As an adult, I have been in the workforce for more than 37 years. During the last ten years, I have held senior management and executive positions. Yet, nothing prepares one for the unexpected words, “This is the hardest thing I’ve ever had to do”. What does one do once you are given notice you will be laid off from work? Following are a few financial decisions I made and how I am coping with my period of unemployment.
1. Made a Decision to Not Look Back -Prior to working for my last employer, I worked for a major, national nonprofit advocacy organization. Shortly after leaving, I was demoted due to budget cuts, and then ultimately laid off. Although a raw deal, I now have time to reinvent myself and prepare for my next career. I have to make a decision as to what type of income will sustain me while considering what I want to do that will gratify and fulfill me. I have made a firm decision to look ahead and not back.
2. Filed for Unemployment Compensation-I did my homework to determine the best time to file for unemployment in my state. Louisiana penalizes residents who leave state employment with vacation leave on the books and are compensated. My aim in filing was to avoid the state imposed penalty.
3. Sought Mortgage Loan Modifications-I phoned my mortgage company to inquire about payment assistance options after hearing about Stimulus loan modifications. I was told the company offered their own payment assistance programs. I then pursued the option of applying for a “Hardship/Loan Modification” to reduce my monthly mortgage payments. I provided the mortgage company with requested documents, e.g. 2010 tax return, last pay stub, proof of unemployment compensation, proof of COBRA insurance, current bank statement, etc. My request is pending.
I am also a landlord. Immediately upon receiving my layoff notice, I contacted the mortgage company that financed my rental property. I was able to successfully obtain a loan modification that resulted in a $130 monthly reduction in my monthly mortgage payments over two years. This arrangement resulted in a two thousand dollar savings that I do not have to repay.
If you have experienced a reduction or loss in pay or some type of financial hardship due to no fault of your own, you may want to consider a loan modification. However, please proceed with caution as no two mortgage companies or payment assistance offerings are alike. For example: I have a cousin who is an unemployed teacher. Her mortgage company reduced her payment from $1,500 monthly to $160 over 6 months. She, like I, may request an extension at the end of this period, if necessary. A former church member was able to permanently reduce her $1,500 house note to $300 monthly. Some mortgage companies do tack reduced payments on to the end of mortgage notes.
When pursuing a modification, there are terms that have to be met. I was required to sign an additional agreement outlining the terms.
If you happen to pay monthly Mortgage Insurance Premiums (MIP) or PMI, you may qualify for a “partial claim” with your mortgage company. This process closely resembles a loan modification.
4. Other ways I Cut Costs
Shop at Grocery Stores that Offer Perks-I was able to shop at a local grocer which resulted in my saving $1.35 a gallon up to 20 gallons of gas. The chain also offered numerous “buy one, get one free” specials on substantial items.
Changed Homeowner or Car Insurance Companies-I switched both and am now saving over $450 a year.
Shopped Around for Individual Health Insurance-Quoted COBRA premiums were $568 per month. I contacted the same company resulting in an offer to purchase a similar individual plan for $154 per month rather than maintaining my group coverage. You must consider deductible options as well.
Considered Credit Card Debt-I had no credit card insurance to delete this debt. Instead, I was able to freeze all future finance and interest charges until I obtain work.