There’s been a lot of news lately about layoffs. It seems like nearly every company is going through some type of downsizing to start 2023.
But, what happens if you have lost your job or are faced with a huge income cut?
Losing a job or facing an income reduction is an emotional time when many are already living month to month.
Here are four tips that can help you manage a layoff and keep your finances and credit score from being negatively impacted.
1) Make A Plan and Make a Budget
What are your fixed costs and what unnecessary items can you reduce or eliminate from your budget?
Develop a budget of your mortgage/rent payments, utilities, loan payments and allocated funds for groceries, etc.
It may mean cutting out the ‘extras’ like a cable package or ordering out. You may also want to reduce the amount you’re putting towards your savings, such as RRSPs or TFSAs.
It’s time to live within your means.
2) Call your Mortgage Broker
The key thing to remember is to talk to your mortgage broker before a Non-Sufficient Funds payment happens.
Often your mortgage is your biggest expense in your budget, so we want to have a plan for this payment first. Mortgages are reported on credit bureaus and if there are missed payments recorded on your credit, it will impact your future lending needs.
Some banks and lenders have a ‘miss a payment’ option with your mortgage. If they don’t, we can talk about potentially changing your payment—such as accelerated bi-weekly to monthly—to reduce your payment and free up cash flow.
Being proactive and communicating will help avoid unnecessary stress on top of an already stressful situation!
3) Set Up Minimum Payments on Credit Cards
Still make your minimum payment on time!
If you can’t make your minimum payment, you can call your bank to negotiate a different payment.
Credit card companies are willing to work with you if you contact them ahead of time. There are also new programs released all the time to help people manage their credit payments more effectively so it’s worth giving them a call.
Several credit card companies have a balance protection option on their cards. Contact your credit card company and see if you have that option. Often they will cover your minimum payment if you are unemployed. Take advantage of this before you miss the payment.
4) Contact your Utility Companies and Set Up Equalization Payments
Many utility companies and municipalities offer equalization programs. This helps spread higher winter utility costs over the summer months to fit tight budgets.
While this is a really simple tip, it’s often overlooked when you’re trying to figure out everything else that needs to be done after a layoff.
As a mortgage broker, I’ve worked with folks who have been in all types of layoff situations. If you’re worried about an impending layoff or have just recently been laid off, give me a call.
These are only four tips to manage your finances during this time. There are so many other options we can look at to help you as you find a new job.