Build a budget, review savings, reach out for free counseling via phone or at 24 offices across Michigan
FARMINGTON HILLS, Mich., August 18, 2011 /PRNewswire-USNewswire/ -- As the Michigan unemployment rate jumped in July to the highest point in 2011, those suddenly finding themselves out of work need to review their current financial situation and prioritize a to-do list to help ensure economic stability while they look for work.
GreenPath Debt Solutions, a nationwide, nonprofit financial organization, based in Farmington Hills, with 24 offices across Michigan, provides consumers with financial education, debt repayment programs, foreclosure prevention and bankruptcy counseling. Based on the recent headlines, GreenPath counselors have put together an unemployment checklist.
"The first step is to build your budget," said Dorothy Barrick, GreenPath Debt Solutions counselor. "As simple as it sounds, it is imperative that you sit down and list what income is coming into the household, be it from a spouse, severance pay, or unemployment."
Barrick said that once you determine what income is available the next steps include:
Subtract your priority expenses. List food, shelter, transportation costs (car payment, gas, bus fare, etc.), utilities, and secured loans (boat, camper, etc.). Pay these first and foremost.
Now start subtracting all non-necessities. These are expenses that you can live without for the time being, such as premium TV channels, Internet, second phone, etc.
"If there is a surplus, stick to the budget you have built," said Barrick. "However, if you cannot afford to pay all of your necessary bills, it may be in your best interest to contact a non-profit credit counseling agency for free counseling. They can help you balance your budget and explore your options."
She went on to explain that GreenPath helps build budgets for all people, no matter how long they have been out of work. GreenPath is also a HUD-certified housing counseling agency that can help you explore options to possibly lower your mortgage payment.
Barrick continued with the list:
Determine what expenses can be eliminated. Have a family meeting. Make sure everyone understands that expenses need to be reduced until a new job is secured. Cut TV down to basic. Go to cell phone only and eliminate the landline. Pack school lunches. Sell the boat if you can live without it. This is not a "one size fits all" as each family has unique needs and wants.
Determine how much you have in savings. Determine the monthly shortfall in your budget. If you have $3,000 in a savings account and your budget is short $250 per month, your savings will run out in 12 months.
Call your secured loan companies. These are your car, camper or boat loans. Tell them you lost your job and ask if they will allow you to put two months of payments at the back of the loan. Often they will charge the interest only or charge a small fee to do so. This will give your budget a couple months to find employment without falling delinquent.
Meet with a free HUD certified housing counselor to help you contact your mortgage servicer to see if you can make a smaller monthly payment, until a new job is secured.
Call your student loan servicers and explain that you have lost your job. They may offer to defer up to six months of payments as a hardship forbearance.
Determine how much you can afford to pay on your credit cards. How much does your budget allow you to pay on your credit cards each month?
Contact your credit card companies. Tell them you lost your job and ask if they will reduce the interest or lower the monthly payment. Be careful you do not commit to an amount you cannot afford. By doing so you are simply putting on a band-aid and not stopping the bleeding. GreenPath can also help you communicate with your creditors.
Consider dipping into retirement only as a last resort. This is your financial future and times may be even tougher when it is time to retire.
GreenPath Debt Solutions offers free counseling in the areas of debt management, housing issues and bankruptcy concerns. For more information, www.greenpath.com or call (866) 648-8122. GreenPath operates 24 offices in Michigan and 37 additional offices across the United States.
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SOURCE GreenPath Debt Solutions