According to the Department of Numbers, as of September 2013, there were an estimated 11,255,000 persons who are unemployed. That’s an employment rate of 7.2%. So the good news is, if you have been downsized, if you have suffered a job loss or you are otherwise unemployed, you are in good company. There are many other workers out there just like you searching for employment. While that may make the tasks of finding a great job a bit more daunting, it should offer you some encouragement that your job loss probably had little to do with you and more to do with the current economic climate.
So what do you do if you have had a recent job loss? The first thing is to take a step back and breathe. Do not panic. Any time you are under stress or feeling under pressure it’s not the time to make big decisions.
File for unemployment immediately after a job loss
What do you need to do right after a job loss? File for unemployment benefits if you are eligible. Because it could take several weeks to start getting your unemployment benefits you don’t want to wait. Not everyone will receive unemployment. For example, if you have been fired for cause or if you resigned you will not be eligible.
Review your budget after a job loss
Hopefully, you have been reviewing your budget periodically prior to your job loss, but if not, it’s time to take it out, blow the dust off and revise it for your new financial situation. While you might have been able to afford the four dollar latte while you were employed, that may not longer be an option now that you are not working.
Take a good look at your financial position. Experts recommend creating a budget and evaluating your spending and savings immediately after a job loss and especially BEFORE cashing out your 401K plan or IRAs. If you have income from unemployment, your savings, friends and family, or an emergency fund, you may have more flexibility while looking for another job.
Next, consider how you can increase your income, even if it’s just temporarily. For instance, my husband’s an accountant. If he was laid off he might be able to find additional tax work or talk to a past employer about consulting work.
Obviously, you will need enough income to pay for the necessities which will include utilities, mortgage or rent, food and transportation costs. Other things can be cut- including cable, cell phone, extra cars, eating out and clothing purchases.
Other considerations after a job loss
Experts also note it’s important to consider any lump sum payments you might receive and talk to a tax specialist to find out how to take large lump sum payouts from your employer.
Finally, experts also recommend NOT cashing out retirement savings until you are in a dire financial state. According to Colleen Jaconetti of Vanguard Investment Strategy Group, “The impact of penalties and taxes can significantly reduce the amount you’ll have available to meet your current spending needs. Also, giving up the tax-deferred growth on these savings can lower the amount of spending your portfolio can support in retirement.”
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