If you’ve just lost your job, there are probably a lot of thoughts about loss going through your mind. Lost identity. Lost colleagues. And lost earnings. It may be your first time in a long time without a steady income. When job loss happens, it can be unexpected. Most people do not have a plan to get back on their feet.
While an unexpected job loss can be an overwhelming life-changing event, it IS possible to recover quickly and successfully. In the immediate aftermath of getting your walking papers, take some smart, practical steps to reduce your stress and help you survive financially. Here’s what to do:
1. Line up health insurance
According to the Kaiser Family Foundation, 49% of people in the United States receive health insurance from their employer. So if you lose your job, any major medical bills would be financially disastrous. Here’s how to cope:
- Check to see if your former employer will continue your/your family’s coverage.
- Switch to a working spouse’s insurance plan. In most cases, employer-based health plans must provide a special enrollment period of at least 30 days.
- Continue employer-provided group coverage by signing up with COBRA, or enroll in a Marketplace plan.
- Obtain regular private coverage.
2. Eliminate expenses you don’t need
If you’re newly unemployed, you shouldn’t be binge-watching Netflix or listening to tunes on Spotify. Take a hard look at any types of subscription services you can eliminate. These services cost you money regularly, and should be canceled until you get a job again. If you’re having trouble with this step, or just find it just hard to do, consider using your parents’ or friends’ accounts temporarily to save money.
Here are some more discretionary expenditures to consider cutting back or eliminating to help make ends meet:
- New crazy purchases. Don’t go out and buy a bigger TV or couch, even if you’ve been planning to do so.
- Online shopping. Now’s not a good time to fill out your wish list at Amazon.
- Cable TV. Drop your plan and watch over the air channels.
- Eating take out. It may not be in vogue, but just like college days, peanut butter and jelly sandwiches and ramen can get you through a job search.
- Energy costs. Keep the air conditioning turned off or the heat turned down to save money on utilities.
- Phone charges. Switch to a prepaid cellphone plan.
- Gym membership. Put your membership on hold until your finances improve.
Get serious about making a household budget with a focus on analyzing your expenses based on your current situation. Now, you should be left with the leanest version of a budget, consisting of necessities only: like your rent or mortgage payment, food, insurance and utilities.
3. Apply for unemployment
Upon layoff, immediately apply for unemployment benefits, welfare or temporary assistance, and other programs and services that can help.
Unemployment benefits are intended to partially replace lost wages, so the precise amount you receive will depend on what you used to earn. States use different formulas to calculate benefit payments, but all states take prior earnings into account in some way.
Those furloughed rather than laid off as well as independent contractors (not on staff) should also file.
Bear in mind that each state runs its own unemployment program, so there’s no one-size-fits-all approach. Most states allow you to file for unemployment online or over the telephone.
4. Reduce debt
It’s important that you start dealing with any debt you may have, and budget effectively, as soon as possible.
Take a look at your monthly expenses and prioritize them. Decide what you need to pay for and what you can, at least for now, let go. Housing, food, transportation, and insurance should take top priority. Dining out, clothes, and entertainment may need to be sacrificed for the time being. Remember, this isn’t forever, when the cash is flowing again, they can be resumed.
When shopping, consider every purchase. Ask yourself if you really need it, and if you do, can it wait a while, or can you get it for less somewhere else. Getting in the habit of asking yourself these questions will help you become a savvy shopper in both good and bad times.
- If you can afford to pay your credit card balance, do it. If not, pay the minimum balance. If you don’t, you may owe fees and extra interest, and your credit score could be negatively impacted.
- Talk to your credit card company and see if they can help with any debts you have with them.
- Reach out to your mortgage lender to review payment options.
- Work with a credit counseling service. They may be able to work with your creditors if you can’t.
- Try not to increase your overdraft. Many people do this to tide them over between jobs, but overdrafts can be very difficult to get out of, even when you’re back in work
5. Identify sources of immediate cash
If you really need to scare up some funds, consider every option:
- Resell items you no longer need or use online or locally.
- Get a side hustle –a great way to earn extra money in the gig economy.
- Obtain part-time or temporary employment elsewhere.
- If you have children who work, ask them to contribute to the household budget.
- Make and sell things if you have a creative streak.
- Ask a friend or family member for a loan. Chances are they won’t charge any or much interest, but be careful – these sorts of arrangements have damaged many a relationship.
6. Plan Your Next Career Move
Reassess your career choice—is there something else that would make you happy or is more recession proof? You may need professional help to do this. During your employment gap, take the time to spruce up your skills. There are many self-paced learning sites that give 24-7 access so you can learn whenever you want and wherever you want at your own pace.
Resume’s still matter. This is the time to update your resume to highlight your latest accomplishments, promotions, volunteer efforts, jobs, references, skills, etc. As you start your job search, you want to present yourself as skilled as possible.
However, note that every day, people get interviews and job offers without resumes. Therefore, you should also be updating your LinkedIn, Facebook and other accounts with the latest info, as you’re casting a wider net for potential employers. And note that many online job boards will allow you to “one-click’ apply.
7. Catch a break from your bills
Different merchants and service providers may make available free or reduced-price offers to give you some breathing room. See elsewhere in this issue for some ideas on what’s available to you.
Resources: Balancepro.org, Newsweek, HelpGuide.org, The Balance Careers, Money Crashers, LLC, Financial Planning Association, Daily Muse, Inc.