This one hits close to home for me. I have fallen prey to the rising and falling tides of manufacturing and commerce in America. Unfortunately, I have worked for several companies that have suffered during the recession or experienced buyouts. The end result? I lost my job.
Let me be frank: it hurts. Especially with a child and family to provide for, it can be extremely stressful. If you’ve lost your job, you know the pain that it causes, regardless of how well prepared you are for it. It feels like you’ve been punched in the gut.
Regardless of your situation, there are things you can do to help yourself both before and after you’ve lost your job. In this day and age, there are so many resources available to you in just this situation that you should never be left without hope. If you’re facing that unfortunate reality, take a moment to read this guide for some useful steps to dealing with job loss.
1. Reduce Your Spending
The first thing you need to do is cut out unnecessary spending. Start shaving off the things that you can do without as quickly as possible. This way, you won’t have financial drains that you don’t need while you’re not receiving a steady income.
This can mean going without cable (or a more limited version), skipping going out, eating more simply, or something similar. Fortunately, there will be some job related expenses that get removed at the same time, like transportation that you no longer use as frequently. If you can trim off 10%-20% of your spending, you’ll be in good shape.
2. Make a New Budget
The next thing to do is make a new budget to account for the job loss. If you were spending 100% of your take home pay before losing your job, you’ll want to reorient that money now. Your severance will last longer than you think if you budget appropriately. If you can put aside 1/3 of your severance each month, you can make it last 50% longer, which could make all the difference in lean times.
Your budget will be more dynamic during this time period, because you won’t have a steady income stream, but you may receive assistance from other parties. For instance, you will likely be eligible for unemployment benefits, which will add to your fluctuating income. Make sure to create and stick to a budget in this confusing time.
3. Speak With Your Creditors
Speaking with your creditors (mortgage company, credit card providers, etc) is majorly important. It may seem counter-intuitive to tell these people that you may not be paying them, but giving them advanced notice of financial troubles will help in the long run. More than likely, they will be glad you spoke with them, and may even be willing to temporarily reduce your payments until you can get back on your feet.
It is so much easier to prevent issues from occurring than to fix them in retrospect. Even if you are fresh off purchasing a house or have a pile of unresolved debt, you will be able to extricate yourself from missed payments more easily if you speak with them up front.
4. Figure Out Health Insurance
I was tempted to put “Apply for COBRA benefits” here, but that overlooks the reality of the situation. Some people may not be able to afford the increased premiums of COBRA. Some people may choose to purchase their own insurance separately so they can reduce their rates if they’re healthy. Of course, other people may be able to find alternative sources of help, like a parent’s plan if you’re under 26 years old, or a spouse’s if you have separate providers.
It’s important not to let your coverage lapse, even if you think you won’t need it. From a financial perspective, it may seem tough to spend an extra few hundred dollars a month, but it will be much more difficult if you end up in the hospital with a broken limb, trust me. Being financially healthy is about doing the difficult things up front to minimize risk and issues down the road.
5. Get a Temporary Job
Or better yet, a side hustle! Seriously, this is a great option. You may be confident that you can find a new source of income before your severance runs out, but that’s not always the case. If you find a temporary job, you can leverage your time better and find the perfect fit when it comes around.
Better yet, if you get a side hustle, you can keep working on the side in your free time even after you get a new job. If you’ve read my articles on Five Side Hustles to Start Today or The 10 Best Ways to Start Making Money as a Beginning Writer, you’ll know I’m a huge proponent of everyone getting a side hustle. This is a great way to build up savings in case an issue like this ever arises in the future.
The Main Point
In the end, losing your job sucks. There’s no way around that. If you are prepared in advance with a strong savings account, you may be able to weather the storm better. If you’re not, you can still get through it. In fact, you can use it begin a new chapter in your life. If you can begin building an income stream to help you create wealth that lasts and improve your savings, you’ll be better poised for the future.
Take these steps to avoid crashing and burning during job loss. In the immortal words of Douglas Adams, “Don’t Panic.” There’s no reason to lose your head during this time, no matter what happened. If you stay calm and continue to live according to a budget, you can get through a job loss without much worry. Maybe you can learn some new skills in your free time to make yourself more marketable when you finally do get an interview. Good luck out there, and remember, it’s going to be okay.