Getting by between jobs
Richland Center – Losing your job or facing a drastic drop in income is one of the most stressful events a person can experience. Unemployment can mean sudden lifestyle changes for the entire family. Because there is less money to spend, you must decide how to spend what you have.
Whatever changes unemployment brings, everyone feels the impact. Even though the paychecks stop coming, the bills don't. And when you don't have enough to cover your monthly expenses and pay creditors, you face hard financial decisions.
Concern about how to pay bills and meet day-to-day expenses can become overwhelming. You may be tempted to use credit cards, take out a home equity loan or borrow money, but taking on more debt is generally not a good idea.
Unless your situation turns around quickly, more debt only creates bigger problems, says Peggy Olive, University of Wisconsin-Extension family living agent for Richland County.
"Instead, focus on cutting your spending and working with creditors to reduce or defer your payments until your situation improves," she advises. "Act quickly to cut expenses and make a spending plan so you can pay bills when they are due."
"Taking charge of your financial situation is a positive contribution to your family's wellbeing," said Olive.
Studies have found that many families do not adjust their lifestyles to cut spending until about six months after their income drops. Those six months can bring financial disaster.
Olive offers some tips
• Talk with your family about the situation so that everyone understands and supports the decisions being made.
• Review your income and expenses and balance them as much as possible.
• Try not to use credit while you are unemployed.
You're legally obligated to pay all your bills, so if you think you may have difficulty making payments, talk to creditors right away. Have these conversations before you fall behind.
If one partner is employed, explore whether overtime or a change in payroll deductions could bring extra money into the household.
A drop in income can make a household eligible for tax credits or financial assistance programs. Check out access.wisconsin.gov for eligibility information.
To help people find ways to make ends meet in difficult times, Olive and her UW-Extension Family Living Program colleagues have developed a new financial management tool.
"Dealing with a Drop in Income" uses simple language and examples to guide people as they develop a new spending plan, prioritize necessary living expenses, and gain a better understanding of what can happen if they don't pay their bills. The information also helps prepare people to talk with creditors about their financial situation and includes a sample letter or script for use with creditors.
The publication is available in both English and Spanish versions under the heading "Financial Management Teaching Tools" at uwex.edu/ces/flp/econom ics/resources_flp.cfm.
For more information about handling family finances, contact your local UW-Extension office.
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MANY HATS - Kathy LaShelle from the Town of Merton tries on a handmade hat from Jo's Feltz at the Delafield Winter Market on Sunday, Jan 15. The market is an indoor farmers market and craft fair located at the Delafield Fish Hatchery on the third Sunday of each month through April.
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