Laid Off, On Strike or Locked Out? How to Avoid Financial Disaster When Off Work
Q: My husband may be laid off from his job. I stay at home and look after our kids and now I’m worried about how we’ll manage without his paycheque. What can you suggest?
A: When facing reduced income, many people wait too long to adjust their spending and end up creating a financial disaster. Take steps right away to bring your spending in line with a lower income level. Apply for EI or income assistance as soon as possible.
Consider all of your costs and look for ways to reduce your expenses. Pay your rent/mortgage and food first, then see whether you can reduce housing-related costs — utilities, cable and phone plans — temporarily. Could you take one vehicle off the road or stop investment contributions for now?
Reducing your expenses is possible to a certain point, but with a busy family, you also need to consider ways to increase your income. Could you take in a student, rent the garage, get a paper route, provide child care or pick up some temporary work? Can you work, even part-time, while your husband cares for the kids?
You might not have enough money to pay debt during the lay-off, so communicate with your creditors to let them know about your situation. Maybe they can help you before you fall behind on payments. If you owe money to your financial institution and fall behind, your institution can use the money in your accounts to pay down these debts without notifying you. Opening an account elsewhere may help you right now.
Stay focused on solutions and limit spending to essential items only. Operate on a cash basis; this is not a time to rely on credit and get into more debt. A family plan may be needed to gain everyone’s cooperation and participation. Don’t be afraid to ask for help if you need it.