Unemployed and Savings Going, Going, Gone? Tips to Stretch Your Unemployment Check

Unemployment Check The recession's over -- yay! To the 8.9 percent of Americans who remain jobless, that's as much reason to celebrate as this year's Groundhog Day prediction for an early spring. (Which also turned out to be substantially untrue.)

For the unemployed, hours and hours spent online and pounding pavement for a job search need to be supplemented by hours toward money management. Just cutting out the $5 Starbucks and using last year's spring handbag won't do. We're talking tough choices and no messing around.

AOL Jobs spoke with noted author and personal finance expert Jean Chatzky, creator of the Debt Diet online program.

Work backwards

Working with unemployment checks or a dwindling savings account, budgeting is no easy task. Chatzky recommends working backwards.

"You have to start with a list. 'This is where my money is going today.' It's very difficult to budget from scratch," she says. "I think the easiest way to budget is backward. This is where my money is going now and then you can make changes."

The bank account can seem like a ticking time bomb as the balance drops because there isn't a salary flowing in. Chatzky says it's not just about saving; it's much more serious than that.

"When you look at the amount of time it's taking to get that next job whether you're out of work or not, you have to realize we're not living in great times," she tells AOL Jobs. "That calls for more austerity and more careful care taking of your money than when you're living in another time."

While none of it's easy, the easiest way to start is to identify fixed costs like rent, mortgage, and car payments. For other expenses, consider how much can truly be cut. This is when a person needs to consider if 600 cable channels or cable TV at all is necessary.

"The people that I've seen throughout this recession that have the biggest problems are the ones who continued to live as if there were two salaries coming into the family when there was really only one (and one with unemployment payments)," says Chatzky.

Desperate times call for ...

A 2010 CareerBuilder survey reported that 8 out of 10 Americans live paycheck to paycheck. Chatzky says that's got to change, especially when there's no paycheck. She says that means asking the hard questions like:

  • Do I have to rent out the room above my garage?
  • Do I have to pull my kids out of private school?
  • Do I have to sell one car?

When the money situation is beyond bad, thoughts often turn to filing for bankruptcy. But that's not an easy out anymore; debts are not excused like they used to be. The process is longer, now requiring a course of credit counseling.

That rainy day that may come after age 65? Don't even think about it. Chatzky warns against cashing in 401ks and other retirement accounts, in case of bankruptcy or not.

"Pulling money out of retirement accounts should be far down on the list," she says. "Those assets are protected in bankruptcy. You can lose 30-40 cents on the dollar in taxes and fees."

All is not grey skies. Chatzky reminds us that there are people getting jobs every single week, every single month.

Jean Chatzky is also the financial editor for NBC's 'Today' show. Follow Jean on Twitter @JeanChatzky or on Facebook.

Next: Top Companies Hiring This Week

Related Stories from GlassDoor

Add a Comment

*0 / 3000 Character Maximum


Filter by:
Trudy Marie

I am 59 and not even WAL*TRASH will hire me---and I even said I would work THIRD SHIFT!!! It's because I have too much education and intelligence I guess. The job market is horrible enough but if you are over 50 FORGET IT....YOU'RE DOOMED!

May 24 2011 at 4:15 PM Report abuse +1 rate up rate down Reply
Betty L Montgomery

Job Loss is very frustrating, and, the article seems too "rose-colored", assuming that there are resources not yet tapped! And, the internet is not really a good place to search for jobs, contrary to popular opinion.
Help out by making a list of great bargain sites, that really save money! ZenniOptical, Billshrink,
Add yours, please: Bargain Sites? What's Ur Fav? http://www.smartaboutmoney.org/Community/Forums/tabid/943/aft/71/Default.aspx

April 19 2011 at 11:08 AM Report abuse rate up rate down Reply

what a joke! This article was soooo not helpful!

April 04 2011 at 9:01 PM Report abuse +1 rate up rate down Reply

I agree, these so called experts have never had to live on unemployment! I would love to sell one car if I had two in the first place, and my kids go to public school, which is not cheap either. All of my kids play sports and that costs too, and don't tell me they should get a job, here in my small town there aren't any jobs for middle school and early high school students. And how would they get there anyway. And for anyone who also has to pay child support, the amount they end up with is just rediculous. By the end of the month they have to decide if they want to eat or put gas in their vehicle to beable to look for work or even to go for a job interview! Put Obama on unemployment, that would be the best thing that could happen to the United States!

April 04 2011 at 8:09 PM Report abuse rate up rate down Reply
s.l.a.p. crafty

This article was not HELPFUL at all. I thought I was going to really get some good tips! So many of us are effective with job lost, including myself, you spend countless of hours on the internet searching, praying and hoping that your resume will impress someone to at least to give you a call, but you hear nothing and that alone is discouraging! You become a statistic of losers in the eyes of employers wondering why you are without work, as if something is wrong with you! Next time you wish to give tips about something, try giving tips to those of encouragements of how to deal with a job lost and how to take it one day at a time, because each day will bring about different emotions.. Try that tip!

April 04 2011 at 8:04 PM Report abuse +1 rate up rate down Reply

Gotta love these "experts", what a crock of sh... She should cut back on advice.

April 04 2011 at 7:56 PM Report abuse +1 rate up rate down Reply

As an owner of a large business, you can thank Obama for the high unemployment. Employers cannot afford the high costs of Obamacare or the high expenses related to Obamacare. Obamacare has caused such a rift and uncertainty of the future of businesses and their "bottom line" that we are not hiring new employees. In most cases, small businesses have been laying off employees and in some cases closing all together. I have discovered, the longer the unemployment checks keep coming, most people will not seek work. They want free money and have been getting it for over two years. Obama needs to "wake up" , stop the unemployment checks, cut some of the freebee government programs, repeal Obama care, stay off the golf course, get back to business and GET THE ECONOMY MOVING.

April 04 2011 at 7:52 PM Report abuse rate up rate down Reply

I am 57 years old and single. I lost my job 15 months ago. I have a house payment, car payment, insurance payment, utilities to pay and credit card debt. I had to use my 401(K) because the $330 a week I get won't cover everything. Not by a long shot. Not to mention I now owe the IRS $3,400 because I didn't have taxes taken out of the unemployment or the 401(K). I can't even afford to shop at Goodwill, so this article didn't help me at all.

April 04 2011 at 7:50 PM Report abuse +2 rate up rate down Reply

To the author of this article: When you have lost your job for two years, exhausted your savings, lost your home, lived the the attic of some else's garage and been treated like dirt by people who think you did something to deserve all this, I'll listen. As it is, you are not qualified to speak on something you have not experienced.

April 04 2011 at 7:36 PM Report abuse +2 rate up rate down Reply

B**ls**t. Guess what? There are 2 types of people that employers are hiring right now. The person covered under a spouce's insurance or a child under their parents insurance. Can I find work yes, will it come with health insurance 7 out of 10 times the answer to that question is no. I'ld rather have a paycut and insurance, then more (or same) amount of money with no insurance.

Another thing whatever happened to" Made in the USA" . So many of us could find work if work was to be found in our states. It's a fact and, it's a disgrace. Big time celebrities(among other wealth) with high incomes of millions giving work to China, Taiwan etc... Here's a thought bring it back home. Then and only then can we say "Get a job" , and make sense of what we say.

April 04 2011 at 6:35 PM Report abuse +1 rate up rate down Reply

Search Articles

Picks From the Web