It is the season of layoffs. From Wipro to Cognizant, major tech companies are tightening their appraisals and giving away pick slips to the under-performers. And the truth is the job loss is not restricted to just IT sector. Manufacturing companies are also not in good shape. The reason is the the economic growth is still on a shaky ground.
All in all, job insecurity is on the rise. In such a scenario, it is better to plan for the worse and have a strategy for your finances in place to run your household.
Here are a few tips which will help you sail through in case, god forbid, you lose your job:
Monitor your budget
One of the first steps to take is to start monitoring your budget. Normally, when you have a job and salary is credited to your bank account at the end of the month regularly, there’s a good possibility that you don’t know how much you are spending. The first step is to start tracking your spending before doing anything else. You would be surprised to know where you slip-ups. This will help you come up with a strategic plan to plug the unnecessary leakages.
Cut your expenses
This step is really a no-brainer, but it’s important to mention. Even if you do have some funds lying around idle and can continue with your lifestyle for a few months, you should cut down on your lifestyle by at least one notch. In case you don’t have an emergency fund, you will have to look into cutting your expenses aggressively. Make sure you come up with an actual plan, and are serious about the cut back on expenses, especially the entertainment expenses.
Avoid cards, use cash
Yes, you read it right. India may be transitioning to cashless economy. But when in a financially strained situation, kiss prime minister Narendra Modi’s digital agenda goodbye and stick only to cash payments. Research has proven, when your use your cards your brain thinks differently than when your pay cash. You end up doing a lot more impulse spending when you go the digital payment way. So make sure you avoid non-cash payments when you are in between jobs.
Avoid big ticket items
There is a possibility that only one of the spouse has lost job. This means the money is still coming in, though a much lesser amount. Avoid buying any big ticket item during a job loss, even if the other partner is working. This is not a time to buy an upgrade on your iphone, ipad, laptop, car or any such.
Balance transfer credit card debt
If you have an existing debit card debt, it makes sense to balance transfer to another credit card at a much lower rate. There are many lenders who are willing to give you a balance transfer at a lower rate. When you do a balance transfer, usually you pay a much lower interest rate on the card on which the balance is transferred. So that way, you are able to manage or pay the monthly dues with some ease. Lower the rate, lower the cost.
Usually, you can do two types of balance transfers. One is the “fixed duration” option and the other is the “lifetime duration” option. It depends on the bank you approach. The fixed duration option is a limited period offer, usually 3-12 months. Here you need to pay your dues within that period of time. During this time, the bank offers you a lower interest rate around 0.80 percent per month or 9 percent per annum. In fact, some banks may even give you a full interest rate waiver if you plan to get a new card. Of course, the interest rate offered would vary from bank to bank.
Move to lower interest loans
Under no circumstance should you miss out on any of your EMIs for any loan whatsoever. For some reason if you are unable to come up with the EMI especially on your home loan, contact your lender and explain your current financial situation. Lenders these days are willing to work with borrowers and offer restructuring of the whole loan or rescheduling of amortisation repayment. Request for a lower interest rate as well. In case the lender is not co-operating, simply switch the loan to another lender who offers a better deal on interest rate and tenure.
Other sources of money
Even as you look for a suitable job, there’s no harm in trying to generate an alternate income, especially by taking up consulting or freelance work, especially if you have people dependent on you financially. Alternately, you could look into dipping into your savings by taking loans against your assets, like a Fixed Deposit, Gold and the like. Don’t forget to withdraw your EPFO amount if you are unemployed for more than two months.
Remember time and health are your greatest assets. Followed by family and friends. Jobs come and go, and bad times, like good times, don’t last permanently. So no need to worry or fear, be of good cheer and follow the above mentioned steps, as you start your job hunt again.
Updated Date: May 16, 2017 17:02 PM