What do people do when they do not have enough money to pay all their bills?
What do you do when you lose your job and you have no money coming in to pay your bills? You have everything to pay....need medications....need food...just even the basics you can't even buy to survive. What should you do?
Best Answer - Chosen by Voters
Unfortunately, some people use credit cards and once they get a job they can start to work on paying down the balance. Welfare is also an option in situations like this. They also apply for unemployment until they can get back on their feet. If there is a food bank in their area, they can get free food from there. People can also turn to family in times like this. I'm helping my mom with gasoline for her car right now. The last resort would be to take valuable things to the pawn shop (not highly recommended). There are all kinds of things one can do.
Coping with Unemployment
To cope with unemployment or sudden income loss, you can do specific
things to help manage until you find another position or until business picks up.
Take Care of Yourself
A job loss may change the way you think about yourself. Developing
positive habits can play a major role in maintaining or regaining
your self-confidence and moving ahead.
• Pay special attention to what you eat; emphasize whole grains,
vegetables, and fruits. Go easy on sweets and fats.
• Exercise. A brisk 20-minute walk three to five times a week can do
• Avoid excessive use of alcohol and cigarettes.
• Use your time productively. Take time for something you’ve been
wanting to do, like building a tree house or making draperies.
Avoid using daytime television as an escape.
Include All Family Members in Open Discussions of the Situation
It may be tempting at first to spare your family the pain of your unemployment.
You probably will not be successful, however, because they can sense that
something has changed. Not being told what is happening can be worse
than hearing the news. Everybody will need to work together to manage
the family’s limited resources. Even the youngest child can turn out lights,
recycle and reuse goods, and find other ways to extend resources.
If you are married, make time to talk with your spouse. Take walks,
have breakfast before everybody else is up, or set aside time after
the children are in bed.
Match Spending with Income
One of the most important family discussions will be about spending
priorities. Start the discussion by listing all income that will be received.
(See Pm-1673, Take Control of Your Spending, and Pm-1454a and 1454b,
Money Mechanics: Spending Plans.) Then list regular commitments,
like mortgage or rent, car payments, and other debts. Estimate the
cost of variable expenses, like food, utility payments, and gasoline.
If you have records of those expenses, this job will be easier. Without
records, keeping track for a month or two may be an essential first
step. Now compare income to expenses. Can you meet your regular
commitments and the variable expenses? If the answer is “No,”
where can you cut? (See EDC-58, 66 Ways to Save Money.) Consider
refinancing your home mortgage, perhaps opting for a longer term (30 years).
When Ellen got home from work, she could sense that something
was wrong. Her husband Jim was home before she was which was
unusual. Their two children, Amy, 17, and Mike, 15, were still at
school, where Amy was involved in basketball practice and Mike in
jazz band rehearsal. Jim was sitting in front of the television set,
which was tuned to a late-afternoon talk show, but he did not seem
to be paying attention to the TV. In fact, he looked sort of dazed,
as if he had just lost his last friend. When Ellen tried to find out what
was going on, it required several attempts to get him to tell her
what had happened. Finally Jim admitted that his manager had
called him in that afternoon and explained that the company was
closing his section as a part of their “rightsizing” efforts, and that
his last day on the job would be two weeks from today.
The loss of a job by a wage worker or a crisis in the business
of a self-employed person can be devastating to the individual and
the family. Taking charge in those circumstances means taking
stock of your resources to survive the immediate situation and bring
about a positive future.
Community agencies that offer services include: Workforce
Development Centers for unemployment insurance benefits and job
services, the Department of Human Services for a variety of services,
including Food Stamps, income assistance, and Women, Infants, and
Children (WIC). Some churches and other nonprofit groups sponsor
food pantries and thrift shops. Financial counseling and mental health
services also may be available. Your county office of your state can help
you locate services.
Unemployment also means the loss of benefits, particularly health
and disability insurance. If another worker in the family is eligible
for health insurance through his or her job, you may want family
coverage through that person’s employment. If your company has
more than 20 workers, federal regulations require that you be
permitted to keep your health insurance for up to 18 months.
Although you will have to pay the premiums, they may be cheaper
than private insurance. Keeping the policy in force also has another
advantage. All health insurers doing business in some states must
offer “guaranteed issue” policies. To be eligible for these, you
must have continued your coverage through your former employer.
If you have contributed to a 401(k) supplemental retirement program
and have borrowed against your contributions, you will have a
period of time after your job ends to repay the loan. Not repaying
the loan can be costly. The 401(k) contributions are before-tax
monies; unpaid loans from the fund (when you no longer are
employed by the company) will be taxed as income. If you are
under age 59, you face a 10 percent penalty. One good reason for
taking out a home equity loan is to pay off a loan against your
Look for Additional Money
If your family’s remaining income cannot cover your needs,
first look for additional funds to tide you over. Could you sell
assets, like an automobile or recreational vehicle? Can you
draw from your savings? A second, riskier option is to use credit
lines that are open to you. Borrowing against your home equity
is a source of cash, but could result in the loss of your dwelling
if you cannot repay the loan. Charging the maximum on credit
cards, another source of credit, may make the situation worse.
Be wary of consolidation loans that roll all of your outstanding
consumer debt into a single loan with one monthly payment.
Make sure the interest rate is the same or lower than the interest
rate on your current loan.
Talk to Your Creditors
If it is clear that you will not be able to meet your regular
obligations, contact your creditors (including your mortgage lender)
prior to the due date of your next payment. Almost without
exception, your creditors would rather work with you to schedule
reduced payments than have you miss payments altogether.
The key is to be up front about your financial problems. Be sure
to contact your creditors prior to the date that your debt is turned
over to a collection agency. Some creditors will lower the total
debt if you make good faith efforts to pay off the debt. If the
debt goes to a collection agency, chances of getting the total
debt reduced are nil.
Use Company and Local Services
Some companies offer assistance, like career and benefits
counseling. Do not let anger prevent you from taking full
advantage of these services. If your company does not advertise
such assistance, visit with a personnel representative about
But suppose you have not borrowed against your 401(k) program
and you have the opportunity to withdraw your contributions
in a lump sum. Should you do it? Except under very unusual
circumstances, it is not a good idea, for several reasons. The
money will be taxed as regular income, and you may have to pay
an additional penalty.
These steep penalties encourage you to build a substantial
nest egg. Small amounts of money that are allowed to accumulate
over time will create a much larger fund than contributions
invested closer to retirement. you may want (or you may
be required) to move your 401(k) contributions to a rollover
Individual Retirement Account (IRA) when you leave your job.
Check with the personnel department for requirements and
procedures for the rollover, and follow them exactly.
Otherwise, you may make a mistake that requires you to
pay income taxes and penalties without having the use of the money.
Make Plans for the Future
You also need to decide about future employment. Some questions
to be answered are:
• Do you want another job? Does your family need your income to
make ends meet?
• If you need to generate income, what are your chances
of finding a different job near your home?
• Do you have the skills and experience needed for the
job you want? Is a training program available to help
you prepare for that job?
• Will starting a business use your skills and interests
to generate income? Try to prepare for future downturns.
Set a goal to have an amount equal to months’ pay
in savings that you can readily access. Do not carry
balances on credit cards. Pay off other consumer debt quickly.