Need Advice On What To Do..
I just found out today that I am going to be laid off in 60 days. Given the job market in this region, the prospects are not very good. Right now my credit is excellent (700+), I've not missed any payments on anything, but I'm worried about what *may* happen, the biggest problem being that I have high credit card balances. I know for a fact that if I have to resort to unemployment payments, I will not be able to meet hard expense minimums. I want to try and be proactive as much as I can, but I don't know what to do. Do I contact my credit card companies and inform them in advance before I miss any payments? (3 cards, both under 10% interest, but if I miss more than 1 payment in any 12-month period, they revert to 18-20%; I'm tight paying the minimums now, let alone if the interest rate doubles). I don't want to skip out on what I legitimately owe, but I'm afraid that if I'm upfront about things that *might* happen I'll be punished by that fact alone, yet if I wait, they'll say "you should have told us in advance". I'm going to do as much as I can in the next 60 days to pay things down, but there's only so far I can bring down a $15K balance in 60 days. Rough financial picture: Single, no dependents. Annual income: $40K Savings: none. Assets: Pension plan ($36K). 403b plan ($15K) Own home; owe $46K (last appraised at $53,000). Payment (inc. taxes and ins.): $440/month Auto pmt: $410/month (2003 Grand Am GT1) Credit card pmts: $350/month (minimums) Gas/electric: $110/month (avg.) Cable modem: $56/month (would drop to dialup, although my web development would suffer) Trash: $10/month Water: $12/month Auto ins: $60/month (I could drop coverage limits and raise deductibles to $1,000, but I'm real wary of that) Phone: $50/month (replaced land line with cell phone; am in a 1-year contract with SprintPCS, not sure if they'll allow me to lower to a cheaper plan) Food: I tend to eat out a lot, but that will come to a screeching halt; not sure what to estimate here... $150/month (I'm a big guy)? I realize that my situation is not as dire as many who post here; my hope is to not allow things to deteriorate to the point where I have no alternative but to consider bankruptcy. Also, if there are any other good online forums or sites to read/ask questions on this topic, I'd appreciate any pointers. Thank you in advance for any advice/insight,
I wouldn't say anything to any creditors at this time. You are not laid off yet. I'd start looking for another job now and make the move as soon as I found something. I would also consider getting a part time job now to earn extra money. I wouldn't be trying to pay down my credit cards before the layoff because, if you are laid off, what you will need most is cash -- not a lower balance on your cards. In fact, I would consider doing a cash advance now while I had good credit and a job. The extra cash might enable you to make the minimum payments on time until you find another job. Do NOT borrow against your retirement/pension plans or your house. Those are both assets that you will be able to keep if you have to do bankruptcy later on (not likely in your case, I think). The problem, of course, is that you have no real savings and are living paycheck to paycheck to pay for your new car, home, etc. You have good credit so far and you should work two jobs or do whatever else you can do to keep it that way if at all possible.
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