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By Barbara O’Neill, Ph.D., CFP®, Rutgers Cooperative Extension, [email protected]

 Personal Financial Management (PFM) program personnel often counsel military families about career transitions, including the unemployment of a “trailing” military spouse who loses a job or must leave a job with every PCS. Just when a family is used to having a higher income, it is scaled back and spending must be adjusted accordingly. There is also the issue of constantly finding a new job in a new location.

Capt. Millie Hale, 22nd Air Refueling Wing executive officer, and Capt. Ralph Hale, 22nd Operations Group executive officer, pose for a photo on a T-38 Talon Aug. 13, 2017, at Sheppard Air Force Base, Texas. A German pilot instructor, while she was in pilot training, provided the inspiration for Hale’s joint spouse proposal that was recently implemented into the Career Intermission Program. (courtesy photo)

Below are nine recommendations to share with military families who experience frequent bouts of military spouse unemployment:

  1. Reach Out for Help Take advantage of available benefits and services such as state unemployment assistance, college and university career counseling offices, non-profit agency job training programs, and support groups for unemployed persons. Set aside about 30 percent of unemployment benefits for estimated federal and/or state income tax payments.
  2. Save a Surplus Try to save at least 3 months expenses and reduce household debt and discretionary spending if you sense a PCS or job layoff coming or have time until an announced downsizing takes effect. Learning to live on less income when you still have an income will make it easier to live without it later on. 
  3. Live on Less Consider lifestyle adjustments, such as selling a second car or other valuable property and trimming household expenses. There is no “right” way to do this. Some families prefer to trim a number of small expenses (e.g., coffee) while others focus on large recurring ones (e.g., cable bill and mortgage).
  4. Build a Back-Up Fund Apply for a home equity line of credit (HELOC) while both spouses are still employed, to have in case you need it. The cost to apply should be nominal and there is no cost unless funds are actually borrowed. In addition, the interest rate will be lower than most credit cards.
  5. Take Care of Your Health Set up health care appointments while coverage is still available, if a soon-to-be unemployed spouse’s job provides benefits such as medical and dental coverage.
  6. Negotiate With an Employer Find out if a soon-to-be-ex-employer provides severance pay, which is money paid to employees who are dismissed for reasons beyond their control (e,g., as the result of company downsizing). Set aside about 30 percent of severance pay for estimated income tax payments. Another option to discuss might be remote telecommuting. Many jobs today can be done anywhere in the world.
  7. Contact Your Creditors Explain your job loss and request reduced payments or an extension of time to pay bills if you anticipate difficulty paying debts and/or household expenses. If you own a home, you may be able to arrange a forbearance agreement with your mortgage lender that enables you to pay nothing, or make partial payments, for a set period of time. A forbearance gives homeowners time to get “back on their feet” financially and bring their mortgage current.
  8. Contact a Credit Counselor Reach out to a non-profit credit counseling agency that can provide budget counseling and negotiate with creditors on your behalf for concessions such as waived fees or reduced interest rates. Many of these counseling agencies are affiliated with the National Foundation for Credit Counseling (NFCC), which has an “agency locator” search function on its web site.
  9. Keep Retirement Savings Tax-Deferred  Try not to cash in tax-deferred retirement plan assets to pay living expenses while you are unemployed. A job loss is usually a temporary situation while retirement can last for decades. If you must tap this money, repay it within 60 days to avoid income taxes and the 10 percent penalty on premature withdrawals before age 59 ½. In addition, withdraw only what is truly needed.

Join us Tuesday, October 23 at 11 a.m. ET for Employment Resources for Military Families, a 90 minute webinar that will explore employment opportunities for military spouses. RSVP here. 

The NC State Extension Publication What to Do If You Lose Your Job has additional information about coping with unemployment.