Thinking before you spend is a wise way for anyone to live. That rule of thumb is important for even the most successful workers, but especially for those who suddenly find themselves without jobs.
And with a rise in Alabama’s unemployment rate, individuals can never discount the importance of wise financial planning.
Alice McKinney, director of the Alabama Department of Industrial Relations, said the state’s unemployment rate for December 2001 rose to 5.9 percent, an increase from the previous month’s rate of 5.8 percent and from the unemployment rate of 4.5 percent in December 2000.
“This marks the sixth consecutive month of rising unemployment,” McKinney said. “The trend began in June and continued until the end of the year in December.”
Joining the ranks of the unemployed not only leaves an individual financially strapped, but also affects his or her self-image and mental condition.
“It has a tremendous emotional impact, as well as financial impact,” said Roger A. Knauff, CEO of Consumer Credit Counseling Service of Alabama Inc. in Montgomery.
Knauff said losing a job can be a stressful situation because it leaves individuals faced with finding a new job while also worrying about falling behind on paying their bills. In addition, he said most individuals have little savings — leaving them with limited resources to pay bills until they find a new job.
“It’s a tremendous strain to know that in a few months you could lose your house or car,” he said.
That stress is one that can be complicated by a sense of hopelessness individuals often have after losing their jobs.
“People don’t see there will be a light at the end of the tunnel,” said Kim Gregory, CEO of Debt Relief Counseling Services in Birmingham.
Gregory said individuals who lose their jobs are usually struggling with a blow to their self-esteem at the same time creditors begin contacting them.
“They’re without money and the creditors are calling, so the emotional impact becomes tremendous,” she said.
Avoiding the loss of transportation or housing may require looking at eliminating other payments that are not necessities, according to Knauff.
“The first thing for anybody to do is take an inventory of expenses,” he said. “You can’t know where you can economize if you don’t know where your money is going.”
Knauff said most people don’t realize how much they actually spend on things because they don’t have a budget. But he suggests spending can be controlled by economizing on expenditures such as food and transportation that, unlike utility bills, can be decreased at the buyer’s discretion.
Individuals who are dealing with financial problems should also reconsider some of their expenses.
“We don’t necessarily have to have cable. That’s not a utility, that’s entertainment,” said Knauff, who added restaurants are not important to assuring one doesn’t go hungry. “Going out to eat is not a necessity.”
Gregory expanded the list of expenditures to include purchases of new clothing and going to the movies.
“If you are jobless and don’t have additional money coming in, you need to focus on the most important expenses,” she said.
But while eliminating some payments may come easy, Knauff said other choices may be more difficult. Those in a pinch may have to realize going without a phone is better than not having money for automobile insurance or medicine, according to Knauff.
Credit is also something those with money problems should avoid, Knauff said. He said late charges can accumulate if payments are missed and can place them in more financial jeopardy by using credit.
“It’s not unusual for people who are unemployed to live off of their credit cards, but it just makes things harder,” Knauff said.
Larry Burkett said there are several things individuals who have lost their jobs should do. Burkett is chairman of the board of Crown Ministries in Gainesville, Ga., which merged last year with the ministry he founded in 1976, Christian Financial Concepts.
His first suggestion is to list financial assets:
–Immediately take stock of finances. Include savings, spendable assets, income, any severance pay and unemployment compensation.
–Develop a short-term financial plan.
–Know the bottom-line monthly needs and include all bills.
–Arrange a plan with creditors that will reduce payments on a temporary basis.
–Project the cash available for a short-term budget and determine a timeline for how long you can be without work.
Burkett also suggests making an inventory of nonfinancial assets:
–Conduct a self-analysis and recognize your transferable skills and career focus so you can present them to a future employer.
–Outline your work history and identify types of work and responsibilities you’ve had.
–Develop a one-page resume (unless you’ve been employed in the same field 10 years) and be ready to tailor it to fit particular job openings.
A third area Burkett said needs to be addressed is looking after your greatest assets:
–Check your spiritual pulse and that of your family, and be sure you’re trusting God.
–Maintain family devotions, Bible study and prayer.
–Covenant with your spouse or a friend to hold you accountable for goals in your job search. (BP contributed)
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