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Managing Debt While Between Jobs

 As this is being written, the United States is experiencing some of the highest levels of unemployment since the Great Depression of the 20th century. After peaking at 14.7 percent in April, the rate has "subsided" to 11.7 percent in July. This is up sharply from 3.5 percent in February, before the full brunt of the COVID-19 pandemic took hold.

While a lot of people are currently out of work, the bills just keep on coming in. With this in mind, it seems like a good time to discuss managing debt while between jobs.

File for Unemployment Insurance Right Away

With so many people out of work, the unemployment department is working overtime (Hey, maybe they're hiring--). Seriously though, get in the queue as quickly as possible, ideally before your last paycheck is consumed. 

Revisit Your Budget

You're going to have to make some pretty sharp cutbacks. The best way to proceed is to go over all of your expenses and determine what can be lived without until you're employed again. Hopefully, you set aside an emergency fund while times were flush. If so, this is when you'll activate that cushion, as that's one of the main reasons you created it. 

Prioritize mandatory expenses such as food, shelter, utilities, transportation and debt payments. Dining out and other types of discretionary expenses should be set to the side in the interest of making the cash you have on hand go as far as possible.

This means letting the gardener, the housekeeper and the pool service go for a while. Switch your premium subscriptions to ad-supported ones so you'll still have entertainment, but at a lower cost. You'll also need to kill all but one of your video streaming services -- or better yet, get a digital antenna for your television set, cancel them all and watch for free. 

Talk to Your Creditors

You have to let your creditors know what's going on.

Everybody is aware of the current situation and most companies are trying to do things to help consumers out. However, they have to know you need help to offer it. Many are providing forbearance programs to give customers some breathing room. Keep in mind though, debts aren't being forgiven; payments are being deferred. 

This might also be a good time to look into credit card consolidation while your credit score is still strong. This will combine all of those debts into one, with a lower payment and a lower interest rate. Just make sure you'll come out ahead before you sign. 

Consider Entering Hardship Programs

Creditors will often lower your monthly payments if it looks like you're going to have to default. Yes, agreeing to a hardship deal could adversely affect your credit score, but it's better than not paying anything at all and defaulting.

Pay Cash as Much as Possible

This is not the time to try to feel better by going out and buying a big-screen TV, or any other extravagance -- especially on credit. If you need it and can't pay cash for it, look for another way to acquire it. Go used perhaps. The main thing is to avoid creating more debt. 

Look for a Side Gig

It might be easier to find something part-time that might go full-time than getting a full-time job right away. With so many businesses closed or dialed back considerably, the need for full-time workers has diminished.

Managing debt while unemployed is an unenviable situation at best. However, if you're cautious and creative, you can get through this. 

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