Make informed decisions while you're looking for employment.
Before making a quick decision about finding sources of income, get control of the situation by knowing your options and how your choice may impact your larger financial picture. Ideally, you want to make the best possible choice for your current needs while also staying on track to meet your retirement goals.
Talk to someone who can walk you through ways to utilize your cash resources. An Edward Jones financial advisor can sit down with you face to face and discuss your options so you can make informed decisions before using your money.
Watch out for taxes and penalties.
If you must use your retirement money early, you could be paying hefty taxes and penalties. So before you make a decision, meet with us to see if you qualify for any early withdrawal options that can help reduce or eliminate taxes and penalties.
Use your emergency fund first.
If you have saved money in a nonretirement account, consider using this money before touching your retirement savings to pay expenses. It's almost always a good idea to keep cash easily available to cover six to 12 months' worth of living expenses, and this may be especially important during a job transition. Cash reserves can also help you avoid selling investments if a market downturn has adversely impacted the value of your investments.
Take your unemployment benefits.
Unemployment benefits are funded by your former employer for your use and may help you cover some expenses while you're looking for work. They aren't based on financial need. Be sure you know the rules and timing related to unemployment benefits, as rules may vary by state. Remember to file for benefits as soon as you become unemployed, because a delay in filing may cause a loss in benefits.
For more information, contact your state unemployment office.
Know your spending and borrowing needs.
Your everyday spending plays an important role in your long-term savings and investing strategy. We don't recommend borrowing money to pay your bills but when faced with a temporary loss of income, it's important to know all your options before tapping into your retirement savings.
- Personal Line of Credit: If you plan to be working again in the next few months, you may want to consider a personal line of credit. You can use your investments as collateral for money you borrow to meet your short-term needs without having to sell your long-term investments. And you only pay interest on the money you borrow.
Our Personal Line of Credit is a margin account. Borrowing against securities has its risks and is not appropriate for everyone. If the value of your collateral declines, you may be required to deposit cash or additional securities, or the securities in your account may be sold to meet the margin call. Interest will begin to accrue from the date of the loan and be charged to the account. Available only on certain types of accounts.
– Credit Card: All credit cards aren't created equally. Some carry higher interest rates, so make sure you have the lowest. Now isn't the time to accumulate debt on your credit card and carry large balances. Be smart with your credit card use, and don't consider it a solution to a long-term need.
The Edward Jones credit card program is issued and administered by FIA Card Services, N.A.
– Mortgage Refinancing: It’s nearly impossible to refinance your mortgage if you're not employed. If you think you may be unemployed in the near future or have another household income, you may consider refinancing at a lower rate so that you may have extra money each month to pay bills.
Financing is provided by Edward Jones Mortgage, LLC, an affiliate of Edward Jones. Edward Jones Mortgage, LLC is licensed by the New Hampshire Banking Department. Edward Jones Mortgage, LLC may not be available in your area.
Talk to your lender.
If you are having trouble making your mortgage payments, contact your lender immediately. Lenders need to be aware of what is going on and are generally willing to help. Many lenders are developing their own modification programs to help homeowners avoid foreclosure, but don't be surprised if loan modifications have tax consequences.
Beware of scams.
There are plenty of scams out there offering loan modification and foreclosure prevention assistance for a fee. Don't pay anyone who promises a loan modification or foreclosure prevention, don't make mortgage payments to anyone other than your lender, and never sign over or transfer the deed to your home unless you are working directly with your lender.
A local Edward Jones financial advisor is ready to help you roll your 401(k) plan assets over to an IRA to help you stay on track toward your retirement goals. Use our office locator or call 800-ED-JONES to find an office near you.