It is the worst day of your day. Your boss has just informed you that your entire department is being downsized, meaning that you are now out of a job. Leaving an office you will never return to in a daze, you walk out to your leased vehicle. You return home, pulling into the garage of the home you had bought in 2008 at the height of the real estate bubble.
The next morning, fortified by a strong cup of coffee, you fire up your laptop computer to see what your options are. As you see it, improving your financial situation is the most important thing you can do right now.
As you see it, there are three different areas in which you might be able to immediately address your finances: your underwater mortgage, your leased car and having lost your job.
State Unemployment and Other Unemployment Benefits
Assuming you were not terminated for cause, your first stop should be the website for whichever state agency deals with unemployment benefits in your particular state. State unemployment benefits provides cash payments for a fixed term to eligible workers who are unemployed through no fault of their own (keep in mind that whether a worker has become unemployed through his or her own fault is determined under the particular state’s law), and meet any other eligibility requirements set forth in that particular state’s laws. You discover that in your home state, Maryland, one of the requirements to receive unemployment benefits is that you must be able, available, and actively looking for work.
In most states, the amount of unemployment benefits you are entitled to is tied directly to whatever your salary and/or wages at the job from which you were separated from. However, be the maximum amount of unemployment compensation to which an unemployed individual is entitled under state law often is much less than whatever your wages were at your previous job. You also discover that there are time limits imposed by the various states on how long you can receive unemployment benefits.
You discover that in your home state, Maryland, you can file for unemployment benefits completely online and fill out an application right away. Based on the information you enter, you discover that, if your application is approved, you can expect to receive the maximum amount of $430 weekly for a maximum of 26 weeks.
You also discover that other programs may be out there as well to help you. For instance, if you are a former federal employee or ex-service member, then there are programs that provide unemployment benefits to you independent of the state unemployment benefits to which you likely are entitled.
Your Car Lease
You next turn to considering the issue of the vehicle you are currently leasing. Your concern is that the required monthly payments for the lease are more than you can afford without any wages coming in the door every two weeks. Because your lease is a contract, your first step is to obtain and open a copy of your lease. This will assist you in determining your options. Some leases will allow you to transfer the contract and liability for all future payments to someone else. Websites like leasetrade.com, leasetrading.com, or swapalease.com allow you to advertise your lease to prospective buyers. Keep in mind, however, that you lease may not allow lease assumptions and it also may provide that any prospective individual interested in assuming your lease must meet certain eligibility criteria. After looking at the copy you have saved on your computer, you see that your lease, unlike many, permits lease assumption, so you can place an ad advertising your lease on leasetrade.com.
Your Underwater Mortgage
You next decide to research whether there are any steps you can take to deal with your underwater mortgage. Although you quickly realize that you could walk away from your mortgage, that is, give the keys to the house to the bank and move out, you do not want to take this drastic option because it would destroy your credit for up to 7 years. You do discover, however, that the state and federal government have set up programs to help many homeowners who find themselves in exactly your situation-unexpectedly unemployed while trapped in an underwater mortgage. In your home state of Maryland, you discover that the state offers several programs for borrowers which borrowers can take advantage of. Under the Lifeline program program, homeowners who are unemployed through no fault of their own can apply for assistance for adjustable rate or other mortgages. There are also federal programs available in Maryland which provide up to $50,000 in zero interest loans to homeowners to assist them in staying current on their mortgage if the person suffers a reduction in income or unemployment. In addition, you see that your own mortgage servicer, Bank of America, offers a mortgage modification program to underwater homeowners. You download information regarding the required documentation for both programs and immediately begin to fill the required forms to free up some additional cashflow for groceries and other necessities while you look for another job.
More Immediate Steps to Improve Your Finances
While conducting your research, you also come across some other suggestions to ways to improve your finances in the short term. First, you decide to cancel your cable and Netflix subscriptions in order to save on some of your monthly recurring expenses. Next, you also call your cellphone company to see if they are offering any promotions because you are currently off-contract.
After an entire morning spent performing research on the Internet, you are exhausted but feel exhilarated by the progress you made in learning some ways to reduce your expenses and lessen the impact of your unexpected unemployment on your finances.
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