5 Things You Can Do To Manage Debt If You Get Laid Off

Woman Stressed About Debt After Laid Off

Chances are you know at least one person who lost their job or experienced a temporary layoff in 2022. Unfortunately, the United States is heading into a recession, and every industry, from technology to food service, is feeling the effects. As of November 2022, approximately 2.78 million Americans are without a job.

Speaking from personal experience, losing your job is never easy, even if it’s just temporary. This is especially true if you have any debt like student loans, credit card debt, or auto loans. Luckily, there are things you can do to manage these debts when you’re living on a shoestring budget.

1. Make an Emergency Budget

You probably follow a monthly budget if you are reasonably financially savvy. This ensures that your income and bills line up so you don’t overspend. However, most budgets rely on a steady paycheck, which isn’t the case if you just got laid off.

In this scenario, you must evaluate your obligations (bills you must pay) and know exactly when everything is due. This sort of emergency budget will let you see when you can pay each bill and allow you to space things out. You can also use this to see where you can cut back. Sometimes we have subscriptions we aren’t even aware of. An emergency budget will let you see everything and make decisions as needed.

2. Contact Your Lenders

Once you’ve outlined a budget, you will know which lenders you owe. You may or may not be able to pay all of your debts, which can feel alarming. Believe it or not, there is something you can do even if you can’t pay for everything on time.

Many creditors offer financial relief or deferment arrangements. They don’t openly advertise them, but they will typically work with you if you call and explain your situation. Depending on the type of debt and how much you owe, companies will let you extend the life of your loan (meaning you move a missed payment to the end of the loan). Even if that isn’t an option, companies will let you divide a monthly payment into smaller chunks for the amount of time you determine.

3. Refinance Eligible Loans

Sometimes it isn’t the payments themselves that are bad, but rather the excessive interest rates. If you know some of your loans have high interest rates and your credit score is decent, you may be able to refinance those high-interest loans.

For example, suppose you are still paying off debt from college. In that case, NaviRefi student loan refinancing can help you lock in a lower interest rate or refinance multiple loans into a single payment. Similarly, you can refinance auto or other property loans to help lower your monthly expenses.

4. Check Out Debt Consolidation

Student loans aren’t the only thing you can refinance. You can combine multiple credit cards into a single, low-interest loan. This process is called debt consolidation, and many people find it helpful.

Here’s how debt consolidation works: You apply and receive a loan offer from a company. The company will then use the loan funds to pay off the credit cards you reported to them. Although this cancels your credit cards, in most cases, it saves you so much money that the temporary ding to your credit score isn’t the end of the world.

5. Apply for Short-Term Loans

Unfortunately, there are times when none of the aforementioned options work or you still have bills to pay without enough money to go around. In those cases, you can look into short-term loans. These loans typically don’t require much collateral or a credit score because you usually pay them off within 12 months. 

Some options for these short-term loans include Possible, Dave, and Earnin. Many of these provide funds within a day or two, and the application process happens online.

Losing your job is never fun, and it’s becoming a common issue for people. However, you don’t have to let fear and debt consume you if you lose your job. Hopefully, these five suggestions can help you manage your stress so you can focus on what you need to do — interview for a new job.

Feature Image by Mikhail Nilov on Pexels



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