If you’re like most people, you live from paycheck to paycheck. But what happens if your paycheck is suddenly cut by 20% or disappears altogether? If you see sequestration or work cutbacks in your future, here are 10 things you can do to do to get ready.
List your expenses. Don’t forget expenses that may not be monthly such life insurance, tuition, IRS, state or property taxes. Be brutal. List your income sources. Be conservative. Where can you cut back if necessary to save?
We all enjoy going out with friends for drinks or dinner, seeing the latest movie or buying something new. But these “extras” cost money you may need in the future. Consider less expensive options – pot luck dinners at home with a rented movie.
If you’ve been thinking of a new car or renovating the bathroom, put it off. Your objective now is to save the money you have and defer future expenses as much as possible. If the layoffs or cutbacks happen, you’ll need the money later.
It’s tempting to increase credit limits or take out new credit cards “just in case” before layoffs or sequestration hit. But that also makes it easier to get further in debt when you may not have the income to make the payments.
Do you have two vehicles? Do you really need both? If you sold one you could eliminate the payments. Even if it’s paid for, you can save on insurance, gas and maintenance. If you have an expensive vehicle with high payments, consider selling it or trading it in on a lower priced or used vehicle to reduce or even eliminate monthly payments. Where else can you reduce debt?
Instead of traveling to a resort or hotel for a vacation, try some time off at home. You can pack picnics and go on day trips to explore your own area. The money saved can go into your “rainy day” account for when it’s needed most.
These are very high interest loans which are easy to get but extremely difficult to pay back. Many people get into a cycle where they keep renewing all or part of the loan and the interest keeps on building until it’s overwhelming.
Keep your 401(k) or other retirement plans intact. If your financial situation worsens and you file for bankruptcy, these plans are usually protected – you can keep them.
Starting a part time or weekend job now can help you sock away some extra money for a financial cushion as well as provide income when the cutbacks or layoffs take place.
Even if you’ve done everything to prepare for financial emergencies, medical bills, divorce, job loss or reduced income can leave you with overwhelming debt. But there are legal solutions for financial problems.
Since 1991 we’ve helped over 106,000 Virginians regain their financial health. Boleman Law is Virginia’s largest consumer bankruptcy law firm.
John Bollinger is a Shareholder at the Boleman Law Firm and is a Vice President in the firm. He is currently the Partner in Charge of the Newport News Office. He has been practicing bankruptcy law since 2000 and joined Boleman Law in 2004. He specializes in complex consumer bankruptcy issues.
John was raised in Oneonta, New York. He currently lives in Williamsburg with his wife and two daughters. John enjoys spending time with his family, fishing, and visiting the beach.