Get through unemployment without borrowing
Budget, cut back, work part-time — anything but more debt
Dear Credit Wise,
I'm in a bit of a financial bind. I'm out of money and have no job. Seriously, what do I do? I am job hunting as we speak and also a loan was offered at 14.25 percent to borrow $15,225 to pay off credit cards. This still doesn't put money in my pocket. What should I do to get money fast? -- Karen
Being unemployed and out of money is a bad place to be, but adding a $15,000 loan to the mix will only make your problem worse. It is easy to panic at times like these, which makes this type of loan attractive. But resist the temptation and let's talk about what you can do to, as you say, put money in your pocket now.
Expand your job hunt to include part-time work. While this type of work probably will not pay what you are accustomed to or want, it will serve to give you some income. Accepting a part-time position will also give you some time to continue your job search for a more permanent solution.
Look at your belongings and see if you have things you no longer need and could sell. If you have enough, a garage sale may be in your future. If not, consider an online source for selling select items.
Examine your expenses and see where you can make reductions. Now is the time to tighten your belt and go to a bare-bones budget. Your priorities should be your housing, food and utilities. If you have a car payment, that should be next, along with gas for your car. You will also need to keep up your insurance payments. Student loans and credit cards are last on the priority list, but if at all possible try to make the minimum payments to keep from falling behind.
Even within your priority list, though, there are changes you can make to free up a little more cash. Forgo the takeout and eat at home; turn down the heat and put on an extra sweater to save on your heating bill; turn off the lights and unplug appliances to save electricity; remove extras from your phone, or even consider going to a prepaid phone plan. If you have cable and Internet, look for cheaper plans with fewer channels and slower Internet speed. Consider raising the deductible on your car insurance to free up extra cash monthly.
I know it can be very difficult and it may not be an option for you at all, but you might consider asking a family member or friend for help until you can get back to work.
Be wise with your credit!
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