Tips for Surviving Job Loss

From the National Foundation for Credit Counseling

1. Allow yourself to be upset or even afraid.  These are natural reactions.  However, should they become intense, be willing to seek professional help.  Talking things through and hearing another person’s perspective can bring relief and restore your positive outlook.
2. Resist an outburst in front of your boss.  Remember, you may need him or her as a reference for a future job.
3. Take advantage of any assistance your workplace offers.  Many companies provide placement assistance, job retraining and severance packages.  Make sure you are aware of all benefits offered.
4. Apply for any applicable government benefits.  Your HR representative at work should be a good resource.  Stay up-to-date on benefits changes for which you may be eligible.
5. Update your resume.  If you’ve been at your current job for a while, you may need professional help bringing your resume current.  Today resumes are often reviewed by computers and scanned for key words, so you’ll want to be certain to reflect your skills in the way that benefits you most.
6. Make finding a job your new full-time job.  Get up every day, get dressed appropriate for the job you seek, and from 9:00 until 5:00 look for a new job.  This search may be online or networking or actually calling on prospective employers, but the important thing is that you put yourself at the front of the line.
7. Resist the urge to solve your problems by spending recklessly.  It may feel good for the moment, but the high of spending won’t equal the low of dealing with additional debt when there is no income.  Further, new credit is hard to come by, so use your existing credit lines wisely.
8. Don’t be tempted to live off of your credit cards.  Someone with a good line of credit could actually support the family at the current standard of living by using credit, but there’s no guarantee a new position will materialize any time soon.  One rule of thumb job counselors use is to expect one month of job search for each $10,000 of annual income you hope to replace.  In other words, if you seek a $50,000 salary, it may take you five months to land that job.
9. Take a personal inventory.  Consider all assets, income and expenses.  Hopefully, you will not have to liquidate any assets to survive, but it is good to know what you have to fall back on.
10. Drastic times call for drastic measures.  Nothing is off-limits.  If necessary, consider selling the second car, or any recreational vehicles, real estate holdings, rental properties or jewelry.
11. After reviewing income versus debt obligations, if there is not enough money to make ends meet, calculate how much is needed to meet the basic household living expenses.  Your goal is to pay everyone, but if you must make a choice, keep your home-life stable by paying your rent or mortgage, utilities, childcare, insurance premiums, health care, food and keeping gas in the car. 
12. Have a family meeting that includes the children.  You don’t want people pulling in different directions, and a joint effort yields a greater result.  Make cutbacks wherever possible, knowing that this austere lifestyle will only be temporary.  Resolve to stop all non-essential spending immediately.
13. Tracking your spending is always a good idea, but when money is tight, it’s essential.  Write down every cent you spend.  At the end of 30 days, review where the money went and make conscious decisions on where to cut back.  You’ll be amazed by how much you can save and not even feel the pinch.
14. Contact your creditors to arrange lower payments.  Most major credit card issuers have in-house help programs.  Explain your situation and what you’re doing to resolve it.  The creditor may be able to temporarily lower your monthly payment and reduce interest.
15. Call your mortgage lender or servicer and inform them of your situation.  Be prepared to provide them with documentation of the setback, and have a resolution plan in mind.  Since the average consumer doesn’t know all of the loan modifications available, it is smart to first sit down with a certified housing counselor and map out a plan.  This way, you’ll know that you’ve selected the option that is best suited to your situation.

Needed for America: A New Commitment to National Financial Literacy

Enclosed is an excerpt from testimony given on May 13, 2009 by Susan Keating, president and CEO of the National Foundation for Credit Counseling to the U.S. House of Representatives Committee on Financial Services Subcommittee on Housing and Community Opportunity calling for increased congressional support of financial literacy.

…Today, we are focused largely on damage control. But looking beyond the current crisis, the NFCC feels strongly that we need to do a better job of preventing personal financial problems through financial literacy programs that provide consumers with basic money management skills and the financial know-how to take charge of their personal finances and use credit responsibly. While good money management cannot offset the impact of external events such as losing a job or a costly health problem, it can help consumers to better weather economic ups and downs and enable them to avoid the types of financial mistakes that lead to mortgage defaults, bankruptcy, and general problems with credit. Better outcomes for individuals and families will collectively add strength to our national economy. 

Susan Keating

A recent Wall Street Journal article speculated that people tend to think they understand money because they’ve been handling it since grade school. “More likely,” the Journal added, “they have a basic understanding of spending, which is why so many households are in such dire straits these days.”

 Whatever the reason, it is clear to us, from both our counseling experience and the NFCC’s Financial Literacy Survey, that too many Americans lack the financial skills they need and too few are stepping forward to get help. 

For example, our recent Financial Literacy Survey found that 41 percent of Americans grade themselves as a C, D, or F on personal financial knowledge; only 42 percent keep close track of their spending; and more than quarter say they do not pay their bills on time. As noted earlier, 28 percent of mortgage holders admit that their mortgages have turned out to be different than expected when they took out the loan. Numbers like these scream of the need for better financial education.

Toward that end, the NFCC believes that basic finance and money management should become a mandatory part of the standard school curricula in every state. Surveys show that financially literate consumers are more likely to make their loan payments on time and less likely to default. That should be a powerful incentive to everyone, especially creditors, to promote financial education. At a time when lenders are trying to reduce their risk, it is a good time for them to promote proven risk-reduction strategies such as financial education by offering incentives such as better credit terms to consumers who have completed such programs. Consumers, too, would certainly avoid problems if they took part in financial education before their finances deteriorated.

A number of organizations, including the NFCC, have been working on financial literacy for some time. Collectively, we’ve developed effective and relevant course materials and other education tools. What we don’t have is a true national strategy or a national delivery system. If we are serious about financial education, we need to provide consumers as well as lenders and other third-parties involved with incentives to attend classes, secure funding to support education services, and also find a way to measure results so we know what works and what doesn’t.

We are further convinced that the federal government can and must provide leadership in this area. Both Congress and the President support legislation to extend consumer protection by requiring new disclosure requirements for credit cards and restricting some practices that have made it easier for consumers to accumulate excessive debt and harder to pay it back. But no legislation can do more for consumers than they are willing to do for themselves. That is why we feel so strongly about financial education. Ultimately, financial education IS consumer protection, and it must be a priority.

To read the entire tesimony click here.

Top Ten Basics for Controlling Your Financial Future

The following tips were provided by the National Foundation for Credit Counseling:

1. I open my bills the day they arrive. This may seem like common sense, but everyday people walk into an NFCC Member Agency with grocery bags filled with unopened bills. Ignoring the problem won’t change anything, but facing the facts and developing a plan will.

2. I review my monthly creditor statement thoroughly. Consumers not only need to be aware of the amount they owe and payment due date, but should check their statement for unauthorized charges which could indicate ID theft, rate changes, credit limit changes, and any additional fees that might have been added on. Contact the issuer immediately if you observe anything out of the ordinary on your statement, or if the terms have changed.

3. I pay my bills on time. Late fees can be in the $40 range, and one late payment can ding your credit score by as much as 100 points. If you’re a procrastinator, travel, or are just plain unorganized, set up automatic bill paying to make sure you’re never late with a payment.

4. I record each check I write, along with any ATM withdrawals. Overlimit and Non-sufficient Fund fees can be as high as credit card late fees. Even if your financial institution allows you to exceed your balance, you’ll pay a hefty price for that courtesy. Record all transactions and know where you stand at all times.

5. I do not max out my credit card limits. Utilizing all of your available credit will likely backfire on you. Creditors like to see people responsibly manage their credit by using only 30 percent or less of what’s available. Maxing out your cards could indicate that you’re in financial distress and move you over into the risk category in the creditor’s eyes. That could equal higher rates and lower credit lines moving forward.

6. I track my spending and know where my money goes. You are relinquishing control of your financial future unless you have a keen awareness of your spending habits. Many people feel that having a budget would restrict them, but in reality a spending plan frees you to use your hard earned money exactly as you deem best. Track your spending for 30 days, organizing the results by category. Once you see your spending in black and white, it will put you in the financial driver’s seat where you belong.

7. I have at least one month’s income earmarked for emergencies. Unanticipated expenses have been known to wreck the best of budgets. Without a rainy day fund, when the emergency arises, you have to either pay for it by charging, often adding to an already burdensome debt load, or grab cash from another area, thus neglecting that payment. Start by putting 10 percent of each paycheck into an emergency account. At the end of a year, you’ll have a little more than one month’s income stashed away, which will be a welcome safety net.

8. I have three to six month’s income saved in the event I lose my job. Job losses have affected almost every employment sector, thus no one is immune from the pink slip. The time to prepare is now. Without a paycheck, cash is indeed king. Accumulating this much money can seem like a daunting task. However, no one has ever regretted having significant savings to fall back on during hard times. Recognize that you’re on a slippery slope if this element is not a part of your overall financial picture.

9. I have an annual insurance check-up. No one should be over-insured or under-insured. The way to avoid this is to review your policies once each year with your insurance agent. Make sure that you understand exactly what is covered and what isn’t, as the last thing you need in an emergency is a bad surprise. If you don’t understand the lingo, ask for further explanation. Inquire about ways to save on your overall insurance costs without sacrificing coverage.

10. I have a well thought through plan for tomorrow, and am executing it. People have short-term and long-term goals, and we need to plan for each. An example of a short-term goal is a summer vacation. Long-terms goals are things such as a college education for your children and your retirement. Such financial realities cannot be ignored, nor will they take care of themselves.

The National Foundation for Credit Counseling (NFCC), founded in 1951, is the nation’s largest and longest serving national nonprofit credit counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior and build capacity for its members to deliver the highest quality financial education and counseling services. NFCC Members annually help more than three million consumers through close to 850 community-based offices nationwide. For free and affordable confidential advice through a reputable NFCC Member, call 1-800-388-2227, (en Español 1-800-682-9832) or visit www.nfcc.org.

Top Credit Card Issuers Provide Payment Relief to Consumers

Responding to the “Call to Action” of the National Foundation for Credit Counseling (NFCC), the nation’s top 10 credit card issuers have agreed to provide additional relief to consumers struggling to repay their debts.

 

“This represents a significant action on the part of the creditors to take additional steps to help consumers, which is our collective mission,” said Susan C. Keating, president and CEO of the NFCC.  “This will provide those in debt with more options to stabilize and rebuild their economic lives.” 

 

For more than 40 years, consumers have avoided bankruptcy and benefited from repayment programs commonly referred to as “debt management plans” (DMPs) through which creditors provided some repayment concessions, including waiving late and over the limit fees and a reduction in interest rates.  However, in these tough economic times, fewer consumers have sufficient income to be eligible for, or the ability to maintain, a traditional DMP, often leaving bankruptcy as the only option. 

 

In response to a need to make better alternatives available to struggling consumers, the NFCC issued its “Call to Action” last fall, calling on more creditors to take additional steps to make DMPs more affordable for people in troubled financial circumstances.  The NFCC also expressed its appreciation on behalf of struggling consumers to those card issuers already providing significant concessions aligned with the “Call to Action.”  The “Call to Action” set the end of the first quarter of 2009 as the target date for adoption and implementation.  Together with the “Call to Action,” the NFCC created a strategic partnership of NFCC Agencies and Association of Independent Consumer Credit Counseling Agencies (AICCCA) to work with the top 10 credit card issuers. 

 

As of March 31, the top 10 credit card issuers have agreed to implement the changes necessary to provide both a more affordable “Standard” DMP and a “Hardship” DMP (together, the “Call to Action” DMPs) for consumers who are seeking to avoid bankruptcy, but who do not have sufficient income to qualify for a traditional DMP.  The key elements of these two new DMPs will allow consumers to maintain a reasonable monthly budget, establish a savings account for economic emergencies, make fixed monthly payments more affordable, and be out of debt within 60 months.

 

Those creditors supporting the “Call to Action” are American Express, Bank of America, Capital One, Chase Card Services, Citi, Discover Financial Services, GE Money, HSBC Card Services, U.S. Bank and Wells Fargo Card Services.  The NFCC urges all other consumer lenders to follow suit.

 

 “Many consumers are facing serious financial problems, and they should be given every opportunity to qualify for an affordable program that meets their individual circumstances and that puts them back on the road to financial stability,” said Keating.  “We applaud these creditors for recognizing the need to do more for consumers who are trying to avoid bankruptcy, and need some additional help with interest rate and fee waiver concessions so they can repay their debt.”

 

Consumers seeking more information about or eligibility for a “Call to Action” DMP should contact the NFCC Member nonprofit credit counseling agency in their area by calling (800) 388-2227 (en Español (800) 682-9832) or visit www.nfcc.org.