Unemployment Issues

Understanding the issues relating to unemployment or underemployment can help find a solution to avoid debt and overcome the present ones. The following is an overview of some common employment-related issues contributing to debt problems.

Job Loss and Unemployment

A paycheck coming in every month frays the expenses and helps to stay ahead of debt payments. When that paycheck is suddenly snatched away by the hand of unemployment, the ability to maintain necessary payments is also gone.

The loss of a job can be from layoffs, illness, poor performance, or the closure of the company. Temporary income is sometimes available through unemployment claims, such as severance pay or state assistance. These payouts, however, can not compensate for the funds lost that were used to cover various debts.

Overtime Reduction Debt

If you maintain a lifestyle of earning from overtime to help service debt, then overtime reduction, or cancellation, changes your financial situation in the negative and makes you spend more than you are earning.

Reduction of Hours

Debt can also arise when employees’ hours are cut when a business slows down. especially if the business depends on seasonal sales and there is a bad season. Instead of laying off staff, the hours get reduced so that people can still have jobs. But this can result in the employee not meeting obligations and needing to seek a side job or a full-time job to cover the debt. Any way you look at it, it's not easy.

Employment vs. Underemployment

The term is used when someone is employed but earns insufficient income to cover their needs. So, even if you're working full time, your expenses could be higher than your income. Underemployment occurs when a person is unable to find a full-time job and must settle for part-time work, which is preferable to no work at all. Underemployment leads to debt issues and can disqualify the family from obtaining assistance through other programs.

Debt from Furlough

A mandatory time off due to internal or budgetary issues stops cash flow because the employee is sent home for a specific time without pay. It's not a lay-off—it's a furlough. They can receive partial furlough pay, but they are often sent home without pay. These employees still have a job and can return to work at the end of the furlough period.

Temporary Unemployment from Seasonal Jobs

In a variety of industries, jobs are seasonal. For example, teachers don’t work in the summer, or the construction industry closes down in the winter months. However, other industries, like tourism, thrive in the winter and summer months. Many of these workers don’t earn in the down times, and they experience varying levels of pay fluctuation that negatively impact their finances.

Debt from Lack of Sales Commission

Based on performance, a sales commission job can rake in the funds and cover expenses comfortably. What happens, though, when commissions decrease? All systems are shaken up! Sales associates will now have to work harder to earn that commission to cover bills. Decreased sales commission doesn't always lead to unemployment, but underemployment issues do occur, affecting finance.

Spouse Job Loss and Unemployment

It's common practice for spouses to combine salaries to cover monthly expenses. Therefore, if a spouse loses employment or if there is even a drop in income, it will cause instability and financial struggle.

How to Manage Unemployment

At some point or another, an employee faces various levels of unemployment and must rely on unemployment benefits. If you are out of a job for weeks, months, or a year, it's not too late to revisit your finances and revamp your budget. Work to minimize your overhead costs to avoid debt accumulation. Consider how much money you spend now and be proactive in amassing more income and saving more. There is always a debt of one kind or another, and you might be doing quite well now to service those debts and live your desired lifestyle. A job loss can occur at any time, however, and you will begin to carry a heavy financial load because of your unpreparedness. Lack of income will result in your inability to keep up with minimum payments and increased debt due to interest and late fees, as well as various penalties added by creditors. However, bear in mind that debt negotiation solutions are always available to help simplify the debt repayment process and make it easier for a financial turnaround. Be proactive with the strategies and options available in case unemployment or underemployment pays an unwelcome visit.

However, keep in mind that debt negotiation solutions are always available to assist in simplifying the debt payment process and facilitating financial change. Proactive with available strategies and options in the event that unemployment or underemployment causes an unwanted visit.

Sin embargo, tenga en cuenta que las soluciones de negociación de la deuda siempre están disponibles para ayudar a simplificar el proceso de pago de la deuda y facilitar el cambio financiero. Sea proactivo con las estrategias y opciones disponibles en caso de que el desempleo o el subempleo le hagan una visita no deseada.