The headlines tell the story: lay-offs and furloughs, reorganizations, and closings. If you’ve recently lost your job, your first thoughts may be, “What do I do now? How will I pay my bills?”

To Do

  • Contact your organization’s personnel department. Find out how long you will have health insurance, if you’re entitled to a severance package and what it covers, and when and how to apply for unemployment benefits.
  • Contact your creditors. Try to work out a modified payment plan that reduces your payments to a more manageable level. Don’t wait until your accounts have been turned over to a debt collector. At that point, your creditors have given up on you.
    • Mortgage – Ask your lender or mortgage servicer about a loan modification. That’s where you and your loan servicer agree to permanently change one or more of the terms of the mortgage contract to make your payments more manageable for you. Modifications may include reducing the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A modification also may involve reducing the amount of money you owe on your primary residence by forgiving, or cancelling, a portion of the mortgage debt. Learn about the President's plan to help homeowners at
    • Rent – Ask your landlord for a rate reduction in exchange for extending your lease, or consider a smaller, less expensive unit within the complex. You also might consider getting a roommate.
    • Credit cards – Do the best you can to pay at least the minimum and if at all possible, more. Ask your credit card issuer(s) about their hardship programs – you and your issuer set up a payment plan, and they reduce your interest rates and sometimes lower your monthly payments.
    • Auto loans – Explore refinancing options to lower your payments like getting a lower interest rate or extending the loan term. The downside to a longer term loan is that you’ll pay more in interest. If you don’t need a vehicle, consider selling it, but make sure you get enough to at least pay off the loan. Before selling the car, review your financing agreement to see if the lender charges prepayment penalties – fees charged for paying off all or part of your loan balance early – and the amount.
    • Auto insurance – Consider raising your deductible. If you have a $200 deductible on your policy, raising it to $500 could reduce the cost of collision and comprehensive coverage by up to 30%. If you have an older car, consider dropping collision and/or comprehensive coverages. If your car is worth less than 10 times the premium, buying the coverage may not be cost effective. Combine policies; many insurance companies offer premium discounts for multiple policies, like auto and home.
    • Gas and electric – Ask about energy assistance programs, budget plans, and if emergency funds are available.
    • Telephone – The easiest way to save money on your phone bill is to eliminate services you don’t need. For example, many companies offer bundled packages of phone service with a variety of features like voice mail, call waiting, and caller ID for one low rate. The final price may indeed be a great value, but if you don’t regularly use all those services, you are paying more for items you don’t need. If you have both a land line in your home and a cell phone, consider dropping one. You also might consider Voice over Internet Protocol (VoIP), which uses a broadband Internet connection rather than a regular phone line. VoIP converts your phone call into a digital signal that travels through the Internet to the person you are calling.
  • Maintain your health insurance. If possible, transfer to your spouse/partner’s insurance plan. If that’s not possible, you may be able to keep your coverage under COBRA, the federal law that allows unemployed workers to maintain their group health insurance, usually for up to 18 months. You’ll pay the whole premium (including the share once paid by your employer), which can be expensive, plus a 2% administrative fee. Another option is to purchase your own health insurance. The advantage: you can save on monthly premiums by scaling back the coverage to your essential needs. If the loss of a job has left you with little or no income to pay for insurance, Medicaid may be an option.