Dear Money & Crisis Reader,
Ray Mote hangs up the phone and slumps into a chair at the kitchen table.
“That was the auto repair guy,” he says, thumbing through the stacks of bills piled in front of him. “He wants $700 to fix the Chevy… I told him he might as well be asking for $7 million right now.”
At 59 years of age — and never having crossed the state border — Ray has lived all over the great state of Maryland.
Frederick. Rockville. Bethesda. Baltimore. He has good things to say about them all. But the sleepy suburb of Somerset, where he now lives, holds a special place in his heart.
“It’s so quiet. Tranquil. You don’t get that much anymore… a real quiet town. It’s been my plan to retire down here for years.”
But Ray’s dream retirement is now in real danger of disappearing forever.
“This time last year, a $700 bill would have been water off a duck’s back. I had a good job… savings… and I always had a nice, fat emergency fund. Saved my bacon more times than I can remember.
“It really takes the wind out of a big expense when you can just dip into your stash and pay it off without tightening the belt or nuthin.’”
But for the last seven months, the 59-year-old Maryland native has been out of work.
By the time we sat down to discuss his options, he had burned through his emergency fund… and was starting to make a serious dent in his retirement savings.
“Just because you’ve stopped working doesn’t mean the bills stop coming,” says Ray. “The mortgage. Water. Heat. I’m doing everything I can just to keep the lights on and stop the bank from taking my house.
“And I gotta eat too. The bank doesn’t care if you eat or not. But you’ve got to eat and stay healthy if you’re hunting for work. Employers ain’t going to hire a dead man.”
Despite years of experience and specialized expertise, Ray has had no luck finding a job in his field. If he doesn’t find a job soon, he’s going to have to start making some difficult decisions.
“I don’t want to sell the house yet,” he says. “That feels like giving up to me.”
Today, Ray is just one of 6.6 million job-seeking Americans who are struggling to re-enter the work pool.
Up to 20 million Americans are laid off every year. And while some folks will get back on their feet in a little less than three weeks, many struggle to return to the work force for months… even years.
That can have a dire, long-term impact on your finances.
Of course, just because you’re unemployed doesn’t mean you have to take that punishment lying down.
Here are the best steps you can take to minimize the impact on your savings and protect your retirement while looking for work:
1. Finding a Job Is Your New Full-Time Job
No matter how well you manage your money, the drain on your finances isn’t going to end until you get a new job. Spend your 9-to-5 day searching and applying for new jobs.
If you’re having trouble finding suitable openings near you, start applying for jobs farther away and jobs outside of your field. Remember, it’s always easier to get a job when you already have a job.
A job that’s not exactly a right fit will give you a stepping stone to finding a new job — and some much-needed cash to tide you over.
2. Have an Emergency Fund
An emergency fund is simply a stash of money you can use to supplement your income if you’re unable to work. You can tap into this fund to pay your bills and buy groceries until you get a new job.
You should store this money in an account that you can easily access in case of an emergency. I recommend building an emergency fund equal to at least six–12 months’ income.
(Editor’s note: If you need to build an emergency fund FAST, check out this clever income strategy developed by self-made millionaire James Altucher. It’s a little-known technique for ripping $3,000 out of the market every month. And it’s got a 92% success rate. Click here and James will tell you all about it.)
3. Cut out Nonessential Spending
Even if you have a robust emergency fund like Ray, try to limit your spending.
You don’t know how long you’re going to be out of work. Cutting down on dining out, takeout and other nonessential spending can easily stretch a six-month emergency fund into an eight-month emergency fund.
Hopefully, you’ll be able to find a job earlier than that. But it pays to be prepared just in case.
4. Ditch the Credit Cards
One of the most common ways folks get in financial trouble is using their credit card to try to maintain a lifestyle they can’t afford.
It starts small. Buying groceries every once in a while. Picking out some new clothes for the kids. Before long, you’re using the card to make three–four big purchases a week and racking up tens of thousands of dollars of debt.
My own mother fell into this trap in the early ’90s. It took my folks years to dig themselves out of that hole. If you can’t afford to buy something with cash, you can’t afford to buy it with a credit card either.
5. Get Yourself a Side Gig
There are very few financial problems that can’t be solved by making more money. These days, there are plenty of lucrative, app-driven side gigs with low barriers for entry and flexible schedules.
If you have a car, you can earn some extra cash with ridesharing apps like Uber and Lyft… or deliver packages for Amazon in your free time. I’ve made a nice bit of extra money selling my unwanted stuff on eBay. And websites like Upwork and Fiverr are great places to pick up some freelance work fast.
What about you? Have you ever been unemployed for an extended period of time? How did you get by? Any tips or ideas for surviving unemployment that you think I missed? Shoot me an email and tell me about it.
All the best,
Editor, Money & Crisis
Editor’s note: No emergency fund? Build one fast with James Altucher’s clever income-building strategy. After falling on hard times, he devised a strategy to yank $36,000 out of the stock market every year. Click here and he’ll show you how to do it yourself. Don’t delay. You only have until midnight Sunday to take him up on his offer.