'You are not this situation': Advice for long-term joblessWhen he lost his job in April 2009, Robert Mathis wasn't worried. With 23 years at AAA, most recently as a "quality analyst" driving to auto club offices in three Western states, he was confident of quickly finding work. Fast-forward to August 2010.
By: Claudia Buck, McClatchy Newspapers
SACRAMENTO, Calif. — When he lost his job in April 2009, Robert Mathis wasn't worried. With 23 years at AAA, most recently as a "quality analyst" driving to auto club offices in three Western states, he was confident of quickly finding work.
Fast-forward to August 2010.
These days, it's hard to rev up much optimism. The 48-year-old feels he's riding on fumes. He's burned through his severance and nearly tapped out his 401(k) fund. Despite numerous applications, his job search has netted just three in-person interviews. Worse, his health care premiums just tripled — to $586 a month — while his unemployment benefits will expire early next year.
Before his layoff, Mathis already was feeling some financial strain following a home foreclosure and subsequent divorce. Now he's getting desperate, even contemplating a move from his Placerville, Calif., rental to his mother's home more than 300 miles away in Northern California.
"When you first get laid off, you think: 'I'm smart. I can do this. I'll get another job in six months,' " said a weary-sounding Mathis. But after nearly 16 months he's discovered that "finding a job is the hardest job you can do."
Especially when he's got so much company. By U.S. Department of Labor standards, anyone who's been jobless more than six months (27 weeks or more) is considered "long-term unemployed." Nationally, about 6.6 million people were in that category as of July, nearly quadruple the number in July 2008.
"These are the highest figures we've seen in 62 years — not only the sheer numbers but the percentage of the work force who are long-term unemployed," said Amar Mann, an economist with the U.S. Bureau of Labor Statistics in San Francisco. During the previous worst recession in June 1983, Mann said, 2.6 percent of the work force was long-term unemployed; today, it's 4.3 percent.
To help Mathis and other long-term unemployed, we asked Debbie Grose, a certified financial planner with Lighthouse Financial Planning LLC in Folsom, Calif., to map out plans for cutting costs and finding work.
On a recent morning, spreading out Mathis' financial paperwork on her firm's conference table, Grose quickly summed up the obvious: Facing the loss of his unemployment benefits and a tripling of his health insurance premiums, Mathis "needs to readjust pretty quickly."
For someone accustomed to a $64,000 salary and meals/mileage paid for by his employer, Mathis already lives frugally. He rents a small, one-bedroom home in Placerville. He doesn't eat out. He pays a discounted bill for electricity.
"There's not a lot of wiggle room in this budget," she told him, "but the more proactive you are, the better off you'll be in the long run."
While some of Grose's recommendations are specific to Mathis, many are applicable to anyone who's been unemployed long term. Here's her advice:
For saving money:
—Continue to be frugal in order to build up a savings reserve.
—Settle up with the IRS and state Franchise Tax Board, to which he owes a total of $13,700. Grose suggested contacting the IRS about its economic hardship program, which helps the unemployed deal with delinquent tax bills.
—Consider selling his 2009 Toyota Camry — purchased four months before his unexpected layoff — and getting a less-expensive used car. If it pencils out, he could earn a few hundred dollars on the trade, plus save on his auto insurance.
—Switch to a lower-cost health plan. "It'll be bare-bones but it'll cover you in case something major happens."
—Consider switching to a pre-paid cell phone that doesn't require a monthly service plan. Don't switch, however, if penalties will incur.
—Look into cheaper housing: taking a roommate; renting a room, rather than a house; offering to mow lawns or do maintenance in exchange for reduced rent.
—Call utility companies to ask about hardship reductions. "Especially if there are late payment fees or penalties, it can't hurt to ask," said Grose.
—Consider withholding taxes from alternating unemployment checks to ensure there's enough to cover an estimated $1,000 federal and state tax bill. "Pay attention to the amount taken out. You can do the math to see if it's enough to cover that tax bill by the end of the year."
Mathis, who has significantly lowered his professional expectations, took some recent steps to amp up his job search.
Worried that his 23 years at AAA might make him sound old, he's adding a photo to his LinkedIn.com profile to make it obvious that he's still in his 40s.
Several weeks ago, Mathis posted his resume on Facebook to get feedback from friends/colleagues. He's already gotten some useful critiques, he says.
This month, he applied for three jobs: at Marshall Hospital, for a Verizon customer sales job and for a school custodial job in Placerville. He got rejections from each.
"It's like I've lost a piece of who I am because I don't have a job," said Mathis. "People ask what you do for a living, and I don't have an answer anymore."
—Fine-tune your resume. If it hasn't been updated recently, get professional advice to be sure it's current and lists specific job skills, such as training, instructing and claims analysis.
—Return to a career center to evaluate new retraining programs.
—Sign up with a temporary staffing agency.
—Volunteer. It's good for the soul to help a good cause. And it adds to the resume.
—Find things that make you happy, whether it's cooking a meal or spending time with friends or family.
Above all, she urged him to stay hopeful. As someone in career transition herself a few years ago, Grose said she understands the intense feelings of discouragement. "I know it's hard. It's difficult hearing 'no' after 'no' for over a year."
Leaning across the table, the financial planner reminded him: "You've got some great skills and talents. You are not this situation. Honor that."
MORE FINANCIAL TIPS:
Whether you're long-term unemployed or merely furloughed, here are some tips for coping:
—If making extra payments on a mortgage or other loans, go back to paying the required amount only.
—Defer major purchases. Drive an older car for another year; postpone or take cheaper vacations; put off home improvements.
—Scale back or eliminate expenses that aren't a necessity: cable TV, dining out, magazine subscriptions, gifts to family/friends.
—To lower premium payments, raise the deductible on your auto or health insurance.
—Negotiate with creditors to get lower interest rates or deferred payments.
—Boost your income: Look for part-time jobs; sell unneeded goods online or at garage sales.
—Cut expenses: Shop at warehouse stores, buy generic prescriptions, clip coupons, entertain at home, quit smoking. If job-hunting, map your daily route to minimize transportation costs. Eat breakfast to avoid snacking; bring a brown bag lunch.
—Barter with friends, neighbors, family for goods and services. Offer your skills as trade.
—Build a freelance network. While making contacts for full-time work, always ask if any temporary or independent contract work is available. If not, get in touch with the company's temporary assignment managers, says Lita Epstein, author of "Surviving A Layoff." Search for jobs on a project-by-project basis. Websites such as Sologig (www.sologig.com) match freelancers with companies needing work.
—Contact your industry's professional association to see if it has a job board or matches companies with consultants and independent contractors.
—In extreme cases, it may be necessary to borrow from relatives or a life insurance policy, or withdraw money from a tax-deferred retirement account. Use these as a last resort.
Sources: Bee research; Bills.com, www.360financialliteracy.org