How to Deal With Unemployment

No matter how it happened, you have to go forward one way or another. It’s absolutely necessary that you know what you have to do, how you’re going to do it, and how long you may have to deal with it. Answer those three questions, and believe me, life won’t seem quite as bad as it could have.

Dealing Financially With Unemployment

Outline of Steps to Take:

1. Gather your data
   1. Sources of Income
   2. Create a list of monthly expenses.
   3. Break expenses into two categories: fixed and variable.

2. Make a detailed list of pertinent financial information 

3. Credit Report 
   1. Review for Accuracy

4. Income and Expense History 

5. Income/Unemployment Benefits 
   1. List all Sources of Income
   2. Unemployment Compensation
      1. Make Money Now (part time, odd jobs start a business, etc.)
      2. Check with your State
      3. How to Apply
      4. Eligibility Requirements
      5. What to do if your unemployment claim is denied
      6.  While the appeal process Is taking place

6. Expenses 
   1. List all expenses (monthly, quarterly, annually)
   2. Determine wants vs. needs
   3. Prioritize your spending (no wants only needs)
   4. Track your spending (review monthly)

7. Develop A Personal Financial Statement
   1. How to develop a personal financial statement

8. Dealing With Creditors
   1. How to set up a payment plan

9. Ask For Help

Steps To Take:

1. Gather Your Data 
   To start to get out of debt, start by knowing where you stand. You want to have a complete picture. Here’s what you need to get:
   1. Create a list of all of your sources of income.
      If you are self-employed or have any outside sources of income, be sure to record all sources of income. If your income is in the form of a regular paycheck where taxes are automatically deducted, then using the net income (or take-home pay) amount is fine. Record this total income as a monthly amount. If you have lost your self-employed income list your anticipated unemployment benefits. 
   2. Create a list of monthly/quarterly/annual expenses. 
      Write down a list of all the expected expenses you plan on incurring over the course of a month. This includes a mortgage payment, car payments, credit cards, auto insurance, groceries, utilities, entertainment, dry cleaning, student loans, retirement or college savings — essentially everything you spend money on. Consider all quarterly, semi-annual and annual expenses and divide them by 12 so that they can be recorded in the monthly expense breakdown.
   3. Break expenses into two categories: fixed and variable.
      Fixed expenses are those that stay relatively the same each month and are required parts of your way of living. They include expenses such as your mortgage or rent, car payments, cable and/or internet service, trash pickup, credit card payments and so on. These expenses, for the most part, are essential yet not likely to change in the budget.
      Variable Expenses are the type that will change from month to month and include items such as groceries, gasoline, entertainment, eating out, and gifts, to name a few. This category will be important when making adjustments.

2. Make a Detailed List of Your Creditor Accounts (Credit Cards, Mortgage Loans, Installment Loans, etc.)
   With this list, you will have one place to go for creditor contact information and comprehensive information about your relationship with the creditor. 
   1. Creditors – Name, Address and Phone Number
   2. Account Numbers
   3. Current Balance
   4. Minimum monthly payment
   5. Interest rate
   6. When Account Was Opened

3. Review Credit Report [LINK]

You are looking at your credit report so that you can inform your creditors about your credit history. Your creditor can then see your payment history and will help them decide if you are capable of abiding by any agreement made between you and the credit company.

4. Personal information correct?
5. Review the public records section
6. Review the accounts section
7. Review for inquiries
8. Dispute all deficiencies  

4. Income and Expense History [XLS] [PDF]

Your first tool is a historical listing of all your income and expenses. This is your starting point. The income and expense statement will provide you an overview of where all your money has come from and how it’s gone out.

A budget is a better and more accurate insight into your spending habits. By listing all of your sources of income against all of your monthly expenditures (from required expenses like mortgage or rent payments to discretionary spending like eating out or going to the movies), you get a true picture of your personal cash flow, which will allow you to make better and more informed financial decisions. An accurate budget will also help you to better understand what you can and cannot afford.

If you’re finding your financial situation is changing due to an unforeseen economic downturn or job loss, now is a good time to get familiar with these resources and get ahead of your budget to make sure you’ll be OK in the long run.

5. Income 

Look for other sources of income until you are caught up. For households and individuals, “income is the sum of all the wages, salaries, profits, interest payments, rents, and other forms of earnings received in a given period of time. (This is also known as gross income). 

Look For Ways to Make Additional Money Now [Link]

You should schedule in time to look for a job. However, you should also do what you can to make a little extra money now. Part-time or temporary work can help augment your monthly cash inflows, or you can do odd jobs. Plasma and bone marrow donations can be sources of quick cash as well. Now might also be a good time to consider starting up a home business, or starting a web site that can create cash flow. You might still need a “job” of some sort for a while, but if you have a dream of making money from home, you can start that up.

Unemployment Compensation

However what will probably be new to you and supplement your income will be your “Unemployment Benefits”.

6. Check With Your State Unemployment Office 

 Check with your state unemployment office for information on what benefits you are entitled to. Initial benefits may be different from weekly benefits, there may be a waiting period before you receive payment, and some states have maximum payout amounts or timelines. It’s important to do your research and contact your state’s unemployment agency quickly, so you have all the accurate information you need to collect the benefits you’re entitled to.

1. How To Apply

To receive unemployment insurance benefits, you need to file a claim with the unemployment insurance program in the state where you worked. Depending on the state, claims may be filed in person, by telephone, or online.

• You should contact your state’s unemployment insurance program as soon as possible after becoming unemployed.
• Generally, you should file your claim with the state where you worked. If you worked in a state other than the one where you now live or if you worked in multiple states, the state unemployment insurance agency where you now live can provide information about how to file your claim with other states.
• When you file a claim, you will be asked for certain information, such as addresses and dates of your former employment. To make sure your claim is not delayed, be sure to give complete and correct information.
• It generally takes two to three weeks after you file your claim to receive your first benefit check.

1. Eligibility Requirements

The following are qualifications that need to be considered when applying for unemployment.

• Earnings Requirements: To receive unemployment compensation, workers must meet the unemployment eligibility requirements (for their particular State) for wages earned or time worked during an established (usually one year) period of time. Also, workers must be determined to be unemployed through no fault of their own, so if you quit or were fired, you may not be eligible for unemployment compensation. It will depend on the circumstances of your termination from employment.
• Eligibility Based on type of job Loss: A person is eligible for unemployment if he or she is unemployed for reasons other than his or her own fault, such as a layoff. If you quit or are fired for some form of misconduct, you are unlikely to be eligible for unemployment. However, if you were wrongly terminated from your position, or forced to quit, you may qualify for unemployment.
• Hours Worked Requirements: Additionally, most jurisdictions require a person to meet his or her resident state’s weekly requirement for hours worked or compensation earned for a specified period of time before being eligible to collect unemployment. It can be hard to determine exactly what each state’s rules are, but most people that lose steady, long-term employment through no fault of their own, should meet their state’s minimum criteria for eligibility
• If you were paid as an independent contractor and receive a 1099 form (first check, with your State Unemployment Office), you were not considered an employee and would not be eligible for unemployment. That’s because eligibility for unemployment is based upon being employed by an organization that was paying into the unemployment insurance fund.

1. What to Do if Your Unemployment Claim is Denied

If your claim is unemployment claim is denied consider doing the following.

• If you’ve been laid off, wrongfully terminated or forced to quit, you are most likely entitled to unemployment. But what happens when you meet your state’s criteria for unemployment benefits and apply to receive them, only to have your claim denied?
• If you have filed an unemployment benefits claim and your claim is turned down or contested by your employer, you have the right to appeal the denial of your unemployment claim. Don’t assume that one denial is the end of the claims process. Even if you quit your job, there are cases in which you might be entitled to benefits.
• The process of appealing a claim may vary depending on your locations, so check with your State Department of Labor for guidelines on what to do when your unemployment claim is denied. They’ll also be able to provide you with information on how to file an unemployment appeal.

1. While the Appeal Process Is Taking Place

• Continue to file for unemployment payments as scheduled until you have gone through the appeals process – and don’t press pause on your job search process. Unemployment benefits are generally contingent on the recipient looking for work. You don’t want to get all the way through your appeals process, only to discover that you’re disqualified from receiving benefits because you did not actively job search.
• Not showing up for an unemployment appeal hearing can be grounds for your appeal to be denied. If you are not able to attend, be prepared to provide documentation, e.g. a doctor’s note on why you can’t be there and advise the board in advance, when possible.
• But make a real effort to attend – even the best documentation can’t overcome human bias. Showing up tells the board that you’re serious, reliable, and committed to seeing this through.

• The information contained in this article is not legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law

6. Expenses
   1. List all Expenses (Monthly, Quarterly, Annually)

Expense is the money that something costs you or that you need to spend in order to do something.

7. Determine Wants Vs. Needs
8. Definition of Needs
9. By the term needs, we mean those requirements which are extremely necessary for a human being to live a healthy life. They are personal, psychological, cultural, social, etc that are important for an organism to survive.

7. In ancient times the three basic needs of the man are food, clothing and shelter but with the passage of time, education and healthcare also became integral, as they improve the quality of life. They are a person’s first priority as they are the things that keep us healthy and safe. Therefore, if needs are not satisfied in time, it may result in illness, inability in functioning properly or even death.

7.  Definition of Wants
8. In economics, wants are defined as something that a person would like to possess, either immediately or at a later time. Simply put, wants are the desires that cause business activities to produce such products and services that are demanded by the economy. They are optional, i.e. an individual is going to survive, even if not satisfied. Further, wants may vary from person to person and time to time.

The best way to budget for unemployment is to decide what you need vs. what you want. There is a big difference. It may mean that you have to make some “drastic” changes to your lifestyle. Here are some ideas to cut down on your spending:

• Eating/Drinking Out – Going out for a burger and a beer can add up quickly.
• Phone Plans – It’s not hard to change your phone plans to a cheaper option. Do you really need unlimited texts?

• Grocery Shopping – Try to avoid brand names and look for the specials.
• Books/Movies – Try the library. They have an awesome free selection
• TV/Cable – Do you really need to watch your favorite reality TV show?
• Coffee – Buying a cup of coffee a day, can easily cost you over $1000 per year.
• Vacation – Don’t cancel it, but plan to delay it until you can afford to enjoy it.
• Insurance – Higher deductibles mean lower monthly bills.
• Drive Less – Gasoline is always pricey. Try public transportation. It’s way cheaper.
• Monitor Your Home’s Temperature – A few degrees difference in your home can save you bunches of cash each month.
• Review all expenses

Wants and needs are different for everyone. When assessing your expenses you must keep in mind that you can only deal with your needs at this time and your wants will have to wait.

7. Prioritize your spending 

After you have identified your expenses take the time to prioritize (number 1-10, 1 being the most important and 10 being the least important) them. The most important and most needed goes to the top of the list

7. Track Your Spending (Review Monthly)

Tracking your spending on a regular basis can give you an accurate picture of where your money is going and where you’d like it to go instead.

7. Develop a Personal Financial Statement
   1. How to Set Up a Personal Financial Statement

A personal financial statement is a document that shows your personal assets and liabilities as well as your personal net worth. The equation here is that Assets minus Liabilities equals Net Worth. 

To begin, start gathering information about assets and liabilities. The personal financial statement shows assets and liabilities and net worth at a specific point in time, so just prepare the document with the most recent information you have. 

If you are unsure of the value of assets, do your best to get a reasonable figure. If the lender wants to use the asset for a guarantee on your business loan, they will do an appraisal. 

Some details on these assets and liabilities:

• Cash in a checking or savings account. The most recent balance is OK since these figures are always changing. 
• A copy of the latest statement on your home mortgage, with the balance outstanding. For a mortgage, you may also need a recent appraisal. 
• A copy of the latest statement on your car loan, boat loan, other loans. 
• Don’t include furniture and household goods as personal property. These items have no value to a lender because they can’t be sold to pay off the loan. 
• You can include special items of personal property if they have significant value and you can verify the value with an appraisal. For example, including antiques or jewelry might be appropriate. 
• Include credit card debt in liabilities. Actually, include any debt that may show up on a credit report. 
• Include any debt you have jointly with someone else (called a “contingent liability.” For example, if you are a co-signer on a loan with someone, be sure to put that in the report. 
• If you have unpaid taxes from previous years, these amounts should be included. These taxes include federal and state income taxes and any business payroll taxes, for which you are personally responsible. 
• The lender may want to know your sources of income (see the SBA form below). It’s a good idea to list this information, and be able to show the income through your checking account or business checking account. 

When you have entered all the information on assets and liabilities, the last thing to do is calculate your net worth. If you have a negative net worth (you owe more than you own), so be it. Don’t try to change the document by eliminating liabilities or over-estimating assets. Just let it be what it is.

8. Dealing With Creditors
   1. Setting up a payment plan

If you cannot pay the full monthly amount on certain debts, contact your creditors and explain the situation. Present to them your Income and Expense Statement, Your Credit Report and your Personal Financial Statement. Ask them if they can temporarily lower or suspend the payments until your financial situation improves. You may also write a letter to your creditors and explain how much you can pay them each month. It may help to include a copy of your budget so they can truly see your financial situation.

These steps may not stop your credit from being damaged, but they are good-faith efforts to pay as much debt as you can. They may also help you if your creditors take any legal action against you for failing to pay your debt.

Document all calls with creditors and debt collectors, and send all letters via certified mail so that you can prove that you sent them. 

1. Credit card companies and banks will not settle debts with you until you are several months behind. However, informing them of your current situation may help you because they can temporarily lower payments or reduce interest rates.
2. Be persistent but patient: When you contact creditors, calmly explain the situation. Being polite and respectful will be more beneficial than yelling and screaming. If you need to keep asking for a manager until you speak to someone that can help your situation, do so.
3. Stand your ground: If you are receiving collection calls, explain the situation and your plan. If your creditors harass you, simply hang up the phone. That kind of treatment isn’t acceptable, even if you are behind on your bills.

Stick to your plan: Although it is frustrating to not have extra money, it is important that you keep a strict budget until you improve your financial situation, either by finding a new job or changing your lifestyle.

9. Services Available To The Unemployed
   1. Check on Extended Benefits – Check with your state unemployment office to make sure that you are receiving all the benefits you qualify for.
   2. Social Services There are emergency programs in place to help you cover the costs of food and your rent through each county. You may also qualify for child care assistance while you are looking for a job as well as help with rent or utilities.
   3. Home Affordable Modification Program (AMP) – allows qualifying unemployed homeowners to reduce or suspend mortgage payments for 12 months or more so 
   4. 2-1-1 Call Center – will help to find training, employment, food pantries, affordable housing, and support groups.
   5. Food Stamps – food stamp program, now called the Supplemental Nutrition Assistance Program (SNAP), helps low-income families and individuals buy food.
   6. Medicaid – provides medical benefits to low-income people who have no medical insurance or inadequate medical insurance.
   7. Free Phones – phone service is available to eligible low-income families 
   8. Apply for marketplace insurance – You will be eligible to get insurance through the marketplace once you’re unemployed. Not only will this protect you if you have a health emergency while you’re unemployed (and allow you to get coverage for your existing needs), but it will also be much more affordable than other option

Some States offer classes, instruction on how to write a resume, start a business and opportunities to search for a job online.,

Don’t panic. Follow the steps above and before you know it the worst will be over.

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