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Prepare For Unemployment

Oct 26, 2008|

CPA Michael Eisenberg discusses unemployment preparation.

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Automatically Generated Transcript (may not be 100% accurate)

You're listening to -- yourself a series of interviews with people of interest in northwest Oregon and southwest Washington. I'm your host chilling winter yeah. And he's our economy unemployment is on the rise and many who still have jobs are fearing that they could soon join them jobless. With me today is CPA Michael Eisenberg from the national financial literacy commission and he's here to tell us about how we can prepare in the event that were shown the door. We wanna thank you so much for joining us Michael. Well thank you Jordan for having me to tell -- what is unemployment like right now. Unemployment. Is at the statistics are that it's in the high sixes. Nationally in certain areas it's it's probably higher than that. And at what we're looking -- -- hearing is it's probably gonna go higher in the in the new term future than it already it's. So when you say the near term future what are you referring to couple months from now a year from now what you see the forecast looking. I think we're talking to everyday we hear more and more people are losing their jobs. We're talking weeks and few months before it gets better is going to be a long time for such children get better. So when you see things starting to turn around getting better. There's probably sixteen maybe tenement window that this gonna continue our. And then when you say things and then start getting better is it going to be a slow recovery or pretty rapid recovery do you think. In my personal opinion I think it's during reveal more slower gradual recovery -- This economic crises that is gripped the world is not just the US but his script the world has taken a toll. And it's taken a number of years to get us to this point it personality of the winding. Roll it if you will and so it will take us a little bit longer to get back on the street narrates. Well what is the average length for unemployment -- now. It's it really depends I don't know if there is an average if if you're somebody that's been unemployed for two years. But does that mean you're average different places six months that your average had a perfect example is my sister who lost her job actually. And because she was in -- industry for many many years she had any contacts. She knew people in the surrounding area where she lives and -- isn't a matter of four -- five luncheon was able to. A game. And outside consulting job which he's -- out and do very well let's look in her situation it was a relatively short although during their 45 month period. It didn't seem like I'm very short because you know what's going on actually actively seeking. -- But it depends on what field jury and for example if there's -- whole building. And that may take longer than historians say the arm. To -- -- -- distance with which -- complex and currently. Are there certain sectors that are seeing unemployment more than others and if so what are -- Well I would think so I think you either have it in any of the homebuilding industry. I think we've seen therefore I think it's gonna continue weren't I think you may see dead in their retail sector. You'll see him right has indicated. The retail shops closing clearly we're seeing it in the -- services industries. So what do we do how camera prepare for unemployment. -- what we know poor are working with the commission is that. Americans had core group period of negative savings they ordinarily not believing they were spending -- And they -- in the wording there have been a purgatory where Americans are spending a dollar 22 -- they -- -- And that's. That's not a good step. What you want to do is especially this in this -- are required to you -- -- safe you've got a job. It'll. Start putting money aside has observed safety net. In any event you should lose your job. It's always good to know is that if you have some money in the bank taking care you can six months. Or even eight years where -- living expenses. And that won't. Making it easier if in fact even Sheikh jarrah because you are when you go after your interviews. You're not gonna be forced to take the very first thing that comes along which may mean to repeat the appropriate. Position for -- to -- things that we talk about is trying to. How that's fifteen minutes of liquid cash in the bank and it's taken these Rockies in repertory. And probably not a good idea between that and the stock market that's what you're looking RA announced. Well if here in the position where your. -- retired. Obviously you're not worried about working but if you're in that position being -- you're seeing. The market chilling terror and in some of your retirement -- and I have -- down. One of the things to consider just. Do you want to do you have the ability to -- or is energy wise maybe to look for part time jobs to help. -- absolutely. The valuations of course there in the stock market but if you are. Any -- young by the districts if you're young it's been working. Absolutely this media great -- particularly the stock market Kazaa a lot of for the good solid blue chip companies are telling -- are on -- there until a few -- And so which need to have a plane needs to double point historic Russian and it just put everything -- -- what went torrent. Still it's it's good to talk to somebody and keeping any parameter. Or somebody you know that you're comfortable -- -- it knows about trying to it is. If you young working that he should continue to do that their companies have forewarned can mean. He continued to continue to put many into data as well. But if you lost your job for pure fear of losing your job and then what you want to do you wanna hold onto as much cash it's possible at this point time. Well I would like to -- cash is king. But some Google may be listening to us right now say yet at all sons and good and well but I'm living from paycheck to paycheck right now on I can barely make ends meet. Some people might be surprise is where they can make cuts if they do a budget correct. Yeah that's exactly right in need of people that people don't like to -- budgets will what I -- he's gonna cash flow analysis of. You have to be either would have to know the people -- -- -- an -- -- -- -- -- you're looking at a careful analysis which sort of do this. Prepare to learn what their resources of money coming in or you know what's coming in. On -- or Barley wheat basis Ellerbe get paid so you know what your net inflows are in there and put -- what you're spending ultimately bases and and and compared it to its and it's in fact there is any shortfall. Or if in fact it's paycheck to paycheck. It pin which becomes a little bit more obvious where we you can look to the expense side of things where what he's going out and make those cuts. Because you'll see it in black and white in which I also recommend that you don't do it just over one -- -- -- would be just because. There may be some build their paid quarterly horse -- annually for example. Homeowners may -- homeowners insurance. Quarterly or semi annually sometimes they're paid annually they need be property taxes I mean any other kind of insurance applications that are not plead their peak month. And also out. What happens if you don't -- couple of months and you're builder fairly okay will this lead in the third or fourth branch. You have a major car repair bill comes up. Some -- ordinary happened so it's it's not as good to do it not be as opposed to trying to look -- your expenses. He Dorgan annual basis or at least no -- consumer annually that should keep who have better. You -- teachers spent the early nineties and I'd like to throw out that the world is. What would seeps through people's -- everybody's like this into their pockets. Is what we spent cash if we have some cash to our pockets and we go out to distort where. You know -- -- I'm buying at the. -- -- Privileges are being privileges on a daily basis we don't realize. Because we're not tracking. How much cash -- spending on the on the day to day basis so if you start to track where your passion is -- you might also be able to this day. You know what I don't need to have a cup of coffee or. Spend money on lunch five days a week we're gonna work media can. Bring my lunch to work once or twice a week maybe I can do with. You know a coffee every other day or you know not treat coffee in the -- need one copy it is something like that but you'll be able to -- where that cash. Is growing because there's a lot of what I like to call -- in the cash. So patent -- here. Daily cash spending and you take look at what you're multiply. Expenses are. Of course as we talked that's spread over -- -- periods that were keeping a very good idea as to where you're spending your money and show you. Where you could possibly make some cuts -- You're listening a -- scope and we're talking with CPA Michael Eisenberg with the AA -- CPAs financial literacy commission. And we're talking about how you can prepare for unemployment. Now let's talk a little bit about credit cards because it seems like credit card usage is at an all time high. And now I know that a lot of -- cracked me if I'm wrong button a lot of the credit card companies. -- -- get in the cash that there whining because some people are filing bankruptcy losing their homes as set track. So I would think alum as a consumer if you are financially strapped to your trying to set yourself -- budget. You may be able to contact your mom's credit card company and work with them on a plan. Absolutely if you finding that you are behind in your credit card payments a couple of things happening maybe sailing along -- Using their credit card in in charging. Purchases. And making your payments and and for whatever reason -- Find out they even he can't make those payments. Needle ought to job -- -- job his cup that the number of hours you work scorched if there's. To wage earners and household with maybe one of them -- job for various and sundry reasons. What you should do -- you should become proactive and contact the credit card company especially in these hard economic times. Aren't those people that are proactive we're gonna get in most instances -- a very nice surprise and that is that the credit card companies. Would be willing to work with them are either in -- extending. Debuted the payment I think we have to make a lowering their interest rates. Maybe even giving him a small term moratorium because. They would prefer that you continue to make those payments as opposed to having individual file bankruptcy in the and they the critics are looking when it up with zero. And a lot of people are looking at Christmas right now -- I can't afford to go out by Christmas presents right now. But I'm out of a job may be within a few months -- will have a job so I'm gonna start putting everything on a credit -- second still. They provide my family gifts and and and treasures for the holidays. Probably not a good idea. I would agree that is of the worst idea because what happens if worst case very cold so we were to go through and in music kind of an analysis -- and I should start getting the Gibson now because I mean I'm not working they may have the Japanese three or four months what happens if you don't have a -- -- -- apartments. There's a lot of uncertainty out there and if you built up that credit card. Balance and then all of a sudden you care to pay at the board you're putting your overall credit. Scored the cycle score at risk number two you're setting yourself up for some difficult times been on the road because. You may get the. And give those gifts at this point that they need and it will he really spending a lot of money you don't have and won't have been Roche as a matter of fact. Content even in our own family we've been discussing it now here it's October we've been discussing. The fact that. You know because of economic climate that in the war in US today we are suggesting. Did our own family members to reconsider at least think about what it is going to be doing as far as gift giving this year. And you know what family members and friends are not gonna be upset if they get a smaller gift or -- gift or something like that you may have to do something. I think gift card to the baby sitter or. To lose some special people do work for you around the house and -- or where you were good. Something like that that part different family members. If if they understand your circumstances. That you do you don't have a job or there is the possibility because of where you work I mean you work which you might lose your job. They will be extremely understanding about it and they're not gonna be hurt -- feelings not be hurt if they get a lesser work that gift store to get noticed at all this too clear. We have to get back to the idea that. You know material is and is not the key right now but survival basically for a lot of people is get. By the way another Arafat that pops in is that you don't necessarily have to go in. Spent money -- give you my pupils don't mean except. You couldn't which your own creativity you can make something for somebody that sometimes those kind against well more rewarding for both. Person making gifted person receiving it's been going after the sort spending a lot of money on something. And one of the things we've always forget about you know who we remember back in the day -- Tom lay away we're talking -- -- -- Not a bad idea. Not I think it's great idea that he -- in the olden days when it's cold but I'm suspecting. When people wanted to buy something they would go to the stores and they put a few hours staring each week. And until they actually had the united case for -- and they can go and they can get it. And that's a great way to do things because what -- doing generic is certainly -- burning up those -- so this does. Are charges that you're not going to be able to pay down the -- still a lot of stores may be willing to work with people nowadays with this clearly program. He's going trying to what division wanted to acquire or would be give to wanna get an -- works -- -- -- with the retail and listen I'm gonna give you -- -- dollars per week. Until things Steve Jobs you hold it in this story we're gonna make the final payment would get it. There is that what we need to understand is there's there's certain element of trust and confidence between the consumer in this store owner -- In this climate. It's a great way to build up a relationship to build back up the trust confidence level between. Consumers in in two election and it it makes it easier for the consumer. Because they know that they're gonna have to items that they want they gonna pay for it's a little bit over the ensuing months. And they'll eventually get it and they know they awarded a -- just. Large sum of credit that they may or may not be able to take on the road. Eliciting an Interscope or speaking with CPA Michael Eisenberg from the national financial literacy commission were talking about how you can prepare for unemployment. And probably a great time to ask your employer about benefits should you lose your job correct. I definitely agree with -- X com it's what people should should do even if you're. You don't know that you're gonna lose your job be don't have an idea but you have friends Serbs -- I have lost their jobs. Talk to the people in the HR department and ask them what kind of benefits are out there. Would take you have your company you know these things might happen. If you do your job what's what's the issue that you you know peaceably with political -- health insurance is so critical -- sustaining -- -- how does how does the company. Support people with insurance and what happens after that. What kind of retirement plans do we have we've seen are familiar with them and and what's there. As far as the company's. The benefits are going to be but the other thing you can -- issue concern talking to some of the people who worked and and that's if there are if there had been -- -- source there's discussion about someone -- what are things you may wanna do is. Make sure that your supervisors and bosses know who you are and what you're. What benefit you're bringing to visit to the company. You don't wanna be mister -- showboat but you -- certainly make sure that -- Supervisors know -- words so that if there's picked. The choice between two people who are gonna get laid off and if your supervisor is certainly we Q and what it is you do it do well. In the -- -- a little bit of a better chance of not. Giving fired or laid off at the time because you folks again became proactive even if you're pointed out of of course if you do that he could be saying okay. Be prepared for taking on more more work but that's okay. Because you are adding to that the company in the long term and long term you and the company will benefit by this. Illegitimate Tesco and we're speaking with CPA Michael Eisenberg from the national financial literacy commission were talking about how you can prepare for unemployment. And and let's talk about just the overall. Health of your financial situation probably a really good time to assess that -- some key things that you should probably have when you're looking over the health of your finances correct. Absolutely. We talked a few minutes ago that having a cash flow analysis and I would recommend that your listeners to that. Now and in updated down the road. Especially if they're if they're currently employed. It's a good time to take to it. Make and analysis of what's coming what's going out and trying to put a waste of money in the event of some rocky times. Why are you working its why you're getting your info -- is the perfect time. Don't set aside some money for that statement that we wanna talk about the other thing you may or look at this. Where -- -- as far as your your credit cards and other outstanding obligations. Do you have then have you been current are you falling behind. -- or of these. That this kind of financial difficulties is when you start to fall behind in payments or you're making minimum payments only. We he's been making you know paying the -- so often focus. The other thing you may want to consider if you're concerned. About your industry your company about to. The potential for losing your job if you have a mortgage for example and you making payments on it and you're also because you like to pay their mortgage -- Speaking extra payments now waving at the time to reassess that on the short term basis and say you know what as we take. We want to have as much cash and it didn't look ridiculous possible. So although we would like to have their mortgage paid off -- media we need to take this step back for a brief period of time -- take. Let's not. Continue to make these extra payments to -- make your payments. But not adding the extra prints books and putting it extra principal into the debate that you can start to build -- -- safety -- If you will just in the event. Unfortunately nobody whose job. So those are some of the things we can do the other thing is if you're driving her car and you say well my -- -- seven -- eight years old. It's time for new car. Maybe you can make this car last maybe it needs had to go up there in the and oil change some things of that nature of that's gonna enable you to keep the car addiction here to. And not have to pick up new car payments at this particular moment in politics. Or any other hand if the car is actually dying in you have to get there and another car -- -- should think about in this in these kind. Can I do they used car as opposed to a brand new car there's lots of new works that there's lots of. Used vehicles that are not that old on the market today because people are turning their cars they can afford themselves. There there are things that we can do or a practical basis can help us. Preserved what we have and reserve what we have so we can prepare for those -- disinfecting it. And I would think -- now would be a really important time to assess your health insurance and -- is sort of insurance that you do have with your family. It's a perfect -- Turkey that. -- these economic terms which are very very difficult. For all of us what it does is it provides us with an opportunity to revisit everything that we have wherever we're spending money. So for example if there's an opportunity. To sit there let's say you do have a life insurance policy you know -- insurance salesperson. It's a good opportunity not to contact them and and talked about what's there what's going on. Are there are changes in the history can we change something stinks anyway turner employee or or. Whomever you may have your health insurance where it's. Homeowners insurance it's a great time to revisit these things. I also know is that. -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Maybe he's been checked with the so the appropriate taxing agencies and see if you can get. They'll property reassessing your property taxes become that's so what we're saying here is as bad as these things are. This silver lining we're finding music gives us the opportunity to reassess. Everything that we have in our financial life and start to tweak and and make changes that will have a long lasting effects many years -- the perfect opportunity. But for those who have already lost their jobs. -- don't have a lot of money flow right now for -- Kaczur down stock plans are down. But yet you might have some room on your credit card or maybe a home equity line. Where do you go what do you touch if you have to an emergency you don't have any savings. Well if you haven't actually knows savings whatsoever. You have to be very careful where you gonna go figure you're talking about a situation where we don't have any savings. In the and. The credit line may be almost step dad and if you start to tap out all of your credit lines and you don't have that inflow of dollars. Then what's gonna happen is that. You know you you may find itself going in this slippery slope what you could do in lieu of that it and by the way on the forward case if you take money out. From forward case what I recommend you do is. And check with your previous employer's -- currently -- tension that we had to forward can't. Most likely should no longer employed as he took our money from the 401K. What's gonna happen is gonna be tax consequence to that. So you're not gonna be able to utilize the total of any to take you know because you gonna have to pay taxes if you can't ship your forward -- need to be very very careful about that. But which you could do is for example maybe there are as an opportunity to talk to other family members about their temporary family roots. You know maybe the younger -- can talk to the parents. Loaning him some money at this moment in time if they're okay financially. -- could be for example if you have a life insurance policy a whole life policy sometimes as cash value to it that might be something to look at cash value of but like centrist policies and if you're already unemployed. BP or dissipated to it's very depressing everybody understands that it's not the most comfortable place to be but don't give up put yourself. There have been the best that it we have where's our selves and what you can do is go out promote yourself. Even if it means to temporarily while you're looking for a full kind of jokingly have to take a temporary jobs to generate some cash to keep you afloat. But you have to assess where where the money's gonna cover for example if you have. It's a retirement account. And you have. Some stocks that are not a retirement accounts it might be best to keep them from the north -- Medicare because he's. Today the stocks may be counted if you liquidated and media actually selling and -- loss. And that you can have people to take that prosecutor future persist if he took when he had the forward -- camp which become taxable income. Michael wanna thank you so much for joining us some metro scope today. You're welcome and and Joey if I -- mention one of the things. PA ICP doesn't have a web site called free six -- financial literacy -- awards. There's lots of this information on this web sites and it's all free to the public and there aren't just a wonderful service that the Spanish PH. Provides the public. And there's one special. As a programmer one special treatment of this web site called late great pieces. And -- that the Euro listeners want to look at some more additional information. 360 financial literacy Dell's web site is a great place to get this information. Sounds grace. That's CPA in my eyes and -- from the national financial literacy commission and we've been talking about how you can prepare for unemployment. And that's mattress company Entercom communications and public affairs program. I'm your host -- winter if you have a public affairs or nonprofit event that you'd like to let others know about email me and @entercom.com. We're good -- this station's website click on the community page and submit your information. You've been listening to mattress out.