Here's this week's dose of financial advice from Dave Ramsey:
Dear Dave, Could you please give us a list of the things people need to think about and deal with if they’ve been laid off? Anonymous
Dear Anonymous, What a great question! It’s good to know you’re thinking ahead. Hopefully, you won’t have to face this problem, but if you do, here area few ideas to help hold things together.
The first thing you do is take any severance pay, plus all the other money you have, and put it all in an emergency fund. You never know just how long money will be tight in a situation like this. Even if you go out immediately and find a part-time job to tide you over, you’re still going to be facing a significant loss of income in the short term.
You know I love beating down debt, but at this point you need to stop paying extra on any debt you have. Yank the plug on retirement planning, too. You don’t need to worry about these things when you’re in the middle of a crisis! A bare-bones, detailed household budget is also a necessity. It’s beans and rice time, so you’ve got no business seeing the inside of a restaurant or buying new stuff for a while. If you had vacation plans, put them on hold. Many times people don’t want to experience the pain of a scaled-back lifestyle while they’re feeling the pain of a job loss. Often they’ll turn to credit cards in this situation, and that’s a really dumb idea!
Be on the hunt for life insurance, if you previously had it only through your employer. Everyone needs a good, level-term life insurance policy outside of what’s offered at the workplace. When it comes to medical insurance, consider using a health savings account (HSA). Look for one with a high deductible and low premium. If you have a 401(k), roll it directly into an IRA with a direct transfer rollover. Do not have them send you a check! Don’t ever cash out an IRA in a situation like this, unless it’s absolutely necessary to avoid bankruptcy or foreclosure.
Finally, you’ve got to be willing to take any work that comes your way. This means even part-time jobs like delivering pizza or flipping burgers. There’s no shame in honest work, and losing a job isn’t the end of the world. It just might be the opportunity for a great new career change!
Dear Dave, Do you think people should a keep a certain amount of emergency cash on hand at home? It seems like this would be a good in idea in case there’s a national emergency or disaster situation. Rose
Dear Rose, Some people do that kind of thing. I know a guy who is a multi-millionaire, and he keeps $50,000 locked up in a safe at his home. I’m fine with that. At the same time, you shouldn’t act like a scared rabbit, and tuck all your money under a mattress, or bury it in a coffee can in the backyard, because you’re afraid the world’s coming to and end!
There’s nothing wrong with having some cash stashed away at home. I’m all about being financially prepared. Just remember that the money you hide isn’t growing or earning anything!
news
