Have You Recently Been Laid Off or Suddenly Unemployed?
Laid off versus fired, does it really matter? Possibly. You are still unemployed. You might still have and spend your days searching for a new job. What if you are given sum of money when you get laid off? Can you live on that? If you were fired, you may be facing a different circumstance altogether.
As for layoffs, there are two kinds: temporary and permanent. A factory closes and moves overseas … permanent. A construction or oil crew is laid off … likely temporary. Knowing the difference is important in planning for economic downturns resulting in sudden unemployment.
Laid off or fired, you feel like someone just stomped on your big toe. Pain and anger at first, then fear and worry. You start to review your budget. Will there be enough to cover the bills? Any extras? What might I need to cut? Who should I call first?
If faced with this type of uncertainty, it can be helpful to discuss your situation with a qualified financial professional.
Whatever choice you make, it could come with some stress. This is normal. Your daily routine is about to change. Part of it should include taking care of both your financial future and your mental health.
Some things you can do for both include:
- Accept reality and make plans for living within that new reality.
- Keep a daily journal and note successes, like negotiating an extended payment plan with creditor A.
- Look for a silver lining, like have you ever wanted to start your own business?
*Lundervold Financial does not provide estate planning, but we are part of our clients’ estate planning team. If you are looking for an estate planner, we can refer you to professionals who provide the following services: trusts, probate, charitable giving, estate planning, and tax planning.
Coping with Unemployment
Perhaps the hardest part of being unemployed is emotions. Whether laid off or fired, we tend to feel rejected, as if we have been tossed aside, discarded. But nothing could be further from the truth, so the sooner we get over this initial thinking the better.
Coping with unemployment is hard but we can make it easier. The first thing you can do for yourself is to give yourself time to adjust. Life will be different.
You are going to have time on your hands, but don’t waste it. Beware of social media or video gaming traps. It would be so easy to sit down and start surfing old friends. You may even use social media to put out feelers, letting people know you are looking for work. Then, slowly, imperceptibly, you spend more of your days online. It happens.
The best way to cope is to set a goal and stick to it. Want to find another job in your field? In another field? Want to go back to school? Start a business? Whatever goal you choose, start taking steps toward it right away. This is one of the best things you can do to cope with unemployment.
Small steps every day towards your goal will boost your self-confidence and reduce stress. In time, you will reach your goal and enjoy a new reality.
Preparing for Layoffs
How do you prepare for or even survive a layoff?
The best way to prepare is to save up for our needs. If you work in a field that is prone to layoffs, ask coworkers how long layoffs tend to last. If not, plan for three to six months.
Your preparation should include a combination of tools both physical and financial. You also need to prepare mentally. If you are the breadwinner, your family is going to be fearful. You will need to reassure them. In fact, get them involved. Let them help. Their involvement will reduce stress on the entire family including you.
In other words, involve them even in preparations. Think of it as a family fire drill. Brainstorm ideas for both planning and coping. Some things to consider include:
- Budget — Know how much you need for X months, then start saving towards that goal.
- Credit — Try to keep credit cards clear or keep one card for emergency use only.
- Advance payments — Most creditors will allow you to make advance payments. Just be sure to let them know the purpose of the extra payment or it may not be applied as you want.
- Retirement funds — Increase your contribution when times are good. And yes, sometimes you can pull from your retirement plan without penalty, but would that be wise?
Whether it would be wise after a layoff to withdraw from your 401k or not depends on many complex factors including what triggered the layoffs, whether you have insurance, the types of policies in effect, how much you have in regular savings, will creditors work with you and more.
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