“Dear Steve,

When I read the news I get so afraid that I will get laidoff. Business at work seems to be slow and I find myself surfing the internet more at work and reading more of these stories about the pink slips that are coming.

I’ve got bills and credit card debt to payoff and a wife and kids to care for and I’m afraid. What should I do, or maybe, what can I do now?

James”

The Answer:

Dear James,

I’m afraid you are right, the news is not good about jobs in the near future. As an employer even I am not immune from facing those same pressures and potentially reducing staff. Even sites like one of my favorites, The Consumerist, has just laid off some really good writers.

Rather than blow smoke up your ass and give you hollow good news I’d like to give you some honest and from the heart advice that you can use.

1. Losing Your Job Does Not Mean You Suck – When pink slips and job loss notices are distributed it does not mean that you are not a valuable member of the team. In my past I had to once layoff 18 members of a 70 person team. It was horrible at it and cried each time I had to do it. Maybe that shows a weakness in me, I’m not sure. Regardless, it was painful for all concerned.

   As an employer it was not a decision that I took lightly. I fully realized that these were the lives of good people that were going to be hurt by the failure of my business to produce enough income to support them. I was deeply hurt that I had failed them by not finding my magic wand to save them.

   Decisions to let people go were based on a number of factors that had nothing to do with who they were as individuals. Sometimes business is just business and what had to happen to save the remaining jobs.

   I guess what I’m trying to say here is that if you’ve been working hard, contributing ideas and help to the company, and doing your best, you could still lose your job but that it not a negative reflection about you.

   Layoff decisions in big companies come from slash and burn policies to reduce a specific head count or certain departments. Again, that is not personal it is personnel.

   You might find my America’s Job Bank page helpful for looking for a new position.

2. Let’s Assume That You Are Going To Lose Your Job And Start Implementing a Plan – It is always better to plan for the worst and enjoy the best, if that is what fate is going to give you. And so much that life has to offer is fate or divine intervention or just random luck.

   Even before you get notice I think you should consider the following advice now.

   1. Talk Honestly With Your Family Now – Even if you’ve always maintained a facade as a strong provider it is time to sit down with your spouse and lay out the facts. Once the two of you are on the same page then it is time to sit down with the children and be open about the facts now. Let them know what your concerns and worries are. Let them know that there might have to be cuts and ask them to help where they can to reduce expenses. Keep the entire family in the loop so there are no bombshell surprises.

   2. Don’t Buy Another New Thing On Credit – If you might find yourself in a hole, you can stop digging it deeper right now. You can use your credit cards to make a purchase but make sure you are paying for what you buy in full each month. If things get really bad and bankruptcy might be in your future, which it might, then recent credit purchases can pose a problem.
   3. Cut Where You Can But Don’t Eliminate – It is important to prepare for an eventually but you don’t have to run for the bunker right now. If the family is used to going out to eat twice a week, trim it back to once a week and then maybe once every other week. You don’t need to cut out things that bring happiness completely.
   4. When You Face Fear, Bring Hope – You are facing uncertain times and these moments make us face our fears. Actually they just make us focus on our fears and make us feel desperate. The reality is that anyone can lose their job at anytime, and for any reason. Even in your best days there was always a possibility that you could be unemployed. You would have been hopeful then if that had happened, be hopeful now.
   5. Evaluate Most Every Purchase – As you are your wife go forward from this point, spend money wisely and thoughtfully. Start asking yourself why you are buying this thing and if you really need it. Here are some helpful pre-purchase questions to ask yourself, in your head. If you ask them to yourself out loud in line, people will stare.
      

      Pre-Purchase Checklist

      • I feel like I really want this. Why?

      • What does this thing represent to me?
      • Once I buy this, how will it make me feel?
      • If I don’t buy this, how will it make me feel?

      (This list is from page 122 of my book The Path to Happiness and Wealth which you can download for free as my gift to you.)

      If you find that you are purchasing an item because it makes you feel better, you deserve it or it reduces your stress; put it back. Now is not the time for medicating yourself with shopping. Now is the time to be a good steward with what money you do have.

      That means that if you feel like you must buy a name brand of a particular item that is more expensive and you have not evaluated the less expensive alternative, do it now. Just because you have always bought the name brand of an item does not mean that the extra expense is justified, it primarily means that you have associated a benefit from purchasing that product.

      Not that long ago I travelled all over doing some price comparisons and found where I could buy the things we normally use for the least amount of money. You might want to do this also to find out where your money buys the most. Read the article.

   6. Let’s Assume That You Will Not Be Able To Find a Replacement Job – It is better to deal with the issues of not being able to find a job that pays the same amount as you are making, now.

      There are certain realities to go along with that situation. If you do not have enough income to support your current lifestyle, you are going to have to layoff part of your current lifestyle. I guess that’s what trickle down economics is all about, at least in down times.

      You might have to go bankrupt, talk to your mortgage lender about a loan modification, buy generic instead of name brand, drive the family car till is falls apart, etc. All of these things are a reality.

3. What Happens When You Lose Your Job – If you’ve been working this plan then you will be better prepared to deal with the pain and misfortunate of losing your income. At least by thinking about these things in advance you will have better prepared yourself for the eventualities. The most likely solutions when you are not bringing in enough money are:
   1. Only pay the essential bills; food, shelter, clothing, utilities, etc. You will notice that credit cards and other unsecured debts are not on that list.

   2. Look at credit counseling and see if that is a payment you can afford with your new limited income.
   3. Talk to a bankruptcy attorney and find out if bankruptcy is right for you. Many bankruptcy lawyers offer a free bankruptcy review.
   4. Reduce your lifestyle. Move to cheaper housing, rent if you have to. Trim back on expenses that you can’t pay for in cash. Get out of your car lease or refinance your car loan to lower your transportation costs.
   5. Think of your savings account money as water that can’t replaced in a drought. Consume it as carefully and wisely as you can. When it’s gone, it’s gone.

As always, I’m here for you when you need my help. I wish I was there to give you a big hug, goodness knows you sound as if you could use one. We don’t have to tell anybody.

Steve

The Answer:

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Read the full article at GetOutOfDebt.org, click here: I’m Afraid I’m Going To Get Laid Off. How Will I Pay My Bills? What Will I Do?

So much of what we read is all high level safe stuff about what people should do when facing tough economic times. And a whole lot of that advice is good for the masses, but what about what is best for the individual, you.

The government wants consumers not to lose confidence during tough times. The economy needs you to keep spending money to fuel business but when you’ve done your part and you are tapped out, there is no safety net for your financial failure.

Your spending to keep the economy afloat is at the personal risk of the financial health of you and your family. As an individual, the reality is that you are disposable, but as part of a collective of consumers, you are indispensible.

So this article will focus on top ten realities and what you should do as an individual when facing financial insecurity.

1. Cash Is King – While you don’t need to go so far as converting your cash to gold and burying it in your backyard but you should treat cash in hand like gold.

   It is much easier to control the outflow of cash that you’ve already earned and hold than it is to refill the cash reservoir. You need to take an ever more concentrated gaze of the outflow and ask yourself if you really need whatever it is that you are buying. If it does not have to be bought now, don’t. Hold onto all the cash you can.

   Think about it like this, your cash is like water and as you set out across the desert you’d want to ration and protect the water that you started with because you don’t know what situations you’ll run into along the way. It could be a long, hot, dry and dusty journey.

2. Credit is Not Cash – Anything you buy on credit now, that you absolutely can’t pay off this month is going to be a tightening noose around your neck as the weeks and months pass. That credit, when spent, immediately converts from a shiny attractive thing, credit, to a dark and horrid mass, debt.

   Once credit is converted to debt it must be served, you must give up cash to pay for it and if you feed it only enough to make it content, it will cost you dearly over the years and years it will take to pay off.

   You need to stop thinking about available credit as a safety net, it’s not. Start thinking about your credit cards as only a financial instrument that allows you to make a purchase today on borrowed money and repay it tomorrow with your precious cash.

3. Run Away And Live To Fight Another Day – Now is not the time to try to increase your status with things. In fact it is the time to be cool by shedding things. If you can sell the plane you are struggling to keep, sell it. If the lease is up on the shiny fast car, replace it with a used car that costs less each month.

   What used to be shiny and cool is now just going to be a rope around your financial neck. You don’t have to go so far as to wear Birkenstocks but scaling back will definitely be real cool when you are living less stressed than your high flying friends that will be freaking out on how to make it through the month.

   You can always buy most stuff in the future and you’ll be better able to if you shed stuff now because those actions will protect your credit score and credit report. If you try to hold on to all the stuff you’ve got during tough times, I guarantee it will drag your cash or your credit down.

4. Throw Stuff Away – If you are currently paying for a storage place to keep your stuff, go take a second look at what you’ve got in there. Go through all the stuff in there and either make room for it in your home or get rid of it.

   Now is not the time to pay to store stuff. You can use that $150+ extra in your pocket each month.

5. Sell Stuff – Put stuff you can get rid of on eBay or Craigslist or have a yard sale. Just try to get some cash for the stuff you no longer need. If it does not sell, throw it away.

   If you don’t want to hassle with selling it, and you are just that lazy like me, then contact one of the many companies that will sell it for you and keep a percentage for their troubles. You can turn trash to cash and that cash only helps to refill your pockets a bit, or a lot if you factor in the savings for the storage place you just dumped.

6. Do Not Cancel Your Health Insurance – If you are thinking of cutting out your health insurance to make ends meet, don’t.

   All it takes in one unforeseen and unexpected event to bankrupt you with medical bills.

7. Stop Paying Bills – If you’ve paid for the basic expenses like food, shelter and clothing and you don’t have enough money to pay your credit cards, don’t pay them. It will make the credit card companies angry and hurt your credit but it all that can be overcome. Creditors will only be happy when you send in the minimum payment but that will only keep them happy this month.

   The worst that will happen to you if you don’t pay the bills is some late fees, maybe your interest rate gets jacked up, some nastygrams or unhappy phone calls. There isn’t much a debt collector can do when you are friendly, nice and honest on the phone and just tell them you don’t have any money to send them. Try to make the debt collector smile, make a friend of them and help them to have a better day, but under no circumstances should you promise to make a payment you either can’t afford or have to use savings to pay.

8. Don’t Use Savings to Pay Some Bills – What! I know, it sounds crazy, after all isn’t that what savings is for? Well, kind of. In uncertain economic times, if you lose your job or your income is cut back, you may not know when it will be restored to previous levels. You need to use that money to pay the essentials, and not all your bills are essentials. Mortgage, rent, car payment, food, medical insurance, etc., those are essentials. Other bills aren’t.

   Creditors will be pacified for this month when you reach into your savings to pay the bill but when you reach bottom they will not thank you for all the months before that you drained your savings to make them happy. No, they will be just as disgruntled and unhappy as if you had stopped paying them months ago. Draining your savings didn’t change the inevitable, just delayed it, in worse shape, and left you dry.

   If you do anything with your savings, move it to a bit more distant high paying savings account that will earn you more as it sits there and be less accessible to immediate temptation.

9. It’s Not Worth What You Want – If you are trying to sell your house or some fancy car and people keep making you insulting low offers, get off your high horse and take a clear headed look at what it is that you are selling.

   Holding out for more often leaves you nothing. You don’t get cash unless you sell and in any economy the fair price is that price at which the buyer and seller agree. Period. If you need to unload some asset noose around your neck, then you might have to sell it at a loss.

   Far too often people ruin the sale of their home because of the value that they place on their home. When you bought it you were told it was going to go way up in value and when the real estate agent came to help you sell it they said it was worth a lot but you’ve got to look through that smokescreen.

   The original promise that your home was going to go way up was a marketing tool to persuade you to buy it and the high value that the real estate agent told you when you put it on the market was an inflated value to make you think you would get more and list your home with them so they’d get a commission.

10. Consider the Unthinkable – If you have followed all of these steps and you are still finding it hard to survive then you should learn more about the unthinkable – bankruptcy.

    Bankruptcy feels shameful, feels dirty and can be the secret you’ll want to keep from people at work, but the reality is that bankruptcy is a legal and viable way to clear debts that are now dragging you down. The vast majority of people that find themselves in these difficult financial situations wound up there because of factors beyond their control. Either they had their income cut, got sick, had a change of marital status, etc.

    It is a bigger tragedy to watch people struggle along for years trying to satisfy debts when they could have used that time to rebuild a new and better future. You have to ask yourself if it is reasonable for us to allow a family to go month-to-month with no health insurance because they can’t afford it or to go bankrupt, clear bills they can’t afford and now be able to afford health insurance.

    Talking to a bankruptcy attorney to get a free bankruptcy review does not mean you will go bankrupt but it will allow you to become more informed about how bankruptcy may help or hurt you. You can’t make good choices unless you have all the facts. Speak to a bankruptcy attorney for free and learn the reality of bankruptcy for you before you simply decide against it on an emotional level.

11. Remember What Is Really Important – Being able to spend at will and buy what you want, feels good. Having really nice stuff to show people how successful you are, is a high. But at times like this, trying to hold on tightly to what is no longer sustainable creates stress and friction in your life.

    This stress and friction create tension and pressure at work and at home. Suddenly, before you know it, you are living in fear, depression, uncertainty and wherever you turn you can’t see anything good or happy in your life.

    Now is the time to set some new priorities about what is most important. Is it more important to pay that credit card bill you can’t afford or to go to your kid’s game? Is it better to hug your girlfriend and share with her how much you love her, or to fight about what you can’t change?

    Now is the time to find gratitude in your life and to be grateful for the simple daily pleasures. If someone holds the door open for you, thank them. Hold the door open for someone else.

    Random acts of kindness not only make someone else feel better in tough times, but make you feel better also. Instead of enduring your suffering in silence, just do whatever little things you can to be nice and find moments of joy instead of solid days of pain. Trust me, it is a big help.

Source

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• Debt Settlement: Top Ten Most Misunderstood Facts
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• Scott Writes Me and Asks For Help – “We Are Behind And Overwhelmed”
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Read the full article at GetOutOfDebt.org, click here: Eleven Real Things You Should Do to Survive a Bad Economy