What to do (and not do) when youre unemployed

What to do (and not do) when you’re unemployed What to do (and not do) when you’re unemployed It’s one of the scariest positions to be in. It’s the thing that you hope will never happen. But unemployment is real and many of us find ourself in the midst of it at some point in our lives. Regardless of how long you’re unemployed, it can wreak havoc on your peace of mind and your finances. There are, however, some steps you can take to try to limit that negative impact. Many of these steps will also protect your credit in the long run.File for unemploymentI wrote last week about when and how to file for  unemployment benefits. This is a great safety net offered by our federal and state governments. If you’re eligible, make sure you file so that you can have some money coming in while you search for a new job. There’s no shame in taking advantage of the programs that were created to protect us when we’re vulnerable.Alert your student loan providerIf you’re having a financial hardship, you can  defer your student loans. If you’re unemployed, that definitely counts a s a hardship, and your student loan servicer understands that. They would rather you defer your loans now and stay current on payments later. So, reach out to your provider and tell them what is going on.Putting your loans into deferment will protect you from late fees and penalties. It will also protect you from having missed payments put on your credit report. These sorts of marks can negatively affect your credit score for years, which will impact your ability to get future loans and credit.Apply for marketplace insuranceIf you’ve lost your job, you’ve most likely lost your health insurance as well. Since losing your job is considered a life event, you will be eligible to get insurance through the  marketplace  once you’re unemployed. Not only will this  protect you  if you have a health emergency while you’re unemployed (and allow you to get coverage for your existing needs), but it will also be much more affordable than other options, like COBRA (see more about that bel ow).PS: You don’t have to get laid off in order to apply for marketplace insurance. If you leave a job for any reason, you’re eligible. The amount you will pay each month will determine how much you will be earning. Fun fact: I have Kaiser Permanente insurance through the marketplace now that I’m self-employed. It’s super affordable, so I don’t hesitate before going to the doctor.Search for new jobsIf you file for unemployment, you will be required to apply for at least three jobs each week, and show proof that you’ve done it. Not only does this ensure that you’re getting your benefit check, but it’s a good accountability measure to make sure you are staying on top of your job search.If you don’t know where to start, reach out to the people in your networks! There are so many people out there who want to help you when you’re struggling. Reach out to friends, former colleagues, and acquaintances who work in the field you’re interested in. Maybe they can’t lite rally get you a job, but they may have advice or leads for you. Check out listservs like the  WIN list  to get started!Turn to your emergency savingsHopefully, you’ve been able to build up some sort of  emergency savings  for times like this. And if you haven’t yet and are still employed, start prioritizing it now! It can be scary and frustrating to have to use your emergency savings, but that’s literally what you saved it for. Losing your job is definitely an emergency, and you need that money in order to keep a roof over your head, food in your belly, and your bills current. So I am giving you permission to use your emergency savings on your bills in this scenario.Ask for helpWhen my dad was unemployed for six months when I was a kid, he still had bills to pay and three children to take care of. To make matters worse, he had previously taken out a 401k loan (you’ll see how I feel about this below) for home improvements. It turns out, when you quit or get laid off, you have to pay back your 401k loan very quickly or else you’ll get taxed and penalized as if you withdrew early for retirement. My dad wanted very much to avoid this penalty, so he asked his father if he could borrow money to pay it back. Luckily, my grandfather had that money and was able to loan it to my dad. He did charge interest so that he wouldn’t lose money himself, but it was a fair rate and was better than my dad could have gotten from a bank loan. This helped to prevent a lot of stress and loss of money, so I’m grateful that my dad turned to my grandfather for help when he needed it.Of course, borrowing money from loved ones can get really complicated. It can cause problems in relationships and make things awkward. So if you do borrow money from a family member or friend, make sure to document your agreement in writing. Map out a repayment plan with a deadline. That way, everyone will be on the same page, and no one will get frustrated or resentful. If you end up having tro uble paying the money back on time, be honest! Have a conversation with your loved one so that they know what’s going on.Don’t borrow from your retirementThis is so, so, so important. And I will yell this from the rooftops for the rest of my life. Never borrow from your retirement! You will be much worse off later if you do this. Like I mentioned above, if you borrow from your retirement account before the aged of 59.5, you’ll be penalized. You will have to pay taxes and fees for withdrawing early. This means that you will lose a lot of that money you’ve diligently saved for your retirement years.Plus, even if you’re able to pay that money back eventually, you’ll have lost money. If you attended the  July Money Circle gathering, you know that  compound interest  is your friend. This means that the longer your money is out of the market, the less it’s able to grow on itself. So you should try to keep your investments in the market no matter what. Your 65-year-old self w ill thank you.Don’t only rely on COBRAAfter you lose or leave a job, you typically get a letter in the mail about  COBRA  insurance. If you don’t know what COBRA is, it stands for  Consolidated Omnibus Budget Reconciliation Act of 1985, which was a law passed that requires there to be an insurance option for those who leave employment.COBRA is available whether you left your job voluntarily or not. You don’t have to be laid off in order to use it. COBRA is typically available for you to use for about 18 months, if you’re unemployed or underemployed for that long. It’s a great benefit that was the only option for insurance covered before the Affordable Care Act was passed. If you’re unemployed, don’t automatically assume that COBRA is your best or only option. Compare benefits and costs to the insurance plans in the  healthcare marketplace. You might find plans with more coverage for a lower cost.Don’t rely on your credit cardsOne of the keys for financially protectin g yourself is to not use your credit cards unless you have the money to pay them back. Of course, this can be impossible when you have bills to pay and mouths to feed, with not much money coming in. But if you have other options than using your credit cards, it’s best to do that. Otherwise, you may find yourself deep in debt even once you’re employed again.If you do have to turn to your credit cards to get by, you do have options to protect yourself. Call your creditors and let them know about your situation. The thing is, they want to get paid, so if you can’t pay your bills, that hurts them too. Call them and ask them if it’s possible to lower your interest rates while you’re unemployed, so your interest charges don’t balloon and make it harder to make your payments.You should also find out if you have  payment protection insurance  on your current credit cards. This is a benefit that will suspend your interest rates and pay your minimum payment for a period of time. I t can prevent you from having missed payments that will be reported on your credit report, which will hurt your credit score. Of course, there is a monthly fee that comes along with this protection, and you are not able to get the insurance once you’re already unemployed. So if this is something you feel like you might need someday, look into it now.Maggie Germano is a feminist and financial coach for women. She helps women improve their relationship with money so they can take control of their financial future. She does this through one-on-one financial coaching, workshops, writing, and speaking engagements. She also founded Money Circle, which is a safe space for women to talk about money without feeling judged. It’s a way to create community and openness around personal finance. Passionate about many issues affecting women, Maggie is a member of the Women’s Information Network and was trained as a salary negotiation facilitator by AAUW.This article first appeared on Bossed Up.