Centre, www.consolidatedcredit.ca, for a free budgeting guide.

4. Create a plan for your bills

• Try calling your creditors to work out a lower payment arrangement on a temporary basis
• Good advice will help avoid the mistakes that lead to bankruptcy
• A credit counselling agency like Consolidated Credit Counseling Services of Canada, Inc. can be very helpful by working with your creditors on your behalf

5. Make contingency plans.

• Have a professional review of your options
• Do you have assets you could sell (a boat, or an extra car, for example?)
• Could you downsize to a less expensive home?
• Do you have a cash value life insurance policy you could tap?

6. Become creatively frugal.

• Look at each expense and see where you can make changes until you’re back on your feet.
• Eating out, for example, may seem like a necessity when you are busy working but could be stopped while you have more time to shop and cook.
• In Consolidated Credit’s Learning Centre, you’ll find several free brochures to help you cut costs in common budget areas like food, vehicles, and energy.

7. Understand your options

• Contact your lenders if you can’t make your house or car payment
• You should always talk with your creditors before you fall behind,
• Understanding what can happen in those situations may help alleviate the fear of the unknown
• Visit Consolidated Credit’s Learning Centre for free brochures that further explain these topics.