Tips for Surviving a Layoff or Reduction in Income

Would you be able to make ends meet if you lost your job? With employees throughout South Texas being laid off or working fewer hours, it's definitely a question worth pondering.

"It's hard to survive any reduction in income because too many people live from paycheck to paycheck," says Kim Womack, Consumer Credit Counseling Service of South Texas. "Because most don't have extra cash lying around, a loss of income has an immediate impact on our ability to pay the bills. People need to have a plan and savings in place just in case," adds Womack, director of education.

Many families wind up falling behind on their payments a month or two after a layoff. Part of the problem is that the typical household has little in savings and investments. CCCS offers advice that will help you gather the financial resources necessary to pay the bills during a layoff.

Scale back your lifestyle. Access to credit allows many to live beyond their means. Learn to live on less so that you can do it more confidently if forced to.

Organize your finances. Create a target budget and track spending for several months. Consider purchasing money management software programs to help get a handle on your money. Begin planning ahead and saving for annual expenses.

Create an emergency savings fund. Your income may stop but the bills won't so you'll need enough in liquid savings to weather a three to six month period.

Reduce your expenses. Consider refinancing your mortgage, shop around for better insurance rates, and evaluate every expense to determine if it can be eliminated or scaled back.

Increase income to increase savings. Maybe you could take a second job, or an unemployed spouse or child could go to work. Jump start your emergency fund with proceeds from a garage sale, tax refund, or bonus. Pay down debt. Pay off credit cards and avoid making any credit purchases, especially for big-ticket items. Squeeze a few more years out of your car and washing machine.

Get help. If you can't get ahead despite your best efforts, consider credit counseling. A certified counselor will analyze your situation and make recommendations.

Although layoffs and cut backs are occurring in our area, says Womack, most people will keep their jobs. "However, it doesn't hurt to get your financial house in order just in case. You'll sleep better knowing that savings is there."

CCCS of South Texas is a nonprofit, community service organization that provides confidential counseling, guidance, debt repayment services, and educational programs. CCCS is a United Way agency and a member of the National Foundation for Credit Counseling. To schedule an appointment locally or to attend a class, call CCCS' main office at 800-333-4357.