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Getting laid off is scary, especially if you have a spouse and kids. It's important to know how to manage your money in that situation.
Unemployment Compensation Is Taxable
A severance package counts as taxable income, including any money you get paid for accumulated vacation or sick time. Unlike wages, no tax is withheld from unemployment pay. So make sure to hold back about a quarter of that money for taxes.
Remember this: the sooner you are able to find another job, the more that severance money will look like a huge bonus. If you can get an income stream flowing again, you can use that severance to save or attack your debt. But, again, make sure to withhold some for taxes. Check with one of our Endorsed Local Providers (ELPs) for more information. Check with one of our Endorsed Local Providers (ELPs) for more information.