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Save to cope with a job loss

TOUGH TIMES: Jobless men looking for piece jobs at a street corner in Meredale, Joburg. The writer says job loss can bring about a combination of feelings - it can be a traumatic, scary and infuriating experience Photo: Katherine Muick
TOUGH TIMES: Jobless men looking for piece jobs at a street corner in Meredale, Joburg. The writer says job loss can bring about a combination of feelings - it can be a traumatic, scary and infuriating experience Photo: Katherine Muick

Are you losing your job? Make sure your finances are in order.

Even if you are not about to lose your job, it's good practice to prepare for it anyway.

More often than not, most people get advance notice or warning that their jobs are about to come to an end.

Perhaps you are a contract worker and know your responsibilities are almost fulfilled. Maybe you are ready and willing to take a voluntary retrenchment package and start your own business or pursue your dream.

Very rarely does a person lose his/her job and it is a complete and unwelcome surprise.

Depending on your circumstances, job loss can bring about a combination of feelings - it can be a traumatic, scary, nerve-wracking, infuriating experience, while to some it may present the most exciting time of change. If you know you are about to have reduced income or lose your job, some advance planning will transform a potential crisis into an opportunity.

Here's how you can prepare for this event and minimis e the negative effect on your life.

Revisit your budget and organise your finances to the last cent. Write down all your monthly obligations - bond, car, insurances, credit cards, etc.

Perhaps you are enjoying two incomes and now have to live on one. It is time to get real with your finances - do you really need pay TV and a cellphone? Can you consider selling your car and downgrade to a cheaper one? No entertainment until your situation improves.

Call insurance brokers for a quotation to cut costs on your insurance. As your car depreciates, your insurance premium must also go down - but premiums often go up by about 10% annually.

Don't allow this; call them every year and tell them to insure your car at current value, not what you bought it for three or five years ago. Are your house and car payments too high? Consider selling or seeing your bank to negotiate the payment terms.

I've met people on the verge of committing suicide because of pressure from financial institutions to get their money back.

If you are in a position like that it might be better to cut your losses and just sell your house or car than live with the pressure and not knowing when you will find another job. If you don't sell, they will do it and you might lose big time.

Pad your emergency fund. Theoretically, we should have some money stashed away for emergencies. In today's economy, we are even encouraged to have at least eight months' salary in this fund. Let's be honest, very few people, if any, have this kind of money in their bank accounts for emergencies.

So, if you do get a payout from work, this might be the time to put some money away and also pay off as much debt as you can. This will reduce the number of "private calls" from debt collectors coming your way.

By the way, if you took up debt with credit insurance, get a letter from your employer confirming that you have been retrenched.

Your creditors should be able to help you to claim from insurance at least 6 months instalments for your debt, depending on the size. Some debt could also be fully paid by insurance.

Do note, however, that for you to qualify for this facility, you must be up to date with payments. In other words, you must not be in arrears by the time of the claim.

If your employer has given you enough notice for your retrenchment, you should do your utmost to use that opportunity get out of debt, especially high-interest debt like credit cards and consumer loans.

Consider finding ways to supplement your income now while you are still employed and earmark those funds to paying off your debt. Get your CV updated and start looking for a job.

l Thedream@winniekunene.co.za

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