When unemployment hits home
How to survive tumultuous times
Monday, February 23, 2009
Perhaps you were expecting your company’s layoffs. You knew business has been very slow for quite some time. You even started to prepare for it, boosting how much you were setting aside in your monthly savings account.
Or maybe you or your spouse’s job loss caught you by surprise.
Whatever the case, losing a chunk of the family’s income has left you reeling.
The economy seems to be spinning out of control. Your retirement accounts have lost thousands of dollars. Your bank pulled back on your untapped equity line months ago.
You have money in savings but will it be enough?
Before allowing panic to overtake your life, take a deep breath, experts say.
"Maybe that is easier said than done, but it is important to remember you will bounce back from this. You have just been sidetracked," says Keith Hill, a certified financial planner and a financial advisor with Edward Jones in LaGrange. "You want to keep a level head."
Downers Grove therapist Breda Doak agrees.
"One of the stressors is the initial shock. People often wonder, ‘How do we continue our lifestyle?’ Well the answer is that you don’t," she says.
Although cutting back on the extras in life can be challenging and disappointing, remind yourself this is a temporary situation.
Now is the time to create a budget. Record your household expenses and sources of income. Additionally, write down all of your liquid assets (investments you can use without paying a penalty) and write down any assets with tax consequences.
Do not rush out and cash in your retirement accounts, Hill says.
"You may have no choice but to cash in long-term savings accounts at some point but do not do it right away," he says.
Remember that withdrawing money from certain types of accounts, such as a 401k, have tax consequences.
Set up a meeting with your tax adviser and your financial planner before you make any major financial decisions. This will ensure you understand the ramifications of your choices and will minimize the chance of overlooking something. Additionally, if you do not have a life insurance policy, begin the process of securing an individual policy, Hill says.
Develop a plan of action for spending your resources that prioritizes which assets will be cashed in first. If you reach the point where you need to begin cashing in your retirement funds, you might want to consider withdrawals in small amounts.
Another source you might want to tap is your home equity line. Again, you will want to consider the current interest rate and what you expect it to be in the future.
In many cases, unemployment benefits are available. Keep in mind the state does not take out taxes, and unemployment wages are taxable income.
"Think carefully about what to do and you will survive this setback and achieve your financial goals," Hill says.
Dealing with emotions
Family relationships can be stressed when one wage earner is out of work. Expect your partner to vent their feelings of anxiety, fear, frustration and discouragement. This is part of the process, Doak says.
"It is natural to want to be a cheerleader and say, ‘It’s not that bad’ or ‘Don’t worry,’ " she points out. "But their reaction likely will be to shut down. Allow them to find their way and just listen to them talk about their feelings. Once a person releases their emotions they feel much better the next day."
Being emotional doesn’t mean a person is depressed.
"When someone is really emotional, that’s healthy; when people are depressed, they actually talk less."
Signs of depression include an inability to get out of bed, no motivation, sleeping less or more, abusing alcohol or a feeling of being overwhelmed.
Many counselors and mental health agencies offer a sliding pay scale, so do not hesitate to ask for help, Doak adds.
What about the children?
Be honest but careful about what you say and how you say it—even when children are in their teens, Doak advises.
"The kids have to be on board because it means that life is going to change for them," she explains, adding that kids adapt quickly and usually are willing to help. "It’s important to reassure them that this is a temporary and solvable problem."
Doak encourages parents to talk privately about serious issues. Arguments should take place away from the kids so parents’ frustrations, fears and concerns are not heard.
"Parents are modeling what it is like to handle problems. This is an opportunity for them to teach their kids how to solve a life-changing event."
What if you lose your cool in front of the kids or have a crying fit?
Children hear and sense more than adults think, so ask them if they have any questions, especially after there has been a meltdown at home.
"It is important to help them understand that just because you broke down, it only means that on one day you didn’t handle things well," she says.
Help finding a new job
• For sample resumes, cover letters and thank you letters in addition to job postings and interviewing tips, go to www.CvTips.com. This comprehensive job search site has loads of information.
- • To look at Illinois-related information, log on to www.cvtips.com/usa_job_search/illinois.html.