What Should I Do If I lose My Job? Part 2.

In part 1 of "What Should I Do If I Lose My Job?", we discussed the ugly truth with unemployment being at a high of 9.4% and climbing and you still face a chance of losing your job.

We also looked at several options where you should and should not get funds to make up the difference in your lose of income. Credit cards and home equity loans = Bad. Emergency fund (that's what it's for) = Good. So what other options may good or bad? let's take a look.

If I can't pay my bills can't I use the money I have available in my 401K?


Do whatever you can to avoid tapping into your retirement savings. It may seem like a quick and easy solution to your cash flow problems now, but down the line it can be very damaging to your financial future. You will need that money in the future for your retirement. When you spend what you have today you have less for tomorrow. And when you are older is when you will need it. Don't think you have a long way before retirement or you'll just boost up your savings when you start working again. Most people never do. Also, your new job may not pay as much as your previous one did.


If you feel that pulling the money out of your 401K is your only option than transfer your money into an IRA to prevent paying the 10% early withdrawal penalty. Instead of taking the lump sum you can take it as you need by taking withdrawals from the IRA as you need them. You will only have to pay penalties and taxes on the amount you withdrawal. Try to minimize the the amounts you you withdrawal instead of the whole thing all at once until you go back to work. At least that way you'll salvage some of your retirement.

I don't have any money in savings. What do I do?


I want you to start finding ways to save money right now! This is no joke. Start building an emergency fund. If you don't have an emergency fund you must start taking steps to increase your income and reduce your expenses so you have a savings reserve. There is nothing more important than establishing an emergency fund that can carry you through for at least eight months.