Don't let a job layoff put you into deeper trouble

— -- Most Americans live paycheck to paycheck. And for most people, that works out pretty well — until the paychecks stop.

That's the predicament facing thousands of Americans who have lost their jobs in recent weeks.

If you're out of work, you might need to make long-term changes, such as learning new job skills or relocating. But in the short-term, you need to shore up your finances. Otherwise, even a short period of unemployment could jeopardize your financial security. Where to start:

Know your numbers.

Sit down and figure out all sources of income, such as severance pay, unemployment, wages from a part-time job and help from family, says Mike Haubrich, a financial planner in Racine, Wis.

Once you've calculated your income, make a list of all your monthly expenses, says Barbara O'Neill, financial resource specialist at Rutgers University. That way, you can figure out how much money is coming in, how much is going out, and where you need to cut.

Prioritize your expenses.

Basic needs, such as the mortgage, utilities, health insurance and groceries, should be at the top of the list, O'Neill says. After that, list expenses that will enhance your job search. Your cellphone and Internet service, for example, "can be really important lifelines when you're trying to get a new job," O'Neill says.

Scale back immediately on non-necessities, such as premium cable and restaurant meals, even if you're sure you'll be back to work soon. Resist the temptation to use credit cards to maintain your lifestyle. Many people underestimate how long it will take to get work, O'Neill says.

Everyone in the family should be involved in this effort, says Catherine Williams, vice president of financial literacy for Money Management International, a credit counseling agency. Don't hide the truth from your children. You don't want them to think they'll have to start selling matches in the street, Williams says, but you should "talk in very general terms about the changes that are going to have to be made."

Use credit cards only for emergencies.

Legitimate emergencies include medication, car repairs or job-hunting expenses. If you're not sure if an expense is essential, Williams says, wait 24 hours before spending the money. By then you may find the purchase is unnecessary.

Start conserving cash.

When you're out of work, "You want to maximize every ounce of cash you've got," Williams says. Make minimum payments on your credit cards. If you've been making extra payments on your mortgage, cut back to the minimum required by your lender.

Williams also recommends that you stop automatic withdrawals from your checking or savings account. When you're receiving a paycheck, these programs offer a convenient way to pay your bills on time. But while you're unemployed, you may need to change the timing of some payments so your most important bills — such as your mortgage — are paid first. You may reach a point where you'll be unable to pay some bills at all. If you're short on funds, an automatic withdrawal could trigger a hefty overdraft fee, the last thing you need when money is tight.

Contact your creditors.

Even one late credit card payment can trigger sharply higher interest rates or a reduced line of credit. For that reason, many people are reluctant to tell their lenders they've fallen on hard times. But if you can't pay your bills, hiding from your lenders will make the problem worse, says Adam Levin, founder of Credit.com, a consumer information website. "If you owe somebody money, communication is the only way you'll make them feel comfortable enough to want to do something for you," he says. "If you become scarce, they'll feel like you're trying to evade them."

While bargaining with lenders is tougher now than it was in the past, you may be able to negotiate a lower interest rate or a temporary deferral on your payments, Williams says.

Get help.

If your debts are overwhelming, consider seeking assistance from a reputable credit counselor. These organizations can negotiate a debt-management plan with your creditors. Many also offer advice on financial management and budgeting.

Be wary, though, of debt-relief companies that promise to make your debts disappear. Paying off debt isn't easy or painless, and any business that suggests otherwise could be a scam. Another bad sign: Unscrupulous debt-relief companies often demand a large upfront payment. Haubrich recommends looking for a non-profit counselor affiliated with a local social-services agency.

The National Foundation for Credit Counseling is a national trade association for non-profit credit counselors. To search for an NFCC member, go to www.debtadvice.org, or call 800-388-2227.