Chamber News Feed: Tips On Job Loss: Q. I’m not sure what will happen with my job. I’m married and we both work, and we have a mortgage and two car loans. We don’t have much of an emergency fund, and we have credit cards, but no balances on them. We also both have 401(k) plans and we save money from every paycheck. What’s the best way to prepare our finances in case I do lose my job? — Staring at the axe A. It’s tough to walk into unknown territory, but you absolutely can try to put things in order. For starters, you’ll have a much easier time because you don’t have credit card debt. That will allow you much more flexibility for your finances, said Brian Power, a certified financial planner with Gateway Advisory in Westfield. He said losing one job in a double-income family can be a huge change, but you can prepare. To start, you can try to live off only one of your incomes. This will allow you to bank extra money and get used to spending less. “I advise my clients to have a minimum of three to six months of expenses in the bank for an emergency, such as losing a job.” Power said. “If someone’s job is more tenuous then most or in a high turnover industry, they may want to consider having a full 12 months of expenses in cash reserve.” Of course that takes time to build, but trying to live on only one income and saving the rest may help get you there. Power said if you had high interest credit card debt, he’d recommend paying it off before building the emergency fund if there wasn’t enough money to do both. Any good financial plan provides for liquidity, said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Fairfield. He recommends you keep saving in your 401(k) plan, but cut your contributions in half. The rest should be put to an emergency fund. “That separate bank account should be located on the opposite side of town with no check writing, no ATM, not open nights and weekends,” he said. “This will mean the money will only be used as an emergency fund.” He said you should also set up a home equity line of credit for the maximum the bank will give you. “I don’t want you to use it, but I want it set up,” he said. “If you need money, let’s say because you lost your job, no bank will lend you money, so always have things set up in advance.” You didn’t give your age, but if you’re over age 59½, you can access your retirement accounts without an early withdrawal penalty, Power said. “For someone in this age range, taking withdrawals from your retirement accounts is always an option and can be an emergency fund for people trying to pay down debt or not able to afford building an emergency fund,” he said. But if you take an early withdrawal, be prepared to work longer than expected so you have time to rebuild your account before you retire. Your Bernards Township Regional Chamber of Commerce Works for You!
Posted on: Thu, 18 Sep 2014 10:23:49 +0000
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