An unexpected layoff can shut you out of money and leave your credit score in shambles. The unemployment rate in the UK has drastically dropped, yet several people fail to come to grips with the financial threat. Having examined the spending behavior of citizens who have taken out loans at least once in their life, financial authorities reached to the conclusion that people with a good credit history are even grappling with keeping up credit, let alone the unemployed.
Being well aware of job insecurity, you could brace yourself stashing away a large chunk of money but there is no guarantee that they are immune from draining away unless you land a new job. The emotional fallout from unemployment is extremely painful to bear. Much as you have set aside enough money to withstand your tough time, you should immediately tighten your belt as your employer orders you to leave the company.
Sometimes it takes forever to land a new job. Savings rapidly go shrink throwing you off track. In bewilderment, you take out loans for unemployed to tide over, which more often than not tie you up with a debt web. Expenses are waiting to burn a hole in your pocket; medical bills, credit card dues, utility expenses, and other unexpected expenses are lined up to leave you strapped. Taking out a loan is not a bad idea provided you are able to pay it off.
Here is how you can keep up your credit when unemployment catches you on the hop:
Look over your spending
When you have a steady source of income, it is easy to ignore where and how you are spending money. You can afford occasional overspending by dipping into your savings as next month cash inflows will offset the effect. The situation becomes harsh when you are left with no steady source of income.
You continue to spend the way as you have been spending until the last day of your job and eventually find yourself worse off. Maxed out credit cards, pending utility bills and overdue debts, all leave default marks on your credit report. Not only will it pull your credit score but also it will keep you from taking out a loan down the road.
If you are running out of money to keep the wolf from the door, you can apply for loans for unemployed from direct lenders. You need to make sure you pay off the debt on time and for that, you must make a budget.
The goal is to figure out how much money you have got in through your income sources such as a part-time job or rental income etc along with outgoings. Make a list of essential and non-essential expenses. The former consists of debt repayments, utility expenses, medical bills, food, drink and the like. The latter includes unnecessary clothing, dining out, etc.
Now try to find out how you can whittle down your expenses. Unemployment loans are usually expensive even though they come with flexible repayment terms. Try to have more money by making do with what you have presently. You should avoid dining out and weekend entertainment in clubs and cinemas. Do not travel a short distance with your car to save in fuel. Buy groceries from a wholesale market and prepare your meal at home.
You must save more and more money to settle dues on time. A practical budget will help you know what size of your guaranteed loan for unemployed should be.
Find a part-time job
Of course, you will have an income source to rely on after all you are going to apply for the loan. Cutting your budget to the bone will surprise you by adding up your emergency cushion. However, you may need extra funds to hold your end up.
Unless you get a new full-time job, you should look out to get a part-time job or freelancing. Something is better than nothing. Identify your skills and do research. Ask your friends and your colleagues to help you grab a part-time work in the field of your interest.
Most of the people opt for content writing, graphic designing, web developing, and similar professions. If you do not fit in such profiles, you can consider opting for other careers like cleaning houses, walking a dog, running errands, cooking meals, etc.
You do not need to leave it even if you have got a new job. Make sure that it does not get in the way of your full-time job.
Grab the best loan offer
You are likely to face financial difficulty when you face unexpected layoffs. Loans for unemployed will give you a leg up but at last, you have to repay it. Not all lenders provide these loans with flexible repayments and lower interest rates. You should do extensive online research to find out which lender provides you with a personalized deal. Use the online calculator to know about the total cost of your loan. Beforehand knowledge will help you prepare your budget accordingly.
Try to pay your debt on the scheduled date. If you are struggling to pay your credit card bills, contact your credit card company. Inform them of your true financial condition. They may switch you to another deal. They may also allow you to make minimum repayments. When it comes to maintaining good credit, you need to ensure that you do not make defaults. Create a budget, cut back on your spending, get the affordable deal and pay back the debt on time.