How to Prepare for a Layoff
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Layoffs can happen to anybody, whether you’re new to a company or have been working there for 15 years.
That’s why it’s important you prepare for a layoff both emotionally and financially.
This way, you’ll know what to expect and how to handle all your affairs.
How to Prepare for a Layoff
If you’re expecting to be laid off, these are the most critical steps you need to take before the big day comes.
The first thing you need to do when preparing for a layoff is start networking.
Once many people secure jobs, this tends to get put on the back burner.
Fortunately, there’s no time like the present to start actively reaching out to coworkers for their contact info and to see if they have ins with other companies. Something as simple as grabbing a coffee or going out to lunch one day is all you need to do.
You can also add them on LinkedIn. If you don’t have a LinkedIn profile, it’s very easy to create and can help you network more efficiently.
Building relationships, no matter how small, and securing contact information is easy to do and just may be the difference between you landing a new job or it going to somebody else.
Whether you’re looking for an outstanding recommendation from your current employer or trying to find a way to score an interview with another company through your contacts, networking can get you there.
Never underestimate the power of networking.
Note: In case of questions, make sure you have a way to contact your manager and HR once you’re no longer working with your company.
Revamp Your Resume
As with networking, keeping an up to date resume also gets neglected once you have a job. What’s the point in updating something you don’t need, right?
Well, it’s now time to focus on it.
If you haven’t kept a running list of accomplishments and skills you’ve obtained over the years, it’s okay. Having all that information will certainly make the whole process easier, but if you didn’t keep track, don’t worry.
Crafting a resume, whether it’s brand new or you’re just updating an old one, doesn’t take too much time.
This article on how to write a resume is a great starting place for updating your resume.
Consider a Career Change
While being laid off from your job is nothing to be thankful for, it might be the perfect time to reassess your life.
Were you happy at your old job?
Do you want to spend more time with your family instead of working long hours?
Is moving to a different city or state to pursue a lifelong dream a possibility?
Take time to reflect on the past years since you started this job and see if you’re really, truly happy with the position you hold.
Think about the work you’re doing and if it’s something that you enjoy or that makes you dread coming in to work every day. If you hate what you’re doing, see if there’s something else with your current skills and qualifications you’d like more.
Consider how much time is spent commuting to and from work and if finding something closer would make your life easier. I know I’m grumpier and more exhausted with a 40+ minute drive each way, so I’ll never get a job far away again unless I absolutely have to.
You should really take into account everything your current job has to offer you, and everything it doesn’t. This will help you decide if searching for a different type of occupation will benefit your current life better.
Your happiness is very important and a career change just may be the key to it.
Look for Jobs Right Away
Whether you’re considering a career change or not, you should immediately see what jobs are actually out there.
This will give you a feel for the current job market to help you better prepare for a lay off.
You’ll be able to see what jobs are available that match your set of skills and work experience. This will also let you know where these jobs are located in relation to you, giving you a feel for a new commute.
Here are some online job search websites to get you started:
The Balance curated a more complete list of job websites for your use. They tell you how to get the most out of each site to make your job search easier.
Create a Tight Budget
Even before you’re laid off, you need to create a budget.
Your budget needs to account for your rent or mortgage, utilities, food, fuel for your vehicle(s), car insurance, health insurance, minimum monthly loan payments, an emergency fund, and anything else you have to pay on.
Anything else that isn’t a necessity needs to go.
That means going through all your memberships and subscriptions and cancelling what you don’t need. Yes, that includes cable. PlutoTV offers over 100 channels for free, meaning there’s absolutely no need to pay for cable.
Another common monthly expense is a phone bill.
If you have a landline and a cell phone, you should get rid of your landline. And if you’re paying more than $50 for your cell phone each month, you need to downgrade your phone and get a smaller data plan.
To help cut costs further, you need to stop eating out.
No more buying coffee, breakfast, lunch, or dinner at restaurants or fast food joints. You need to create a weekly meal plan, create a shopping list for it, and stick to the list when grocery shopping.
You are GUARANTEED to save money by making your own food, or at least eating at home.
A great resource to help you eat at home and cut back food costs is the $5 Meal Plan. Once you sign up, you get weekly meal plans sent directly to your inbox, including an already made shopping list. All that’s left for you to do is buy the groceries and follow the recipes.
In addition to cutting out unnecessary subscriptions and eating out, you need to limit the money you waste on your expensive habits. Yes, getting your nails done or going to the movies are great ways to pass the time, but you need to be in ultra-saving mode.
Once you’re back on your feet, you can treat yourself to a nice spa day or a night out with friends. But until then, your livelihood depends on your ability to stick to a budget and it’s something you need to follow through with.
Remember: Live below your means but within your needs.
Here are some posts to help you cut back on your spending:
Build Up Your Savings ASAP
On average, 6 out of 10 Americans do not have $500 or more in savings.
Crazy, I know.
Whether you’re preparing for a layoff or not, you need money in your savings account. Period.
Life is extremely unpredictable and the only way to prepare financially is to save up as much money as you can. Emergencies happen which is why it’s extremely important to set aside money each paycheck to account for them.
If you can’t find any extra money in your budget to put into savings, all that’s left to do is make more money.
Start a Side Hustle
If you know a layoff is coming and you don’t have any extra money to spare, you need to find some other way to make money.
End of story.
The only way to save more is to earn more, right? Right.
With that being said, there’s an abundance of jobs you can do from home or just with your vehicle. Many of them even pay really well, depending on your skill set.
Whether you start side hustling on the weekends, after you get off work, or while you’re laid off searching for a new job, every little bit helps.
What you choose to do with the extra money solely depends on your current financial situation. Once you’ve determined your budget, you should have a feel for where this money should be going.
Warn Lenders About Your Potential Layoff
Chances are you have some debts that you’re repaying.
And chances are that paying all of these back when you’re laid off will be extremely difficult.
That’s why it’s important to call your lenders and warn them about your potential layoff. Ask them about your options incase you don’t have a paycheck coming in every month.
You may even be able to negotiate lower interest rates.
To do so, you normally contact the hardship department. Once speaking with them, see if there are any documents you need to fill out, such as a budget or hardship letter, in order to get their help.
Doing this can save you a lot of stress from not being able to pay your bills and ruining your credit.
Consider Downsizing Your Home if Possible
Once you’ve gone through and set a budget and generated some extra income, see where you stand.
Is your mortgage still too high?
If you have an extra room, you can try renting it out through Airbnb or Craigslist. Before doing so, you should make sure you look more in depth to it and understand exactly what you’re getting into.
Otherwise, consider downsizing your home.
You should take into account the housing market, how much you owe on your mortgage, how much your home is worth, etc. If your home is in rough shape, fixing it up might help it sell quicker. However, you might not have the means to do so.
Look at all your options and see if selling your home and moving into a smaller home or into a cheaper neighborhood will give you extra money for your savings and bills.
Look Into Your Health Insurance Options
Depending on your company and your situation, you may be eligible for COBRA coverage.
For those of you unfamiliar, COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that could deem you eligible to temporarily keep your employer healthcare coverage once you no longer have a job.
It can cover you and anyone else that relied on your health insurance.
This will only be temporary and only if you’re eligible. That means you need to look elsewhere for long term health coverage.
If you’re married, see if you can get on your spouse’s insurance plan.
Otherwise, you can use the HeatlhCare.gov website to help you find health insurance options in your state.
Once you know the type of health insurance you can get, you can compare it to your current plan. This will show you the new type of coverage and price you’ll be looking at to help you better budget and prepare.
Take Advantage of Your Benefits
There are several different benefits your employer may provide that you should take advantage of before you lose them.
Now’s the time to schedule any doctors appointments you’ve been holding off on, so long as your insurance covers them.
That means seeing your primary care physician for a physical and getting prescription refills; getting your teeth cleaned and dental work done that you’ve been putting off; or even ordering new glasses or contacts.
If you have vacation days left, see if you’ll be compensated for them in cash or if you should use them up before you leave.
In addition, you should look into any discounts on products or services you can get with an employee ID.
For example, Ian gets a 20% discount at Verizon through his employer. He also gets discounts at Bose, Dell, HP, plus many other companies.
It’s worth looking into these employee discounts if your computer needs replacing or you’re trying to lower your cell phone bill. But only act on these discounts if you need something.
There are a lot of benefits companies offer and it will be worth your time to look into what your company offers.
See if You’re Eligible for Severance Pay
In most cases, companies are not required to offer their employees severance pay.
However, the W.A.R.N. (Worker Adjustment and Training Notification) Act requires companies with mass layoffs to give a 60 day notice. If employees aren’t notified of layoffs 60 days prior, the law requires the employees receive severance pay.
Now some employers do offer severance pay no matter what.
A great place to check if you’re guaranteed anything is in your employee contract you signed before hiring in. If your contract states you will be given severance, then you will most likely receive it.
Usually the amount you get is based on how long you’ve been with the company, how high up in the company you are, or whether it’s in your contract.
However, severance pay is negotiable so if you’re up for it, you can try and get more out of the company, especially if you’ve been with them for a long time.
Negotiate Lay Off Terms
Anything is negotiable if you put your mind to it.
And if you’re about to lose your job, you should definitely try to negotiate your layoff terms.
Whether you think you deserve more severance pay or you need to stay on your employers healthcare plan for a few months longer, you need to ask about these things.
What’s the worst that can happen?
Life During Unemployment
Once you’ve said your goodbye’s and you no longer have a job to go to everyday, your life is going to be different. To help make it as easy as possible, make sure you stick to your budget, save as much money as you can, and continue searching for jobs.
Now to help you with life during your unemployment period, here are some helpful tips and information to guide you.
During normal business hours, do not sleep in until noon or sit on the couch playing video games.
Treat each day as if you’re in an office setting and actually at work.
Take breaks like you normally would at work and then continue searching for jobs, fixing up the house to sell it, or side hustling to earn some extra cash. Now is not the time to become lazy and mope around the house.
You should be actively searching for jobs, whether it’s online or in person. It may take weeks, or even months, until you find a job. But you can’t give up.
You’re the only person who can control what happens to you.
Secure Your 401(k)
When you leave your old job, you have a few options when it comes to managing your 401(k).
1. If you already found a new job, your current 401(k) balance can (most likely) be transferred to your new employer’s retirement savings plan. When doing so, you will not have to pay any taxes or penalties. However, you should check with your new employer to make sure they accept rollovers.
2. You can rollover your 401(k) into an IRA (individual retirement account), free of any taxes, but only if your previous employer does a direct rollover. The nice thing is you can choose which institution you want to use. You can continue putting money into your retirement savings this way.
3. While this method isn’t recommended, you can choose to cash out your retirement savings account. When you do this, you are required to pay income tax on the amount you withdraw, along with a 10% early withdrawal fee (if you’re under the age of 59 1/2). If you elect this option, you no longer have a designated space for your retirement savings plan, meaning you might not have anything left when you go to retire.
4. The last option is to leave your money right where it is. This is a short term option, as the company’s policies may change and it may be difficult to get in contact with them.
Of all these options, I personally recommend the first or second. You can find more details on all of these in this NARPP article.
Use Your Severance Pay Wisely
Should your company offer you severance pay, you might be wondering what to do with it.
This is entirely up to your financial situation and the amount you receive.
In any case, putting it into your savings account is your best bet.
It may be tempting to try and pay off some of your debts or go on a much needed vacation, but you most certainly should NOT do any of that.
Until you have another job that can pay the bills, hold onto that money for as long as you can. You should use it as your safety net incase of an emergency or the money you’re bringing in isn’t enough to pay the bills.
Make sure you’re thinking about the future and not just the present.
Apply for Unemployment
Every state is different when it comes to qualifying for unemployment benefits. That also means the amount you will receive varies, along with how long you’re eligible to receive unemployment checks.
Applying for unemployment benefits is not an easy thing to do. It can take weeks for everything to be submitted and processed.
Remember that unemployment benefits are not a long term solution.
You should only count on unemployment checks to keep you afloat while you’re searching for a new job.
Look Into Other Types of Government Assistance
The type of government assistance you qualify for is based on many different things. It also varies in each state.
To see what you may qualify for, use this link to select your state and the type of government assistance you need.
During this tough time, you have to stay positive.
Don’t let the lay off feel like a personal attack on you. Chances are several other people are going through the same thing you are.
You just have to keep your head held high and continue searching for jobs.
Things will get better, you just have to give it time.