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How to control debt if you’re unemployed

How to control debt if you’re unemployed

October 5, 2016
unemployed
Source: Shutterstock

Being unemployed is a horrible thing. Unfortunately, many Americans are going through this ordeal right now. If you’re one of them, you’re probably wondering what you can do to stay afloat, make your monthly payments and take care of your debt and, most importantly, your credit score.

Don’t worry. Here are some tips to help you out.

Lower your expenditures

The first thing to do if you’re in financial trouble is to change your spending habits. Cut all those unnecessary expenses and free up funds. You will need them to make at least the minimum debt payments. Cable TV, dining out, manicures, these are all things that you don’t need.

Don’t run from your creditors

If you don’t have the cash to make at least the minimum payments, you have to talk to your creditors as soon as possible. Don’t run from them, don’t hide from them. It’s better if you talk to them and inform them that you are unemployed. This way, you’ll be able to work something out. Don’t forget that credit card companies want your business. They don’t want to lose you as a client so they might agree to a solution.

Make payment arrangements

You might be able to propose to your creditors an amount that you’ll be able to pay each month until you find work again. If they agree, make sure that you uphold your end of the bargain. Otherwise, they may not agree to help you again in the future.

Make the minimum credit card payments on time

If you want to take care of your credit score, you have to make at least the minimum payments on time. Otherwise, your account will be reported and your credit score will drop.

Talk you your credit card company. If you can’t make the minimum payment, maybe you can negotiate with them a new threshold. And you can also request the due date be moved so that you can use the funds that come with your unemployment check.

Try to stay away from your emergency fund

If you use all your cash to pay off debt, you’ll only end up borrowing again. Hold on to as much cash as possible, even if you are unemployed.

Prioritize, prioritize, prioritize!

Think about what you need most. You need a roof over your head. You probably also need a car. So make sure that you don’t miss your mortgage and auto loan payments. Your credit score might take a hit, but you can always rebuild it later. However, if you lose your house…

Thomas Hookton

Thomas Hookton is a finance journalist, history buff and science fiction connoisseur. Hit him up via email.

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