What to Do When You Lose Your Job

What to Do When You Lose Your Job

Photo courtesy of Âtin

Losing a job is stressful. I know. I went through it just a few long months ago.

You worry about your family.

You worry about your self-worth.

You worry about what your friends will think.

You worry about money.

And in the middle of all that worrying, you have to figure out what to do next. It’s not easy.

My goal here is to give you some specific takes you can take right away. These steps are not only important for securing your family’s financial future, but they give you something concrete to focus on so you can stop worrying and start doing.

Take a deep breath

Go for a drive. Read a book. Take the family for a fun night out.

If you’ve just lost your job, or just found out that you’ll be losing your job soon, your emotions are probably running high. You feel like there are all of the sudden a million things to figure out and that you need to get started right away.

But the best thing you can do in that situation is to not try and do anything at all.

Instead, find a way to relax and take your mind off the situation. If you can do something enjoyable, even if it costs a little bit of money, it will help remind you that all is not lost (trust me, it isn’t).

Not only that, but a little bit of time is often all you need to clear your head so you can start making good decisions.

File for unemployment

This is usually the first big action step you can take, and it’s a good idea to get it done quickly.

You’re allowed to file on your last day of employment, and the sooner you file the sooner you can start collecting benefits. Some states might even have a short waiting period after you file (sometimes 1-2 weeks), so just be aware that you might see that.

Two more things to keep in mind:

  1. If you want to keep your benefits, you need to file weekly. And each state will have their own set of other requirements too, so take the time to know what they are and make sure you keep up with them.
  2. Your unemployment benefits count as taxable income. If you can afford to have taxes withheld from your payments, that’s a great way to stay on top of the situation. If you can’t, try to find away to save ahead for that tax payment so you’re not unexpectedly hit with a big bill.

Check your financial cushion

How much money do you have in your emergency fund? How about your other savings accounts (other than retirement accounts)?

Add those up and divide that total savings by your average monthly spending. That gives you a rough estimate of how many months you could live off your savings. Hopefully any unemployment you receive will help extend that too.

Cut the fat

Chances are your budget has some spending that you could pretty easily reduce or cut out completely. Now is the time to make those changes.

Every dollar you can cut out will extend the amount of time you have. And who knows, you might even find that you don’t miss those things and decide to keep them cut once you find your next job. Which would leave you more money for the things you actually do care about. Consider this a nice little forced experiment!

Here are some pretty common places to look for quick savings:

  • Cable – Could you switch to a smaller package? Or could you cut it out completely?
  • Cell phone – Again, is there a smaller package you could choose? Or could you switch to a lower-cost provider?
  • Groceries – Scale back to the absolute essentials.
  • Travel – Probably not the time for a big vacation.
  • Eating out – Time to break out those trusty old pots and pans!
  • Gifts – Find inexpensive ways to show your love.
  • Retirement – Depending on your situation, now might be a good time to temporarily stop your retirement savings. In the short-term, having that cash available could be more valuable than the long-term benefits of saving.
  • Debt – Similar to retirement, it might be a good idea to scale back to just the minimum payments for now. But in both cases, don’t forget to ramp them back up once you’re making money again.

And here are two big ones:

  • House – If you’re renting, could you move to a cheaper place? Or even move in with family or friends?
  • Car – Do you have an extra car? Could you even get by with just one car? Selling a car would not only bring in some cash but it would save you money on insurance.

Start looking at health insurance options

This is one place where there’s some good news. You have several options when it comes to health insurance.

Here’s the post with all the detail on finding health insurance: 5 steps to take if you’re losing health insurance.

Work through the steps there and you’ll be able to find some coverage.

Review your company benefits

Your company might actually offer some benefits for people who’ve just lost your job, some of which could be pretty valuable. Those benefits might include things like:

  • Severance pay
  • Skills training
  • Job search assistance
  • Insurance coverage

You can contact your HR department to ask them what benefits you might be entitled to.

Check on public assistance

With a reduced income, you might be able to qualify for certain public assistance programs that could make daily life more affordable and extend the amount of time your savings will last.

Some common programs include:

Women, Infants and Children (WIC)
Supplemental Nutrition Assistance Programs (SNAP/food stamps).
Home Energy Assistance

To sort through all your options, I would try to find a service center near you that can take your information and explain what you do and do not qualify for. Anything you do qualify for could be a huge help.

Write down all your job options

I’m not going to get much into the “how to find a job” advice here, but I will tell you that it’s a huge help to take some time to just brain dump all of your ideas onto a piece of paper.

When you first do it, don’t worry much about whether anything you’re writing down is too realistic. If you think it’s a possibility, no matter how small, just put it down.

The power here is that it gets all of these ideas out of your head, where they can cause a lot of confusion and stress, and onto a single piece of paper that you can look at. That alone is a huge help.

Then you can take some time to rate each option both on how appealing it is AND how realistic it is. Depending on how much of a savings cushion you have, you can start leaning more towards the appealing options (if you have a bigger cushion) or more towards the realistic options (if you have a smaller cushion).

Write down everyone you know

One of the best ways to find a new job is to know someone who knows someone who has a job.

You probably know more people than you think, but until you get those names on paper it’s going to feel like one big jumbled mess (just like the job options).

Write down all your family members, friends, co-workers, business contacts, ex-college roommates, literally everyone you know. As you write you’ll start to come up with new ideas for things you can do AND you’ll know who to contact about those things.

This list will be one of your biggest resources.

Stay on the same page with your spouse/partner

Throughout everything, keep an open dialogue with your spouse or partner. And if you’re kids are old enough, involve them as well.

This is a team effort and the whole thing will be a lot less scary and stressful, and a lot easier, if you’re all in it together. Be open and honest about what you’re doing, what options you’re considering, and what you’re feeling (even if it’s scared). Ask for help when you need it. You don’t have to figure it out alone.

And if it’s your spouse who’s lost his or her job, just try to be as supportive as possible. I can’t tell you how much easier it made everything that Casey was 100% in my corner the entire time (and still is). That support gives me a ton of confidence and also gives me one less thing to worry about.

Take action

It’s pretty terrifying to stare unemployment in the face. To not know where the next paycheck is going to come from and to doubt whether you’re good enough to figure it out.

But it’s also an opportunity. It’s an opportunity to find a new career that excites you more than the last one. To ask yourself what it is you really want out of life. To come together as a family and make yourselves stronger as you work through adversity.

In order to take advantage of that opportunity, you have to take action. The steps here will help you get started taking those first steps, but it’s on you to keep taking them.

If you do, my guess is you’ll be surprised at the opportunities you can find.

Start building a better financial future with the resource I wish I had when I was starting my family. It’s free!

4 Comments... Read them below or add one of your own
  • Money Beagle July 31, 2014

    Excellent points. I lost my job once about nine years ago, and when I called my parents to tell them, the first thing they told me was to advise me not to make any rash or sudden financial moves and to take time to let things happen. That was great advice and something I’d recommend to this day.

  • Jen July 29, 2015

    Hey there, Matt. Do you know anything about IncomeAssure (private unemployment insurance)? Do you think it’s worth it? Obviously this depends on a lot of factors, but is there any major downside? I probably have about a 75% chance of being laid off from my job in the next five years (as time goes on, I’ll probably be able to tell whether the likelihood has increased or decreased!)

    To me, I feel like it would be worth it to pay around $50 a month to assure 50% unemployment payment for as many as 24 weeks should I be laid off – it would definitely soften the blow! I also, of course, have an emergency fund. My husband’s job is far more secure than mine, as well.

    • Matt Becker July 31, 2015

      Good question Jen! I honestly don’t know much about this type of insurance but I would encourage you to first look into what kind of unemployment compensation you would typically get from the state. That can often be fairly significant and may remove the need for this kind of thing.

      Second, I would read the terms and conditions of the policy very carefully to make sure that there aren’t any tricky exclusions or anything else that might cause you to receive a smaller benefit than you would expect. Unfortunately, those kinds of “gotchas” are all too prevalent.

      Finally, it really comes down to an evaluation of risk. If you feel like you financial security may be in track jeopardy even with your husband’s job, your emergency fund, and state unemployment, then the insurance might be worth it. If it’s likely that all of that would be enough, you can probably save yourself the expense.

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