It’s probably not something you want to hear right now: you’ve lost your job. The news struck close to home last month when a family member lost his job. Watching him go through the process made me realize that with some advance planning, it could have eased some of the burdens.
Preparing to lose your job is much easier if you still have a job. Why not take action right now to handle a job loss with more financial certainty?
Investigate health insurance costs. Familiarize yourself with COBRA rules and find out what the premium will be from your HR department. In addition, get a quote for private insurance, now. If you have a medical condition, that you know the only way to afford health care is on a group plan, find out exactly how long you will have before you need to have another job.
Evaluate your entire benefit package. What other company paid benefits would you lose? Life insurance, disability insurance, a company car, etc. What back-up plan do you have in place to replace these benefits or go without?
Determine if you’ve really accrued some benefits. Are you vested yet in the retirement plan? What will happen to your sick leave, vacation, and any future bonuses? Make sure you understand which items are accrued and will be paid out, and which ones you will lose.
Beware of unintended consequences. Do you have 401k loan out? If so, you would be forced to pay it back immediately, or face penalties. Brainstorm other costs you might incur without active employment.
Put together a budget. Actually, make two. The first is how much you’ll need to keep your desired spending level. The second is the “absolute minimum” you’ll need to keep going.
Calculate money on hand. Figure out how much liquid money you can get your hands on in a week, a month, and three months. Consider your emergency fund, savings, and any other sources of income that you can reasonably tap. What penalties will you have to pay to access the money?
Educate yourself on unemployment rules. They vary by state. Determine how much you would be eligible for, what filing requirements are, and obtain any documentation you might need. In addition, find out the impacts with a partial work arrangement.
Brainstorm alternative income. In the situation, how much additional money could you generate from various side jobs or money raising efforts. It’s much easier to make the list now to use as a resource in the future, than starting from scratch in a state of panic. In addition, look for other ways to save money in an emergency.
Calculate your time frame. How many months can your money (liquid savings, unemployment, alternative income, etc.) meet your absolute minimum? This is the most important piece of information. It’s your time line and knowing it ahead of time will prepare you to not waste any time taking action if you know how long you can last.
Negotiate. Be prepared to negotiate a severance package, if one is offered. Know your most important need and be ready to negotiate for it when the subject of a severance package is discussed. While it’s probably a long shot at a large company, it may be worth the effort at a small company, especially if you have a good relationship with your employer.
Discuss options. Inquire about the possibility of other positions, part-time work, or relocation options. Don’t let someone assume that you wouldn’t be interested in another opportunity.
Ask for assistance. Find out about available programs for retraining, job placement, or employee assistance. Don’t be afraid to use these programs.
Evaluate financing. Evaluate the long term stability of your loans. Is now the right time to lock in fixed rate financing? Remember, it will be very hard, if not impossible to refinance without a job.
Diversify your income. Now is a great time to set up some alternative sources of income so you are less reliant on your current job. Before I left my job, we were actively working on diversifying our income.
Check your credit report. Make sure there are no errors on your credit report (get a free copy). A future employer may check your credit and the last thing you want to deal with is an error.
Update your resume. Work on it now to polish it up so it’s ready to go. Be sure that you can make yourself marketable outside your current company.
Create your networking list. And take it home! Touch base with your contacts now to check in.
Watch job postings. Many times people see the writing on the wall before it happens. Keep your options open.
Retrain yourself. Would you consider or be forced to change your line of work? If so, start pursuing the training now (and maybe even get tuition reimbursement from your current employer.)
Prepare yourself mentally. It’s hard for me to comprehend what it feels like because I haven’t faced the same situation. Watching a family member go through the process right now has shown me that you might experience a flurry of changing emotions: self-doubt, sadness, anger, fear, etc.
While you can’t prepare yourself to know exactly how you’ll feel, you can prepare yourself that you may experience a range of strong emotions. Some can interfere with your ability to focus, so it’s good to prepare lots of the above tasks ahead of time. Create a support network of family and friends to help you through it.
Have you gone through a job loss? What do you wish you would have done ahead of time to prepare?