Surviving a Layoff: Crucial Money Moves for Your Next Chapter
Losing your job can be an incredibly stressful and challenging life event. Whether you were laid off, downsized, rightsized, or had your position eliminated, the financial implications can be immense. However, with the proper mindset and strategic approach, you can minimize the damage and get yourself back on your feet.
Our founder, Sandeep Varma, shares his top tips on safeguarding your finances during this difficult transition period.
Take Stock of Your Finances
One of the first steps is to quickly take stock of your financial situation. Losing your primary paycheck can severely impact your monthly budget and put you into survival mode. Sit down and review your monthly fixed expenses like rent/mortgage, car payments, insurance, utilities, and existing debt payments. Make a list of areas where you may be able to trim or cut back, even if temporarily.
For example, you can call your internet or cable provider and try to negotiate a lower monthly rate. Make a list of discretionary expenses you can pause or cancel, like gym memberships, club memberships, streaming services, etc. This will help free up some extra cash each month.
If you already have an emergency fund, now is the time to dip into it to handle any urgent bills or expenses that pop up. Most financial experts recommend trying to have 3-6 months’ worth of living expenses saved in your emergency fund, specifically for situations like job loss.
Additionally, be sure to apply for unemployment insurance benefits as soon as possible. Depending on your state, the average weekly payout can range from $300-600+ per week, providing a bit of a financial cushion.
You may also want to consider taking on a part-time side gig or other freelance work, leveraging your skills and expertise. Tutoring, writing, delivery driving, manual labor, marketing, or programming are examples of ways to earn extra income while conducting your job search. The goal is to reduce expenses where possible while still generating some cash flow.
Handle Your Retirement Accounts Wisely
When facing a job loss, one temptation might be to tap into your retirement savings accounts like your 401(k) or IRA. However, financial advisors like Sandeep Varma warn that this should only be done as an absolute last resort. Draining your retirement funds now can jeopardize your financial stability later in life. You may face penalties, lose future growth, and end up with less money compounding for retirement.
If you do decide to take a 401(k) loan or hardship withdrawal, have a solid repayment plan in place. The CARES Act allows some COVID-related flexibility, but distributions are still taxed as income, loans charge interest, and you lose market growth Reviewed By removing funds.
Negotiate with Creditors
- Prioritize paying essential expenses first – housing, food, insurance
- Call creditors early before missing payments, explain your situation
- Request reduced or waived interest rates and late fees
- Consolidate debts into one lower monthly payment
- Pay minimums on all debts to avoid damaging your credit score
- Avoid quick-fix but expensive options like payday loans or cash advances
Conduct an Effective Job Search
- Update your resume and LinkedIn profile. Get professional help to highlight your skills.
- Leverage your network online and in person. Social media makes it easy to spread the word you’re looking for.
- Research growing industries and tailor your search efforts. For example, technology, healthcare, and finance remain strong.
- Consider gaining skills in high-demand fields like coding or data analytics. Virtual classes make this accessible.
- Revamp your monthly budget, including rebuilding your emergency savings fund.
Watch Out for Future Layoffs
According to many economic analysts, 2023 may see an uptick in layoffs across multiple sectors. Here are some tips from Sandeep Varma on staying prepared:
- Monitor WARN notices in your state for any advance word of large-scale reductions.
- Follow business news closely for early indicators like hiring freezes, which may precede layoffs.
- Note any trends of layoffs within your professional network.
- Keep your resume polished and emergency fund padded, ready for any potential downturn.
- Consider proactively gaining skills in more resilient sectors like technology and healthcare as a safety net.
The future is never certain, but staying vigilant and ready helps you ride out any turbulence ahead.
Get Expert Guidance on Your Finances
Losing a job can certainly be destabilizing and emotional. But it also represents an opportunity to start a great new chapter in life. For tailored guidance specific to your situation, Sandeep Varma and his team at ATS Wealth Management host free seminars and provide financial consultations to help you gain control during this transition.
They can offer objective expertise on optimizing unemployment benefits, managing debt repayments, handling 401(k) rollovers, strategizing your job search, and mapping out your long-term financial plans. You’ll walk away feeling more confident, in control, and financially prepared.
Don’t tackle this alone – leverage their decades of experience to your benefit. With the proper knowledge and preparation, you can come out of this layoff stronger than before. The future looks bright if you have the right plan.
