Mar 10, 2025
Bill was laid off a year ago. He’s been looking for a job but, so far, hasn’t had much luck. Despite applying for hundreds of jobs, he’s only had a handful of interviews — and most of the time he hasn’t even received a response back. He never expected to be unemployed for such a long stretch, and he’s worried about paying his bills.
Fortunately, he’s not destitute. His wife brings in about $55,000 a year, which is enough to cover their mortgage of $1,700 a month. However, they’ve used up their emergency savings over the past year and currently have about $7,100 in credit card debt. Plus, they’re afraid of what might happen in the case of an unexpected expense.
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Bill wants to pay off their credit card debt and get their savings back on track, but without a second income, they haven’t been able to make more than minimum payments — and they keep getting further into debt. Bill has savings in a 401(k) and, though that money is slated for retirement, he’s wondering if he should dip into those savings to help them get by until he can find a job.
The state of unemployment in America
Bill is far from alone in struggling to find employment. The unemployment rate was 4.1% (7.1 million Americans) as of February, according to the Bureau of Labor Statistics. Of these, 20.9%, (1.5 million), had been without a job for 27 weeks or more.
According to Aerotek’s Fall 2024 Job Seeker Survey, 63% of respondents believe there has been a hiring slowdown and nearly 18% expect to complete 100 or more applications before being hired.
“While the labor market continues to be strong, a significant number of workers are finding that their job searches are taking more time and demand greater effort,” the staffing agency said in a news release.
At the same time, Americans continue to rack up credit card debt, with a balance of $1.21 trillion in the fourth quarter of 2024, according to the Federal Reserve Bank of New York. A LendingTree analysis of its users found the average card debt of those with unpaid balances was $7,236 in the third quarter of last year.
So, Bill’s credit card debt of $7,100 is in line with many other Americans. But while he’s got company, it’s not an ideal situation to be in.
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How to get through tough times
Bill and his wife aren’t in dire straits just yet, but they’re trying to figure out how they can cover Bill’s job loss without depleting what savings they have left — and without racking up even more debt. They may want to start by cutting back on expenses wherever they can and stick to a budget.
Bill may also want to consider taking on gig work to bring in some extra income. This can help the couple stay afloat, with extra cash going toward paying off credit card debt and rebuilding their emergency savings. Being a delivery driver or dog walker may not be a dream job, but it can help with productive hours in between searching for the next opportunity.
While this couple may be feeling anxious about their inability to save for retirement as Bill looks to get his career back on track, eliminating high-interest debt should be a priority. Minimizing the amount of accumulated interest can help in the long run.
Finally, it may also be possible for the couple to access funds from a 401(k) via a hardship distribution. This is allowable by the IRS if you meet certain criteria and are in immediate and heavy financial need. But withdrawals may still be subject to the early withdrawal penalty of 10% if taken before the age of 59.5, so it’s really a last-ditch measure.
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Vawn Himmelsbach is a veteran journalist who has been covering tech, business, finance and travel for the past three decades. Her work has been featured in publications such as The Globe and Mail, Toronto Star, National Post, Metro News, Canadian Geographic, Zoomer, CAA Magazine, Travelweek, Explore Magazine, Flare and Consumer Reports, to name a few.
