It’s something none of us want to think about: losing our job. But for 12.7 million Americans, life without work is a day to day reality. And it’s a reality for which, like it or not, we all have to plan.
Like most of you, I’m guilty of pushing the idea of job loss out of my mind. But sometimes, I hear a story or read something in the news that brings me back to the real world, one where our nation’s unemployment rate has remained above 8.0% for 40 straight months – and counting. The latest example of my real-world wake-up call happened a few weeks ago, when I was watching, of all things, Dateline NBC. The episode featured three Colorado families, all of which were struggling with job loss. These families were doing whatever they could to get back on their feet, but for most of them, it still wasn’t enough. It got me thinking – what should you do if you lose your job? What do your financial and professional priorities need to be?
#1: Cut Your Budget
If you’re a glass half-full person and you’ve just lost your job, you probably are optimistic about the situation. You probably feel like your job loss is only temporary, and that you’ll find new work right away. For some people, this is true – I have a friend, Megan, who lose her job on a Monday, only to find a new job (one that paid better than the one she’d lost) by the following Friday. She never even had the chance to file for unemployment.
But Megan’s good luck doesn’t happen to everyone. Nearly 43% of our nation’s unemployed workers have been without a job for 27 weeks or more. That’s a long time to survive without a source of income, especially if you’ve been living beyond your means in the first place.
If you lose your job, you’ll need to make drastic changes to your household budget – not at some indiscriminate point in the future, but right away. You need to ask yourself questions like:
- Can I live without cable television? A gym membership? Dinners out? (the answer to all these should be yes)
- Can I reduce other necessary costs, like my cell phone bill or my Internet service? (don’t cut these services – you’ll need them in order to research new jobs and get connected with potential employers)
- Can I trade in my current vehicle for one with a lower monthly payment, one that costs less to fill the gas tank, or one with lower insurance premiums? (you know you’ll need to get around town, but you don’t need to do it in an Escalade)
You may be tempted to hold off on making these changes until you need to – but if you wait that long, it may be too late. Every month you go with an inflated budget is one month closer to financial peril. Don’t take that gamble; make your money stretch as far as possible on day one after you lose your job.
#2: Bring In Extra Cash
Just as you need to figure out ways to trim your budget as soon as you lose your job, you also need to immediately start to figure out how to bridge the gap caused by your lost income. This can happen in a variety of ways:
- Apply for unemployment. Not everyone will qualify for unemployment insurance, but if you do, apply for it immediately. If you’re unsure whether you can receive these funds – or how much you could receive – contact your state’s department of labor.
- Look for part-time work. Ever heard that old adage that it’s easier to find a job if you have a job? It’s often repeated for a reason – it’s true. Even part-time work will look better to a potential employer than a big fat gap in your resume. You can even pick up a good paying tutoring job to cover the bills.
- Sell, sell, sell! Whether it’s furniture you don’t need or old clothes you no longer wear, figure out what objects in your house you can do without. Try selling gently used items on Craigslist, or holding a yard sale to bring in some extra cash.
- If you have a working spouse, have him or her adjust their tax withholding by re-filling out their W-4 form. Doing so can add more money to their paychecks.
Bringing in extra cash also means knowing when to ask for help. A lot of recently laid off individuals hide their heads in the sand after a job loss. Why? They’re embarrassed or ashamed of their situation. This is not the time to get pride get in the way. The sooner you admit to others – and to yourself – that you’ve lost your job, the sooner you can get the help you’ll need to keep your household financially solvent. Applying for various programs through state or local agencies can help you do everything from reducing your housing expenses through rent or mortgage subsidies to gaining access to food banks. And at this point, the less money coming out of your pocket, the better.
#3: Mobilize Your Network
This is tied in to the idea I mentioned in step #2 – don’t bury your head in the sand. Instead, mobilize your network to work for you.
What do I mean by that? Think of that old Hollywood game “Six Degrees of Kevin Bacon.” It seems the old “Footloose” star has worked with just about everyone in the entertainment industry. What about you? What connections do you have that may be able to help you land your next job? Maybe you have a former colleague who’s moved on to greener pastures at a new company that’s willing to give you an interview. Maybe you have a former employer who has struck out on her own and is looking to hire people she knows are reliable. Or, maybe one of your contacts has another contact who is looking for new employees or simply knows of a job opening somewhere.
If you’re ashamed about your job loss and keep it quiet, you won’t be able to take advantage of the fabulous resources of your social and professional network. So don’t be afraid to post that you’re looking for work on Facebook or your LinkedIn profile; don’t be afraid to tell people, especially those who work or have worked in your industry. You never know from where your next job offer will come.
Reader, what would be your first move if you lost your job?