Unemployment rates are rising post-inflation blues in the UK. If not unemployed, many individuals suffered from low wages and reduced working hours. If you are among the group and facing unemployment challenges, you must consciously track the expenses and lead.
With creditors to attend to along with other liabilities, you need a road map to travel smoothly through the unemployment bumps. It is important because mismanagement means unnecessary loan penalties or missed payment penalties that can ruin your budget further. Thus, it would help if you took charge early.
Be it managing regular bills or reducing liabilities by your side, and you can achieve your minimal substantial goal without messing up your finances. The blog lists some ways to help you ensure a penalty-free unemployment phase.
5 tips to prevent loan penalties and exercise financial dominance in unemployment
While you may feel insecure within the microeconomics of your finances, you can still take some measures to stay afloat and increase your employability. The below tips can help you manage finances amid the sturdy unemployment path.
1) Identifying your existing financial situation
Before taking any initiative is ideal for backing yourself up with a clear understanding of your finances. The primary questions to ask yourself here are:
- How much cash do you have currently?
- How much money do you spend through online and offline transactions?
- How much of your earnings do you dedicate toward liabilities? How will you manage after unemployment?
Having a clear inventory of your finances would help you analyse the first step after unemployment on the financial front.
2) Consider debt consolidation
Debt consolidation is an apt way to release the money clocked in your credit report. It helps you reduce liabilities, interest rates, repayments, and overall loan costs with a single payment to the lender. It is the best way to manage finances.
However, if you are suffering from serious credit issues, availing of one can be costly and challenging at the same time.
Paying a one-lump sum is easier in employment rather than in unemployment. If you fail to qualify for bad credit, you may witness a serious credit score drop. Thus, pay off some debts to make them affordable.
If your purpose in consolidating debt is to fund something big, explore instalment money loans for bad credit instead. Debt consolidation is an instalment loan only. Instead of paying one lump sum, you can pay in affordable instalments.
For example: If you pay £4000 as a debt consolidation loan payment monthly, you can instead ask the lender to split the cost of the loan. You can pay nearly half the monthly or just £500, depending on the instalment loan term or your total loan costs.
It becomes easier to manage loans, especially with bad credit and unemployment.
3) File for unemployment benefits immediately
Corporations often confirm the news by providing a letter or emailing employees about the job loss. If you know you are on the verge of losing your job, you must apply for unemployment benefits. Do it at the earliest, as you never know how much time it may take to get the funds in your hands. Usually, it takes longer to process.
In other cases, if you encounter an abrupt job loss without any prior information (layoff) owing to a business shutdown or other issues, the next step must be to register for benefits. The earlier you do so, the better you can manage your finances.
It would help to be eligible for unemployment benefits if you were unemployed with no fault. You will generally need your identity proof and the genuine reason behind the job loss. The authority may ask you to provide proof of sustenance- be it income from any source except benefits. The authority decides the pay accordingly.
Income from benefits can help you manage loan penalties and debts and other personal expenses. And you can cover up for any emergencies as well.
4) Check whether you qualify for some insurance and employment benefits
Some companies provide benefits even after your unemployment. Thus, if your company has similar rules or policies that provide needed assistance to employees – in the form of:
- Insurance benefits
- Monetizing working on holidays as comp off
- Unused leaves
- Temporary health, dental, and other insurance coverage
Well, some companies are not obliged to provide you with benefits or insurance coverage forever; there surely is a utilization period. If your company does, it could help you with medical and treatment costs. You can instead utilize the money you have to pay towards the loan penalties and debt accumulated over time.
5) Contact your creditors
If you are already behind on your credit card bills or personal loan debt before the pandemic, you may have limited options to qualify for debt relief.
Many creditors allow individual borrowers to defer the payments until the finances improve. Contact your creditors quickly as you turn unemployed. Acquaint them with your finances and seek a suitable solution to manage the existing debts. Your creditors may help you with a financial hardship program.
For example, a forbearance program may help lower interest rates, reduce repayments, and allows you to skip a few credit card payments. Be mindful that you can only defer but cannot avoid payments. In this way, you can prevent additional penalties on your loans and ensure satisfaction on peace on the front.
Providing the details of your financial situation to creditors may help you avoid payments for a while. But most loans will accrue interest even if you postpone them for a while. Identify this thing with the lender.
What if your benefits got delayed and you faced insurance rejection? How will you cater to emergency requirements, then?
While you have secure control over your finances, unexpected expenses may hit the doors anytime. As mentioned above, only some companies provide extended benefits like insurance and other coverage; how will you act immediately to urgent medical costs?
The absence of financial backup implies serious trouble. It would help if you had assurance with no one to support you in dire times. Tap quick money loans for the unemployed for your time-sensitive requirements. Whether attending quick medical treatment or paying for medicines, you can cover everything with small financial assistance. However, you must ensure sufficient finances to bridge the gap. With no credit or income restrictions, these loans fit the emergency requirements.
You can use these for any small expense or emergency apart from medical.
Bottom line
These are ways to manage your loan penalties and debts well in unemployment and avoid strict penalties. Make sure to act smart and early to counter the situation in time. Identify how and what trick suits your circumstances best and dominates your finances.
