If you were unfortunate enough to lose your job your goal should be to give yourself at least 6 months of time to get a new one. You do not want to be struggling to pay the bills before you get another job. The main point of this is to allow yourself time to find a job that suits you. The perfect job might not exist, but you do not want to be forced to take a position that might not look good on your CV because the debt collectors are closing in.
Once you lose your job all you can really do is tighten your belt and make sure you talk to your creditors before they call you. There are a few things you can do to prepare yourself in case a job loss happens in your future. You may already know some of them, and none of them are new ideas. I hope collecting these into a short list may help.
You need a buffer:
Don’t spend you money as fast as it comes in the door, definitely not faster. For many poeple keeping a buffer of money in their bank account is almost impossible, so set up an automatic payment that puts a few hundred into an investment account after each pay period. Make sure the account is a little hard to get to, no linked plastic and 24-48 hours to get money out. You will be surprised how quickly this will build up and making it a little hard to get to stops the impulse buying.
Avoid credit (especially cards):
Credit cards can make life easier, but maintaining debt on them is expensive and the second worst form of debt there is. If you can’t pay them off before each month when the bill comes, tear them up so you are not tempted.
The worst form of debt is payment plans as they are not only a millstone around your neck but also indicate that you paid too much in the first place. There is no such thing as “interest free”, no interest in the payments mean it is buried in the purchase price. This is part of the reason why you can get a discount on most large items if you pay cash. As a general rule, if you can’t save up for it before hand, think about whether you really need it.
While having these credit lines is generally manageable as long as kept under control, if you suddenly find yourself unemployed for a while, it is spending you cannot cut back on. While you can stop saving for a new TV until you get a new job, you cannot stop the payments for the one you already have.
If you are buying something today that will be worth less in the future, credit is almost always a bad way to buy it.
Keep your resume up to date:
Obviously you want to get your resume out quickly if you lose your job. When you are updating it at the last minute though, it can be hard to capture everything that could help you win the job. When you complete a successful product, get a promotion, receive and award, or complete a course, stick it into your resume straight away. I keep a master resume which holds all the key facts I might want to mention. I then cut that down to only the ones that are applicable to the job I am applying for.
Practive interviewing:
Handling yourself in an interview well needs practice, so do it occasionally. Get together with a friend or relative and have them role-play an interview for you. A search for sample interview questions on Google nets about 66 million results so it is not hard to get a few to practice with.
Maintain your network:
Know who the recruitment companies are who service your area and potentially even get yourself on their books. Keep in touch with ex-collegues that you liked. These are the avenues for you to find the jobs that don’t get advertised, which are usually the best ones.
When it happens:
If you find yourself out of work suddenly you will have the twin benefits of being able to ride out 6+ months for the right job to come along, and being ready to start discovering the jobs that are available and applying straight away.