You’ve Been Laid Off- Now What?

If you have not received notice of a layoff, I recommend reading this article about what you can do in order to get your finances in order now to prepare yourself for future hardships.  If you are looking for ideas about how to improve your odds of protecting yourself against being laid off, check out this article.

What if it is too late for preparation and you have already lost your job or will be in the near future?  What can you do to improve your situation?

The first step you need to take is to enroll in unemployment benefits as soon as possible.  It takes time to get your claim set up and ready to pay out, so doing this as early as possible is a good idea.  While unemployment benefits do not replace 100% of your income from your job, it will supplement your savings so that you can pay the bills.

Now that your income is reduced and you will be living off of savings and unemployment, your budget needs to be updated.  Once you have figured out how much money you will be receiving through unemployment as well as how much you can afford to withdraw from your savings account, set up a budget that reflects this lower income.

With your reduced income you should be thinking about ways that you can cut your expenses.  Here are some quick ways to reduce your expenses by $100 or more each month:

     -Eliminate text messaging from your cell phone

     -Discontinue your cable & Internet services

     -Sell your liabilities (the extra car, motorcycle, boat, time share)

One of the most important things that you should do is to roll-over your 401(k) into an IRA account.  There is nothing worse than cashing out your retirement savings for a couple of different reasons.  The first is the tax consequences of taking a distribution.  You will be responsible for paying taxes on the money as well as an early withdrawal fee, equal to 10% of the account balance.  By taking this money now, you are throwing money away.  Another reason not to withdrawal this money is that you can’t make up for the lost time.  Check out this article about the power of compounding interest to get an idea of how a small amount of money can mushroom to a significant amount of money given a little time.  You’ve already planted the seed, nurture it and let it grow.

You will have plenty of time on your hands after you’ve been laid off so use that time to your advantage and update your resume.  As a laid off employee, you may be eligible for resume workshops through your local Job Center.  Take advantage of these services.

Now would also be a great time to further your education.  Enroll in a community college and work towards earning a degree.  Even if you aren’t sure what you want to go to school for, take your general courses so that you can begin on the path towards earning a degree.  If you are not interested in earning a degree, find out about auditing classes.  Educating yourself is the best thing you can do for yourself.  Future employers will respond to someone who works to better themselves, and school is a powerful way to do that.

Don’t forget to look towards your social network for support.  Take the time to focus on the relationships and build upon them to make them better and stronger.  Your friends are the most valuable asset and resource in your life; don’t forget to invest in them.

Finally, remember that even though you have been laid off, you have the right to enjoy yourself.  Get out and have some fun with your free time.  Follow your passions and enjoy your hobbies.  Don’t spend the entire time feeling sorry for yourself while you sit on the sofa watching television.  Enjoy your time away from the daily grind and enjoy your life!