Managing Debt

Dealing with Debt While Unemployed

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PayingBill_meddygarnet_FlickrThe recent announcement that our national unemployment rate dipped 0.4 percent brings little relief or jubilation to the 9.0 percent of folks still unemployed. Some estimators believe a more accurate jobless mark is north of 20 percent, if you include all of the people who’ve moved into the underemployed ranks by replacing their $40,000+ per year jobs with minimum wage gigs.

Whether they continue to search for a new job or at least a position approximating their previous level of employment, most people are left to find ways to deal with fast-growing piles of bills and debt.

Gerri Detweiler, personal finance expert for Credit.com, offers a number of tips to help people try to right their foundering finances. For starters, she says people need to do their best to at least pay the minimum on their debts until they are back to work.

[Resource: Not sure where you stand credit wise? Get your Free Credit Report Card to find out.]

“Unfortunately these days, it takes a lot longer to get back to work than you might expect,” she says. “So, if you make the minimum payments, you will preserve your credit history, and you will also preserve cash, which is important.”

Another critical strategy, Detweiler says, is to avoid living and spending as though you were still employed. Step one is to put your credit cards away in a safe place and limit their use so that you don’t keep racking up more debt. Use them only if you absolutely need them, perhaps to pay a heating bill or make a car insurance payment. She vehemently recommends limiting credit card use to “definite, essential emergency expenses.”

An Austerity Budget … and Other Tips »

Image: meddygarnet, via Flickr.com

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