According to the Associated Press, “Officials in Sacramento say a jump in the number of people losing their jobs is pushing California’s unemployment rate to its highest level since 1994.” What might that mean to you? As Harry Truman once said, “It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.” Even if times are good with your employer, here are some tips to plan for a rainy day:
Build that emergency fund: If you don’t have six to nine months worth of savings in an emergency fund, start socking it away. Try to find an account with an automatic deposit feature so you don’t have to worry about forgetting to save. Wondering where you’ll find that extra money? Start tracking your spending.
Slash your high-interest debt: While times are good, cut your spending so you can eliminate credit card, auto and home equity debt first. That’s the kind of debt that’s extremely punishing if you’re out of work. The sooner you can manage debt, the sooner you’ll be on your way to a savings and investment cushion that will protect you in good times and bad.
Understand your benefits: If you lose your job, you usually can continue health coverage through your employer’s plan for up to 18 months through a federal program called COBRA. You’ll end up paying the amount of your total premium since the boss doesn’t have to pay their share anymore, but at least your coverage won’t change. If you’re married, see about switching to your spouse’s health coverage – it might save you money. Also, check out what your unemployment benefit will be ahead of time so you can budget.
Stay away from your 401(k): The possibility of losing your job is an excellent reason never to take out a 401(k) loan. You’ll need to pay it back before your last day at work. Find another way to shore up your cash flow.
Securities offered through Associated Securities Corp. (ASC), member FINRA/SIPC. Advisory services offered through Associated Planners Investment Advisory, Inc (APIA), ASC, David S. Reinders, CFP®, Inc., Registered Investment Advisors. David S. Reinders, CFP®, Inc. is not affiliated with ASC or APIA.
For more information, contact Rebecca Robins, CPA/PFS, CFP®, CA Insurance Lic#0D75745 at 661-222-2331. The office is located at 25129 The Old Road, Suite 105 in Stevenson Ranch.