You’ve Lost Your Job! Now What?
So you have lost your job and you life has suddenly changed. You may be in a state of shock and disbelief, confused or just plain scared of what the future will hold. Despite your feelings, you need to move on as quickly as possible and deal with the hand you’ve been dealt.
The first few months will be the toughest. Along with the personal issues you may have you probably have many questions that you need answers to.
- How will I support myself and my family?
- How do I manage my cash flow?
- What is the best way to deal with my severance package?
- What do I do with my pension benefits?
- Can I claim unemployment insurance benefits?
- What about my health insurance?
You need to take stock of everything and develop a plan to help you though this difficult time.
Get Your Finances in Order
You need to have a clear picture of your net worth: What you own and owe as well as what your monthly obligations will be. Develop a conservative but realistic budget for the next 6 to 12 months. Look at your expenses and see if there are any expenses you can defer or avoid, any payments you can reduce, and anything you can give up in the short term.
If you have established an emergency fund or have other investments, you should be on the right track. If not, you need to consider other options such as your severance package or unemployment insurance to help get you through this time.
Severance Options
If you have a choice you may decide to take you package lump sum so that you can invest you money as quickly as possible. However, since your package is almost always taxable you might want to consider spreading out your payments to delay taxes.
Your retirement plan may be a significant portion of your package. You may need to withdraw the funds and pay the taxes, transfer the funds to a new employer’s plan, leave the funds on you old employer’s plan, or roll-over the funds to and IRA.
Health Benefits
Loss of employment may mean a loss of health benefits. In certain circumstances your former employer may allow you to keep your benefits for a period of time. If not you may need to find a benefit plan for yourself and your family. A provider such as eHealthInsurance can provide benefits in the interim.
Develop a Plan
It is east to become preoccupied with your situation and lose sight of the big picture. Whatever your situation, it is important to consider all of your options and develop a plan that is right for you. Life is unpredictable but a well thought out plan will help reduce anxiety and help identify critical issues that must be addresses now. The plan will provide some certainty in your immediate future.
Related Articles
- Creating An Emergency Savings Account or Emergency Fund
- Calculating How Much Life Insurance I Need?
- Should I Buy Insurance?
- Renting Property - A Little Tax Planning Can Go A Long Way
- How To Create A Financial Plan
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Featured Credit Card: American Express Blue For Business
For the small business owner a credit card can be a valuable tool that provides both convenience and cost savings. When selecting a credit card, there are two key features that I argue must be an integral part of any credit card owned by an individual or a business: No annual fee and a respectable grace period. American Express Blue for Business has both of these features and more.
No Annual Fee
A credit card should be a convenience to the user. It provides immediate access to make purchases when you need to make them and helps you plan your cash flows accordingly. Annual fees for the privilege of having a credit card are starting to be a thing of the past. Many people nowadays carry a balance on their credit card and this has become the bread and butter of the credit card companies. I never recommend carrying a balance on your credit and it only follows that you should never pay any kind of fee to your credit card company.
Grace Period
The grace period afforded by your credit card company should be between 25 and 30 days. Having a grace period is critical to both the personal and business user of credit cards. The grace period reduces your need to carry cash and write checks and helps you plan your cash flows accordingly without running into a cash crunch when there are unexpected purchases.
The grace period can help you earn money as well. By placing your cash into a high yield savings account such as an ING Direct account, you can actually earn interest on your money during the grace period.
For more on using your credit card to save money see Tips To Reduce Credit Card Debt Problems.
Other Features
Some other features of the American Express Blue for Business credit card include a rewards program that allows you to earn rewards for almost every dollar you spend. These rewards can be redeemed for travel or other rewards through American Express partners. In addition, there are no limits on the rewards you can accumulate nor is there any expiry date on the rewards earned.
The American Express Blue for Business credit card also has discounts between 3% and 25% on purchases from certain suppliers through the OPEN Savings program. This is another feature that go help you save even more which is a boon to the small business owner.
Finally, the Blue for Business card has full expense management and can be easily integrated with Quicken.
Summary
Key Features
- No annual fee
- APR between 7.99% and 14.99% depending on your credit score.
- 25 day grace period if your previous statement was paid in full by the due date.
Other Features
- Multiple cardholders contribute to your pool of rewards points
- No expiry on accumulated rewards points
- No limit on the number of points that can be earned
- Discounts between 3% and 25% on purchases from certain suppliers through the OPEN Savings program
- Customized reports for expense management and integration with Quicken
- Travel insurance of up to $100,000
- Purchase protection that mirrors manufacturers warranty
- Online or telephone access to your account
Other Fees
- Late payment fees of $19 for balances under $400 and $38 on balances $400 or more
- Over limit fee of $38
- Cash advance fee of 3% (minimum $5)
The American Express Blue for Business credit card is an excellent credit card for the small business owner.
Other Resources
The Orange Savings Account. Great rates, no fees, no minimums.
Quicken Premier - Save 20% + Free Shipping
Related Articles
- Tips To Reduce Credit Card Debt Problems
- Having A Night On Out Cheap!
- Multiple Bank Accounts Help Manage Your Money
- Creating An Emergency Savings Account or Emergency Fund
- Signs of Financial Trouble
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Weekly Round Up: June 21, 2008
Here are some of my gavorite blog articles from the past week.
- Get Rich Slowly was recently named the most inspiring money blog by Money magazine. J.D. published his twelve key beliefs that form the core of the Get Rich Slowly philosophy in The New Reader’s Guide to Get Rich Slowly.
- The Simple Dollar presetned some thoughts on whether or not estate planning planning is needed and when it becomes important.
- Canadian Capitalist presetned a sample investment poicy statement desiged for the individual. It’s a great tool to help you define and refince the objectives of your investment portfolio.
- Five Cent Nickel wrote about how to and not to improve your gas mileage.
Related Articles
- Article Round-Up
- Best of PMT
- Four Quick Ways to Increase Household Net Worth
- How To Create A Financial Plan
- Budgeting vs Cash Flow Planning
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Free Money? No Thanks
My company offers to match its employee’s contributions to their 401k plans. In the program I’m enrolled in my employer will match my contributions to a maximum of 5% of my annual salary plus bonus. The funny thing is that there are a large percentage of people who do not contribute to a 401k and thus don’t take advantage of the match.
I am shocked that someone would turn down free money. The way I see it, I am giving up 5% of my annual salary and in return I am getting a 100% return on my investment right at the bat. Three are very few investments out there that can tout a 100% immediate return on investment. In my case, my plan is fully vested when the company makes the contribution, so if I had to make a withdrawal, I’m already ahead of the game since half of the money was not mine to begin with.
Now I have heard over the years that people say that in these types of program the funds are invested in a mutual fund and the fees associated with mutual funds eat away at the returns. But perhaps those that feel mutual funds are expensive (and I am one of those people) are missing the point here: It doesn’t matter of the funds are expensive as long as they have a somewhat decent positive return and remember half of the investment is free money.
Any matching is better than none in my opinion!
Related Articles
- Emergency Funds: Cash vs. Credit
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Should I Buy Insurance?
Yesterday I wrote about the emergency fund as a self funded insurance policy that is intended to cover the risk of a short term cash crisis or temporary loss of employment. However, for many people self funded insurance is not reasonable in all circumstances and it necessary to use the services of an insurance company. There are many different types of insurance in the market that is designed to cover different types of risks. But how do you decide what to insure?
When evaluating whether you need to have insurance you need to consider whether you can afford to assume the risk and insure the risk you cannot afford. Phillip Brewer of Wise Bread believes that there is no reason to insure predictable even if large. You would not buy an insurance policy to cover your car wearing out but you would buy coverage in case you had an accident. Thus you should budget for the large, predictable expenses (a replacement car, annual property taxes, etc.) and insure those expenses that have a probability of occurring or not and that you can’t afford to cover if they did occur.
What Should Be Insured?
Depending on your level of income, there is really no limit to what you can self insure. If you are considering self insuring you should understand the probability of the event occurring (risk) and whether you could afford if it did occur.
Needless to say most of us should all have house insurance, car insurance, life insurance, disability insurance, and health insurance.
Resources
- Wise Bread - Things to insure, things to not insure
- The Simple Dollar - Do I Need Disability Insurance?
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- Emergency Funds: Cash vs. Credit
- Why Life Insurance?
- Calculating How Much Life Insurance I Need?
- Creating An Emergency Savings Account or Emergency Fund
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