Prepare for the Worst, Hope for the Best

Make plans now to start saving money, lining up resources, and preparing for a potential layoff.  

Step 1. Create a Livable Spending Plan

By analyzing your income and expenses now, you have time to make changes in the way you deal with money. A spending plan will help you see where your money goes and get you on track to having money left after the bills are paid.  

Step 2. Plug Spending Leaks, Reduce Expenses, and Build an Emergency Fund

Take steps to cut your spending so you can build a cushion of money to pay for living expenses.

Step 3. Explore Alternative Sources of Funding

If you do lose your job, you might need money to tide you over until you get another job. One option might be a home equity line of credit.

Talk to your banker about whether you’d be eligible for this type of loan. If your credit score is low, a home equity line of credit may not be available. But if you have good credit, consider applying for a line of credit while you have a job when it will be much easier to qualify.

A benefit of a line of credit is that you don’t have to pay on it if you don’t use it. The interest rate is usually lower than on other forms of debt. But remember, failure to repay your line of credit once you’ve drawn on it could mean the loss of your home.

Step 4. Catalog Assets in Case You Need to Sell Them

Selling items to raise cash can help you meet some financial needs. Before you’re forced to do so, and struggling with the emotion that can go along with such a situation, dispassionately evaluate what you own and what you can live without.