work — Beating Broke

5 Ways to Handle Debt When Laid Off

September 19, 2013 By Romona Bradham 13 Comments

Getting laid off can be a shock for anyone. Sometimes they come as a surprise and on some occasions layoffs are expected. When you’re presented with a layoff, you may feel that your life is crumbling before your eyes. With no job and debt, how will you pay your bills?

The thought of having no job and debt can keep even the most financially stable person up at night. It’s every ones worst nightmare. So if you’re not going into unemployment with a large amount of savings then how do you handle debt while laid off? There’s no simple answer to this question and every situation is unique but here are five tips to help you handle debt when laid off from your job.

Know what funds you have available

Make a list of all of the monetary assets that you have. You should know exactly the amount of money you have in your checking and savings account. As for credit cards, know your available credit. If you have any investments or retirement accounts, you should know the cash value for those as well. Desperate times call for desperate measures and you will probably need these funds in order to get by.

Prioritize your expenses

You always want to pay secured debt first. Secured debt means that the asset can be claimed by the lender if the borrower falls short of payments. Examples of secured debt are your house and car. Your mortgage, utilities and food expenses should be the first expenses that you pay before anything else.

It may get frustrating getting creditor calls from your credit card companies but credit bills are the last thing that you pay in these kind of situation. So don’t be pressured to pay the bill unless you can afford it. Also, don’t allow creditors to harass you. Know your rights and find out what laws in your area protect you from creditor harassment.

Severance package

When laid off ask your employer about a severance package. Severance package are pay and benefits given to an employee when they have been laid off. The amount given is based on the length of employment. It can include a payment for unused sick and vacation days. Severance pay should be rationed towards your bills until you find new employment.

Contact creditors

Call each creditor and make them aware of your situation. Let them know that you have been laid off. Most credit card companies will be willing to work with you due to the simple fact that they want their money. In most cases there is a good chance that you will be able to negotiate a payment plan. Also, ask your bank about a hardship plan or forbearance program. These programs can involve lowering minimum payment, temporarily lowering the interest rate, or the cancellation of late fees and penalties.

Get a job

It’s important to get a job as soon as possible. When you’ve been laid off and you have debt, you are not in a position to be choosy about where you work. It’s important to get a job, any job. Of course you would like to do something related to your experience and your training but you must face the fact that you may not got the job you desire. Finding a job takes time and patience, so if you know of any places that are hiring immediately, just take it.

If you can’t find a job, then get creative and find ways to make money. Sale your car or rent out a room in your house. If you have a skill start contracting out work as a way to supplement income. Start a business from home using resources that you already have.

In conclusion, unemployment doesn’t have to ruin your finances. Although, being laid off from a job can be one of the hardest times of your life, good money management skills and determination can help you manage your debt effectively.

What are YOU Working For?

September 28, 2012 By Shane Ede 12 Comments

What are you really working for?

We all work, in some way, shape, or form. Many of you, when asked the question, “what are you working for”, will likely give the easiest answer. Money. That’s what we all work for, right? We need it to pay our bills, buy our food, and do many of the things that we choose to do. But, one of the things that I’ve contemplated for some time, and that helped me make the decision to quit my job last year, was the furtherance of that question. Sure, we all work for money. But, is that all we work for? And, if so, should it be?

The conclusion that I came too, as you can probably guess, is that money isn’t everything. We do need some, but if that’s all we’re working for, it quickly becomes less of the tool that it should be, and, instead, becomes something that makes us feel trapped where we are.

Primal Money

One of the popular diets, recently, is the Primal Diet. It’s a diet of foods that our primal ancestors (the hunter-gatherers) would have eaten. Mostly meat, and readily available nuts and fruits. The idea is that the human race has been around for thousands of years, but only been farming, and eating what we farm, for a fraction of that time. Proponents think that we haven’t evolved sufficiently enough to properly handle the abundance of grains and other “farmed” foods in our diets. (sidenote: the increase in Celiac disease over the last few decades might point to them being correct) Because of that perceived evolutionary gap, they’ve taken up eating what our kind would have eaten before the rise of farming. The movement made me think, though. What of money?

For centuries, we’ve used money as a means of trade. I give you a coin, you give me goods and services. If I run out of coins, I have to find a way to make more. I trade my surplus goods and services to someone, and they give me coins. We repeat that cycle, and we have an economy. Slowly, coins become the only way to attain goods and services, and we all depend on them. And the more we depend on them, the more of them we need. And the more we need, the more we have to sell our goods or services to get more. Eventually, we end up where we are now. We all work in order to gain more coins. Our economies have evolved. But, if that’s the case, what were they like in the Primal era?

Before we all became obsessed with coins, and money, our ancestors hunted for their food. They didn’t need to buy it, they just went out and trapped or shot it. Or they scavenged it off of the tree it grew on. Or dug it out of the ground where it grew wild. The work they did wasn’t for a new tv, or a new car, it was for survival. If they didn’t do the work, they would starve.

If you don’t do the work, you get fired (if you work for someone), or you just don’t make any money. And, yes, you still might starve. Eventually. But, food wasn’t the only thing that many of them worked for. They worked to help their family survive. They worked so that their children would grow up healthy and strong. Their children were their legacy; what they would leave the world when they passed on.

Legacy.

Now, we’ve found the real purpose of work, I think. That’s why I work, now. It isn’t about the money, although money can have a place in legacy, but about what I leave the world when I leave the world. The example that I set for my children, the good works I do, the changes I make in my world that make it better, and the life I lead, are my legacy. Money is merely a tool, like the bow and arrow for our primal ancestors, to help me do those things. And, here’s the funny part. Looking at that list of things, it’s a tool that I don’t need that much of. I set a better example for my children by being conscious of the things that I do, and by what I teach them. Donating money to charity is a good work, but there are just as many good works to be done through volunteering your time and skills. And, I can certainly make changes for the better in this world without money. My legacy doesn’t need money. I’ll use what money I have to give it a boost now and again, but it doesn’t need it.

I’m working for my legacy, not for a new tv or a new car, or even a new house. The realization of that is what helped me make the decision to leave my job. There will always be other jobs that I can get that will help me pay the bills and put food on the table, but I don’t need one to help me do my work.

What are YOU working for?

photo credit: The Marmot

Why Passive Income is Better

November 16, 2011 By Shane Ede 19 Comments

Passive Income is a bit of a myth. Not so much in that it doesn’t exist (it does), but in what it really is, and why we should all be striving to attain as much passive income as possible. I’ve written before about what passive income is. But, in that article, I only wrote a short paragraph on why we should want passive income.

What is Passive Income

You should read the original post on what passive income is, but I’ll recap here as well. In a nutshell, passive income is income that you earn with little ongoing effort (work).

Why Passive Income

The why of passive income is really the motivating factor for most people. Many of you know the allure of free money, or easy money. And many of you will mistakenly think that passive income fits one or both of those categories. It doesn’t. The difference, and the reason you will still want passive income, is in the ongoing work part. With a traditional job, like the one I recently quit, you get paid per unit of work. If you work one hour, you get paid $x. If you work one year, you get paid $xx,xxx. If you build one widget, you get paid $xx. Your earning potential is directly tied to the amount of work you do. More work = more money. It’s a finite system. You can only work so many hours in a day, so you can only make so much money.

You’ll still work for your passive income, but, if it’s a true passive income source, you’ll be able to work less for the money as time goes on. The income is no longer tied to the amount of work you put in, except in the beginning. Please don’t think that passive income is easy, or that it requires no work. It does. In fact, you might work harder than you have before initiating it. But, once it’s initiated, the work can decrease if you want it to.

Passive Income Examples

One of the most common examples of passive income is rental income. You rent out a property, using a property management service, and all you have to do is sit back and let the rent checks roll in. Sounds easy, right? It is. But, you have to get there first. You’ve got to do the work necessary to have the ability to purchase that rental property. You’ve got to do the work to make sure that it meets codes so that it can be rented out. You’ve got to do the work necessary to find a property management service that fits your needs. And, even though it then becomes almost entirely passive, meaning you do no work to attain it, there might still be some occasional work that needs to be done, like deciding whether a repair should be done, and by whom. As you can see, there’s a huge outlay of work to set up the passive income stream.

Another popular example of passive income is dividend paying stocks. You own some shares of some companies that pay dividends to their shareholders, and let the dividend checks roll in. Sounds easy, right? It is. Again, you’ve got to get there first. You’ve got to do the work necessary to have the ability (money) to purchase those shares.

Passive Income isn’t Free Money

Passive income isn’t free money. I can’t repeat that enough. And it isn’t easy money. You’ve got to put some work in to set up the passive income streams first. But, once you’ve set them up, each day, week, and year, makes your work cost to attain those funds diminish. Until, at some point, your work cost per unit of income is fractional to what it would be in a traditional job. If a traditional job requires 1 unit of work for each unit of pay, over time, passive income might require 1/100th unit of work for each unit of pay. And, that, is why we should all want passive income.

For me, passive income isn’t about being able to sit on a couch and watch television while the fat checks roll in. It’s all about being able to pay my bills while I do the things that I like to do. This site, and others I own, help me with that (although they are far from passive, they aren’t traditional jobs for me either). I’m working on other methods of increasing my passive income stream as well. I’ve always wanted to be a published fiction author. I’m participating in NaNoWriMo to that end, with hopes of being able to self publish ebooks and use the royalties from that as another passive income stream. I like to take photos, so am going to be exploring avenues of making some income with that as well. It will require taking more photos, which is work, but, because it’s something I do as a hobby already, it’s a variant of a passive income stream for me.

What are some of the passive income streams that you employ? What are some of the things that you do as hobbies already, that you might be able to turn into an income stream?

photo credit: quinn.anya