Massachusetts' most recent unemployment report showed mixed results for March. Good news: the out of work percentage in Central Mass. has dropped to 6.7 percent, way below the national average of 8.1 percent. The bad news: there are over 19,000 still looking, some over an extended period of time.
The U.S. Labor Department reports that the average length of unemployment is at an all-time high—over nine months. If you are newly unemployed, have been for a while, or are worried the ax will fall soon, it’s time to re arrange the finances.
“Unless it takes the roof from your head, it’s probably not necessary,” said Jeanette Fierstein, a certified financial planner in Westborough, who stresses the importance of not just tightening the money belt, but also securing emergency cash to carry through the tough times.
Most people file for unemployment income, but that will only cover about half of your regular paycheck. Massachusetts covers the first 26 weeks of unemployment, followed by federal relief coverage with an additional 20 weeks, plus other extensions if need be. However, extended federal benefits are being cut as part of Congressional budget planning. If an unemployed person is receiving federal assistance, their coverage could be shortened or even discontinued with little notice.
According to Mass. Labor and Workforce Development, the town-by-town unemployment rates:
Auburn: 555 (6.4 percent)
Grafton: 497 (5.2 percent
Holden: 436 (4.9 percent)
Leicester: 391 (6.5 percent)
Millbury: 487 (6.7 percent)
Northborough: 372 (4.8 percent)
Northbridge: 649 (8 percent)
Shrewsbury: 884 (4.9 percent)
Westborough: 354 (4 percent)
Fierstein, who has been offering financial advice since 1993, says there are several actions to prepare for leaner times:
1. Study Your Cash Flow: This is the first place everyone looks, but it is important to know how far it will take you. Since unemployment checks will last a short period, it’s important to plan further out. Fierstein recommends drawing pension money if possible, or borrow from a family member.
2. Plan ahead for a layoff. Many people don’t do this, said Fierstein, but should. When you still have a job, build an emergency fund to cover six to nine months of expenses. If that is not possible, secure a line of credit at the bank, or a home equity loan, though getting a loan when you are newly unemployed will be a hard sell.
3. Cut the discretionary expenses. You have to pay your mortgage or rent, but there is much more you can do without. Cancel the gym membership, the expensive cell phone contract, and eat out fewer times. Drive less, and hunt for cheaper gas.
4. Don’t carry a balance on your credit card. The high interest rates will increase your debt even more, creating an endless cycle at a time you don’t need it. Use your credit card only for emergencies.
5. Shop for health insurance. Your former employer will offer COBRA, but it might be more expensive than buying an individual or family plan. Except under extreme financial conditions, most Massachusetts residents are required to have health insurance. However, there are options. Log onto healthconnector.org, an independent state agency that will help find a plan that fits your needs.
6. Have taxes withheld from your unemployment check. Believe it or not, unemployment income is still taxable. You can elect to have up to 15 percent withheld from each benefit check, if you can afford it. Otherwise, you will be socked next April 15.th “You might need the money more than the government,” said Fierstein. “Weigh it all in.”
For those in long stretches of unemployment, a career change might be needed. “Unemployment income doesn’t get you far,” said Peter LaFleur, director of the Grafton Job Corps, which provides technical job skills.
“Those who graduate from our program are placed in a job 89 percent of the time,” he said.