Help a Reader: Unemployment

Here's an email I received from a reader:

I just have one small problem right now, we are unemployed.  Actually, through a series of tough life situations, both my husband and I have lost our jobs over the past 2 years and we've lost control of our finances.  Prior to the job losses we were paying down our debt and preparing to buy a larger vehicle for a new baby.  I'm a stay-at-home mom, homeschooling 3 young kids.  Working outside the home is not an option for me at this time.  My husband was laid off in Dec 07 with a nice severance package and he is currently collecting unemployment that will run out in Nov.  The main reason he has been unable to find work is that companies are not hiring.  Many times he has had 2-3 interviews and then the company pulls the job listing and freezes the hiring.  He's even had a couple call back when they think they can reopen a position, only to find out they can not. 

We have increased our debt quite a bit over the last couple of years and are now looking at about $20,000 in credit card debit.  Our only other creditor is the mortgage company.  We were able to purchase a van with cash at the time.  Currently, we have only $8,000 left in savings and checking.  Unemployment brings in enough to cover the mortgage each month until Nov.  I found out today that my parents would like to give us a monetary gift to help out.  I do not know how much this will be but I want to put it towards our credit card debt.  More than anything in the world I want to get out from under these credit cards.  We have taken steps to start our own company, and my husband isn't limiting himself to only jobs in his field (information security).  At this point anything that pays more than unemployment is being considered.

O.k so here is my question.  I was wondering what you would do in this situation?  Would you get out from under the debt first or would you use a gift of money to pay all the minimums and stretch it out in case we remain unemployed for the indefinite future?  My original plan was to use the severance package to pull us most of the way out of debt but we didn't expect to be unemployed this long. 

What would you tell her to do?

Comments

[Chris]

Hard spot, and good that you have family support. I think the key is going to be getting things turned around before November and however that money can help do that, use it. Serious about your own company? Use it for that and you will not only be helping yourself, but giving respect to the spirit of the gift. If you are confidant about another good job, then use it to start getting your debt pointed downwards while protecting you from a worst case scenario of a post November mortgage payment with no income.

And I know people are sensitive about kids and homeschooling and such, but is there no way to change your home/work/homeschool situation? Even part time employment would help at this point.

[JayM]

Keep the mortgage paid so that you have a roof over your head. While the credit card debt is dead weight money used to pay it down might be need in the immediate short term for basic necessities. I'd pay the minimums until you have the employment (or business) income flowing. I'd hate to see some one pay off credit card debt then turn around and be foreclosed a few months later when the can't make the mortgage. It appears you have some resources to stretch this out. But what happens if things continue this way into next year?

[tom]

1. Have your husband keep at the job search, sounds like there are nibbles, so you have to hope that someone will bite.

2. Send the kids to public school. Why are you homeschooling and why is working outside the home not an option? Sounds like while your husband looks for a job, so should you. At least part time, even if it is retail sales at a mall, anything helps.

[moneymonk]

keep the mortage paid and ONLY pay the minum on credit cards

During unemployment, you need as much cash on hand, no need to rush to pay down debt

[Rod Ferguson]

The first thing I would do is secure a job. My guess is that her husband is looking for positions close to home; sometimes, especially in tight markets, you have to go to where the jobs are. Some companies will allow employees to work from home on a part-time basis if they live in a different state, some people maintain two homes and visit when they can and others pack up thier lives and move to where the job is. Starting a business a great idea when you can transition from a job to it, but relying on a startup to replace a job that you no longer have can lead you into *serious* debt with no avenue to service that debt - be very careful here.

Get the revenue stream going again - that should be the first priority. If he has the credentials, check the big multi-nationals; they tend to be a bit more forgiving with working remotely. Once he finds a job, they can decide on how they will adapt to it. Use the remaining funds and the family assistance to help facilitate that decision.

[Ryan S]

My suggestion is for you to get a job until your husband finds one or for your husband to get a simpler job until his leads pan out. Heck, anybody can get a job in a heartbeat at a 7 eleven or grocery store.

[justin]

>

Not necessarily...I have tried numerous times to get part time jobs at places like that and they would not hire me because I was overqualified. When an employer at a place like that looks and sees a college degree and a strong job history, they usually don't want to put the training time into someone who will bolt as soon as they get a better job.

On top of that, where I live, the job market is so depressed that even those places aren't hiring or there are plenty of non-skilled workers who are sucking up those kind of jobs.

[justin]

(Sorry! Posted too soon!)

It is easy to just say, "Get a job" but there are areas in which even low paying jobs are few and far between. I live in rural NC and there is nothing short of long distance trucking and outside sales positions. My wife is currently unemployed and has mailed out scores of resumes with little to no response. I looked for a while and lucked into a job here in town that pays pretty well, but it certainly isn't what I want to do long term.

If you are farther from a major population center, decent jobs can be few and far between.

[Foobarista]

I expect she's homeschooling since she has no workable daycare arrangement, especially since she has a young kid. But a part-time job in the evening, while hubby is not able to job-hunt, may be still be workable. If they have any ability to work remotely or have other sorts of IT skills, they may be able to pick up odd jobs on elance.com or other related sites.

As for money, cash is king: I agree with those who say pay the minimums and set aside any cash from gifts, etc until the work situation stabilizes. Paying down the CCs is not a good strategy right now.

[justin]

Putting the cash aside is what I would do. My wife and I have some CC debt, although not nearly as much as these folks. I use gift cash to take care of regular expenses and bills and plan on attacking the CC debt with gusto once the Mrs. has another job. I'd rather use my cash to pay my bills than pay down the cards and just come back and put those bills right back there.

["Mo" Money]

Now is not the time to try to pay down your credit cards. Pay the minimum until such time as you have the income to pay off those credit cards.

[Ggrrl]

As an aside, if you are receiving unemployment, be VERY CAREFUL about starting your own business. If the Unemployment Board discovers that you are engaging in business activity, even if you receive no money, they can pull your unemployment benefits, fine you and limit your future ability to receive benefits.

I would take part of the money and set up an emergency fund, but if the money is substantial and you can make a real dent in the credit card debt, pay it down. This will make the minimum monthly payment much lower.

Also, I agree with the other comments that the wife should seek a part-time job outside the home. If the husband isn't working, he should be able to help watch and/or teach the kids. Also, we are going in to summer, so maybe their school should be out for a few months too, while their parents get their financial house in order

[sahm]

As a fellow homeschooling mom, I understand the situation about staying home. That is what I do and will continue to do until things change. The IT/IS field is tight. My hubby looked for over a year for a job in the field when his position was cut. Fortunately during that time, he was able to keep a job within the company. It wasn't great, but it kept a paycheck coming in.

I know many people are saying for mom to go out and get a job. Is there something that you could do from home that could bring in at least a little bit of income? (I have friends that do "specialty" clothing that they make and sell on ebay and through word of mouth.) Have you gone through and done a thoroughly house cleaning- selling everything that you don't need/use on ebay or craigslist or through consignment? Is there another mom that would like someone to keep her child? What about tutoring? As a homeschool mom, you may be able to give light to a child that just isn't getting it in a traditional setting. Could you possibly act as a consultant or free lancer? A lot of companies that are trying to cut back on employee costs may hire someone on a temporary basis as a consultant.

This could be a very valuable lesson to your kids at this time. My kids (3 1/2 & 5) have helped me with many things, including my own small home business. Yes, I know you don't have a TON of free time, but can you make phone calls during "rest" time (the time when the kids are to stay in their rooms and read or rest or play quietly).

I hope this helps. I want to be an encouragement to a fellow homeschooler. It is tough enough without people jumping to conclusions.

[Adam]

have your husband keep job searching, but have him branch out into other fields. for example, I am in IT, but if I lost my job, I'd be a carpenter (i used to volunteer w/ habitat for humanity), load trucks in a warehouse, home depot, whatever I had to do till I got hired again. and why can't the wife send the kids to public school and get a job, or atleast get a night time job while the husband is at home in the evenings to watch the kids. go work at waffle house, krystals, walmart, hotel desk clerk, whatever

[Jim]

As others have said, conserve cash until your husband lands a job. He needs to take some kind of job (delivering pizza's, retail clerck, etc.) until the "real" job is secured. This will at least keep your head above water until he is in a better situation. Also, see what you can do to raise money (take in ironing, cook meals for others, etc.). Every little penny helps.

[ReddH]

I would keep paying your minimums with the gift and then if you have anything left once your husband returns to employment, put it on the card with the highest interest rate. I would also recommend looking for a work from home job yourself so that you can try to supplement your family income.

Pay the minimums on the CC's and no more until you are in a more secure position. Any extra cash should be going toward an emergency fund.

You should consider looking for a job yourself at least until your husband finds something stable. Even if it's something in the evenings, watching other kids, selling things on ebay. If he isn't able to get a retail job because he's overqualified but you are able to, can he take over the homeschooling/daycare?

Can you sell a car if you have more than one? That would bring in extra cash and save on gas/insurance. Can you rent out a room in your house? Ask your parents if they would be willing to watch your children instead of the monetary gift?

[AdamCO]

If you live in a housing bubble area and bought in before the ridiculous appreciation, sell the house and rent at a much lower price. In a few years, when you're back on your feet, you'll be able to buy the same or similar house back at 25% less money.

[Sarah]

Thank you all so much for all of the replies! It looks like the advice is to hold on to the money until there is an income again.

Just to answer the homeschooling question. No, putting my children into public school is not an option. Since it hasn't got anything to do with money, I won't go into the reasons here but I will be homeschooling. I actually have three children but my youngest is still nursing. Another thing not related to money, but again, working outside the home is not an option. Agree, or not, that is how it is for my family right now. And no, I did not get pregnant after I found out my husband was being laid off.

A couple of things that we have done: sold off nearly everything that we didn't need, turned off all extra expenses like t.v. with the only exception being the Internet. It will be essential when he does find work and also for our company. Yes, we are serious about starting a company and we've already checked out any conflicts with unemployment. So long as he hasn't earned any money, we still qualify for benefits. Oh and the company is in my name, technically he would be volunteering his time for me as it stands now.

He has been looking outside his field for work. At this point we figured it was best not to take a job that pays less than unemployment. That is why he's not working at Home Depot and still searching for a job. He hasn't even gotten nibbles on anything other than his field though.

We can't sell the house, nothing is selling here. Our neighbor is a real estate agent and she told us they won't even take new listings in this county.

Also, yes, he is looking for out-of-state work. Several times he has interviewed for positions across the country, only to have the listings pulled. We are perfectly aware that he may have to move without us for a while.

Working from home opportunities are few and far between where I am. I was working from home for my inlaws when our run of bad luck started and that's how I lost my job. I was bookkeeping for a framing company but with the house-building market gone, that would have dried up anyway. I am still looking. I have found something just last week that might work out so there is that!

[Todd the Bod]

Oh puh-leeze. Quit being a deadbeat. Send your kids to school and get a job.

[K]

I understand your personal feelings to want to homeschool, but I would also suggest that you look for a job yourself and get a pump to continue nursing while your husband teaches and cares for them during the day. I'm sure he is equally qualified and still keeps them out of public school. If you earn income, will that stop his unemployment? I'm not sure how that works.

[Lolita]

When I was married, my ex was constantly out of work because he would just move from job to job to job. Between us, we had 4 children that were not in school. When we first got together, I was working CS at a catalog making about $9.50/hour. We figured it out one day, it was costing us more for childcare and gas than what I was bringing home. I quit my job and went on a quest to find work from home(I'm so not the SAHM type!). It took a couple of years but I finally found a legitimate, WAH job that ANYONE can do ANYTIME!

http://www.westathome.com/

It takes about 2-3 weeks to get started. You need a basic land line, corded phone with headset, and high speed internet. Basically, you start out taking inbound calls where folks place orders from commercials and infomercials. You get a script to read, enter the caller's info and go on to the next one. The best part? You can set your own hours in 30 min increments and the work is 24/7. I used to schedule time during nap times and after bed time. The ex used to get pissy because I wasn't spending time with him, but at least there was steady money coming in. They pay by the minute that you are on the phone. Some days/times are busier than others but I usually did pretty well, even at slow times. Qualifications to get the job? Know how to read out loud without sounding like you've got cotton in your mouth.

One last thought...I friend of mine started doing this while she was working two other jobs. She worked just enough to pay for her gas for the other jobs.

I'm not sure what your reasoning is for not sending the kids to school and that is certainly your business. But there have been a ton of posts with very helpful suggestions here. I hope that you can take a good hard look at your family and the financial situation and see that something needs to be done and soon. I've been reading this site for a while now and for every person that has written in for help, I've never seen anyone make a post that was less than helpful. Hang in there and do something...

[Meg]

I don't mean this as a dig against the emailer, but I couldn't help but be struck by one particular phrase "at this point, anything that pays higher than unemployment is being considered." This is part of the problem with the welfare system. The more the government hands out (especially when the "assistance" is indefinite), the less motivated people will be to earn their own money.

In this situation I would GET A JOB, ANY JOB. They've been employed for 2 years? It's time to try harder and/or lower your standards and/or move to where the jobs are. Also, home-schooling your kids and refusing to work is a luxury you might need to consider giving up. The kids will be worse off growing up in abject poverty than they will be attending public school.

[Meg]

K, I just realized the hubby's only been unemployed for 6 months. Still, the phrase "over the last few years" confuses me. Has he been unemployed on and off for two years? In any event, I'd use the gift to cover BASIC necessities like food and gas and use the unemployment money to cover the mortgage and do everything you can to get employed before either runs out.

[Mark]

It's difficult to do but look at this time as an opportunity. Pray often and do not make emotionally charged decisions- especially big ones. Trust your decision making, be patient and follow your heart. Operate from a position of hope- not one of fear. Remember too that entrepreneurship is a way of life and that it can (and often does) take time for a venture to become profitable. That may or may not be right for you at this time. Take care and God bless.

Mark