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Surviving joblessness

Here are ways to stretch your resources until you land a steady paycheck

September 21, 2008|Tiffany Hsu | Times Staff Writer

Abby Winger learned at least one thing during the more than a year she was out of work: how to live cheaply.

After being laid off from a home loan processing position, the 37-year-old Chatsworth resident scrimped to stretch her unemployment checks and severance pay as far as she could.

Now working in a temporary position, Winger points with pride to the time she used coupons and her store discount card to push a $99 grocery bill down to $65.

"You can't do the normal things that you would take advantage of if you were working, like going to the movies or going to get a haircut as much or even just going out to eat," Winger said of her time in the ranks of the unemployed.

It's never fun losing your job, but it's worse in an economic downturn, when more people are fighting for fewer positions. And it's especially tough in California, which is tied with Mississippi for the third-highest jobless rate in the nation. Unemployment rose sharply to 7.7% in August, California officials said Friday, up from 5.5% a year ago.

Experts say there are ways to soften the blow of a long layoff -- including acting early and decisively to cut expenses. The newly unemployed should also communicate with creditors, landlords and others owed money; you don't want to be driven deeper into debt with fees for late and missed payments.

"It can be a shattering, debilitating experience, but you have to take stock of things and realize it's not the end of the world," said Chris Marston, who counsels laid-off union members as community services coordinator for the AFL-CIO.

If you're mired in long-term unemployment, here are some steps that Marston and others say can help you ride it out.

Be frugal

Prudent money management is key. Resist dipping into retirement savings, experts caution, because those withdrawals carry high tax rates and 10% federal penalties.

You also don't want to rack up credit card debt -- that carries high interest rates and makes it harder for you to dig yourself out of the rut once you find work again.

"The better idea is to circle your wagons and make drastic financial cuts," said Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling.

Jessica Hodgdon, 24, was out of work recently for six months. To save money, she moved into the East Los Angeles apartment of a friend, who waived rent in exchange for Hodgdon's help cooking and cleaning.

Instead of going out with friends, she had them over for dinner. And to get healthcare coverage, she enrolled at Pasadena City College so she could hop back onto her father's Kaiser health plan. If that's not an option, look for low-cost or free health clinics.

"I just didn't spend any money during that period," said Hodgdon, who now works as a technical writer for Banker's Toolbox in North Hollywood. "I don't know how I could have survived otherwise."

Four years of on-and-off employment put a damper on Frank Wesley's style. After Wesley, 50, left a janitorial position, and before he was hired by the Metropolitan Transportation Authority, he said, he even abandoned his favorite Levi's 501 jeans for cheaper stonewashed styles.

Other ways to buffer your budget:

* Cutting back on insurance for your car or home.

* Switching to generic prescriptions.

* Eliminating or downsizing your cable TV, Internet and cellphone service.

* Eating at home, and shopping for discounts.

"Leftovers are also great -- I have barbecued chicken today, and tomorrow it's in my enchiladas and then it's in a chicken salad," said Marguerite Womack, director of economic and workforce development for United Way of Greater Los Angeles.

Talk to your creditors

It's good to let creditors know of your situation -- it could help avoid a ding to your credit rating, which could stick around as an unhappy reminder of your tough times long after you rejoin the working world, said Andrew Stettner, deputy director of the National Employment Law Project.

Can't pay the full amount? Landlords, insurance agencies and credit card companies can be willing to negotiate, so ask to delay or lower payments, or pay only the interest until you score a job.

To keep collection agencies at bay, send a portion of the bill regularly and pay off high-interest credit cards first or transfer the balance to a low-interest card.

There's no foolproof plan. Winger said she tried to negotiate with her landlord, who refused to budge on the $990-a-month rent for her studio apartment. But she had better luck with Toyota Financial Services, which had issued the loan on her 2004 Tacoma truck. The company gave her an additional two months to send in her next check.

"I called and said I was in big trouble, and they said they'd help because I'd been a great customer for four years," she said.

Justin Leach, a spokesman for Toyota Financial Services, said borrowers should always check to see whether their lender can be flexible.

"It's not that they'll write everything off, but work with your creditors, because it's also in their interest to work with you," he said.

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