Friday, January 14, 2011

Dealing with Unemployment...

This is a big issue. Just last year I have helped a lot more than usual new (and old) clients file their income tax returns who are dealing with unemployment. It is not a secret that unemployment had raised to a record high since the great depression. Some states have it harder than others.

As long and taxes were paid by your last employer then you should qualify for unemployment for six months, then you can extend it "if you qualify," and later get the federal extension "if you qualify again". Up to now, nothing new.

But with anything in life, I do suggest you plan for this "unsuspected events". I'm not saying you have to plan to be unemployed, no, what I'm saying is that "you want to have a plan B ready just in case anything happens".

With this troubled times, is best to have a plan A, plan B, plan C, plan D, plan E. and stick to it, meaning hope (and work hard, very hard) for plan A to happen, but in the mean time put in place plan B until you are certain plan A can take place.
People who know me can say: "Enrique is a very pragmatical person," and I'm not going to give you that "hope crap" that a lot of people bought a few years ago. "Things in life do not happen just because your desire for them, or just because you want them, no, things in life do happen when you work for it and make it happen".

Since I don't want to give you real examples from people I know "I do not want to get face a lawsuit," I can tell you what happened to me instead.

I planned for my plan A for about six years, but when things seemed to "ignite" my plan A, then the whole real estate crash began. Back then, I did not have a plan B. plan B came to me just as another choice, whether I was unemployed and I "hope" for plan A to happen, or I take plan B, stick with it until times get better and plan A is in the "cooler" for now
I can also tell you by experience "if you are going to have a plan B, it better be something that you enjoy almost, or "at least you like" as much as you enjoy/like plan A". Some people have called it a second career, and yes I would say that too, but I like the word plan B better. "It's all about choices."

It is not a secret that this whole thing about the record unemployment started with the collapse of real estate and construction, we all know that quite well, and coming from someone who use to work in those two fields at the same time, just when all these started “not fun” let me tell ya.

I have a lot of friends in the construction field, real estate as well, seems to me that the ones in real estate are dealing better with this mess. But not only these two had been affected, but also whole economy. Everywhere you go somebody you know had been touched by a sudden pay cut, personnel reduction, been fired (employers like to call it "laid off") is the same thing!

It is very common to find people who had been laid off. I had changed jobs (my day time stable one) a few times myself. Companies tend to hire over qualified people nowadays just because it is cheaper and because they can (just like purchasing real estate deal) but that itself can be "another blog."

Going to the point. While unemployed I would say the most important thing to do is "choose" to have your taxes taking out of your weekly pay checks; Why? Simple: because you don't want to have "another bill to worry" when the time comes. And chances are "you will be short of money". Who wants to owe money when you have no funds to pay for it? So, ALWAYS pay as you go.

Just keep in mind that Taxes are not (it won't be) wiped out by Bankruptcy.

My second suggestion is to develop another source of income while unemployed, how? I would say start your own business when your unemployment just kicks in, why? Because chances are "you will have a lot of time in your hands while receiving a secure pay check at the end of the week," they're just "2 best things you can do with that time" first choice is "develop an extra income" or "study something that will lead you to what?... another income".

You will get your money back anyways... whether with your business losses (lowers your tax liability and makes you get a bigger refund) "nobody is expected to make a great income when you started a business," or you will get an "education tax break" that should be up to $ 4,000 for 2011 if it stays the same as 2010. Don't wait until the last unemployment extension to make a "realistic decision" PLEASE!

Another choice is to gain experience in something you want to pursue while unemployed. In my case I'm "volunteering" in a job field I want to develop for the near future, but in my specific case I'm doing it while I'm fully employed, "secured pay check at the end of my week," but in my case this is "income: "money earned," unemployment is not income, but still fully taxable.

I'm don't want to be rude, but I have to let it out: "BE REALISTIC ALWAYS". I've seen some people just going deep into some financial mess by just living in "La la land". Some waited until the last minute to make a realistic decision "usually when it is way too late. Or worse by just wasting it".

A piece of advice for you: do not waste this money! Wasting my unemployment money? How? Taking trips, eating out, going shopping, taking pottery classes, etc. I know we all deal with problems in a different way, but just wasting this little money just to keep your mind away of the problem will just make matters worse at the end of the rode.

I've seen people just wasting their secure pay checks while pursuing "nonsense dreams," do you want me to mention some examples? Even though you are dying to hear it and I'm dying to say it, I rather not.

I would like to tell you several more options, but probably it won't make any sense to you, different tax breaks applies differently to different people, and to different situations too.
As a tax person I would say: “as long and you pay your taxes with every pay check, you should be fine.” and ofcourse, DO NOT GIVE UP HOPE, "a realistic hope", I think that alone is the most important.

I wonder, if they are millions of undocumented wokers working "and paying taxes", if they could find a job, kept it, and made a living out of it, SO DO YOU! you have all your papers in order, so go for it!

1 comment:

  1. Enrique man, you're harsh but funny as hell, ain goin to hit you up to check up my past year taxes