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The United States appears to be heading into recession – by some measures it is already there. And that comes with fears of layoffs, even amid the current labor shortage. In fact, several major companies, including Tesla, Redfin and JP Mortgage Chase, have cut jobs or imposed hiring freezes in recent weeks.
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If you think your job is in danger, don’t panic. “The storm hasn’t hit yet, so there’s still time to prepare,” said Mark Henry, founder and CEO of Alloy Wealth Management.
Making a plan to prepare yourself emotionally and financially before a layoff will help you survive once it happens. Here are some tips for surviving the layoff.
1. Do a financial fire drill
Ideally, you should take steps to prepare your finances before you lose your job. According to Donna Freedman, author of “Your Playbook for Hard Times: Living Big with Small Changes, Short-Term or Long-Term,” it’s a good idea to have a financial fire drill.
Start by determining your base budget — the absolute minimum amount you need to cover basic costs, such as food, housing, utilities and paying off debt, she said. Next, check your national unemployment insurance agency’s website to get an idea of what your weekly benefits will be. This will help you determine how much extra money you will need from other sources, such as savings, for necessities, and how much non-essential costs you will need to cut.
Once you have an idea of the shortfall you will face if you are laid off, avoid trouble with creditors. “If you have loans that you are repaying, it is essential to prepare your creditors in advance for the potential redundancy,” Bill Ryze, chartered financial consultant and adviser to the board of directors at Fiona Finance, told GOBankingRates. “They can understand your situation and work with you if layoff occurs and you’re struggling to meet debt deadlines.”
2. Use credit wisely
Contrary to popular belief, taking out a home equity loan or new credit cards while you’re still employed isn’t the ideal way to ensure you stay afloat during a layoff.
“Home equity can be a security blanket, but it means you’re going into debt to weather the storm,” Henry said. “I would much rather see people use their emergency fund to cover their expenses.”
While new credit cards to boost your available credit can lead to unmanageable debt later, consolidating existing high-interest cards — then locking them — could ease the pinch after losing your job.
“If you have credit card debt, now might be a good time to look into 0% balance transfers,” Henry said. “Debt consolidation is never the solution for you, but it can help in situations like this.”
3. Start the job search
The best time to start looking for a new job is before you get laid off.
“I always recommend having a resume ready to go (even when you’re employed),” said Connie Cutillo, an experienced human resources manager and resume and job profile writer. “To keep your resume up to date, you should always keep track of notable contributions and accomplishments for each position. It’s easy to track them as you go rather than trying to remember all of your accomplishments over the years. Last 5 to 10 years in one go,” she said.
This is also a good time to review your social media presence. Henry recommends updating your LinkedIn profile and making sure you don’t have controversial social media posts that could jeopardize your chances of getting a job.
Attending networking events and participating in local organizations provide great opportunities to tell people you’re looking for a new position or, if you’re not ready to move yet, that you’re open to it. .
4. Understand your benefits
You need to know what your benefits status will be if you lose your job.
Depending on your role and how long you have been with your employer, you may be eligible for severance pay. You can try to negotiate the terms, but first you need to understand the package, according to Ryze.
“Make sure you know your health insurance options,” said Jay Zigmont, Ph.D., CFP, founder of Childfree Wealth. “Your company may offer health care benefits during termination or a similar period. You may also have the option of purchasing COBRA insurance (which can be expensive) or participating in the Health Care Exchange. health.
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5. Cut expenses to the bone
If you didn’t reduce your expenses before a layoff, you’ll likely have to cut your expenses significantly when you lose your job. According to Freedman, expenses such as dining out, recreation and nightlife may need to be put on hold during this time.
Additionally, you should talk to your car insurance agent about how much you’ll save by increasing your deductible, removing collision coverage – if your car is old enough – or keeping your vehicle parked in the garage because you won’t be driving. not work daily, she said. You can also upgrade to a cheaper phone plan and ask the kids which of their extracurricular activities are most important to them, as the rest may have to be put on hold.
6. Prioritize bills
When cash is tight, you may need to prioritize which bills you need to pay first. For example, it is better to postpone a medical bill than a mortgage payment.
You can protect your credit score by making the minimum payment on your debts. If you haven’t contacted your creditors yet, telling them about your situation can also protect your score. “They might be willing to lower your minimum monthly payment. They can also lower your interest rate or waive it to suit your situation,” Ryze said.
You may be able to reduce your monthly expenses by taking advantage of programs for people in need. Freedman said she was able to get a reduced utility rate when she was at a financial low. If you have federal student loans, you may be able to take advantage of income-based repayment plans to lower your monthly bill.
7. Get a part-time job
When you’re looking for a new full-time job, you may have to take a part-time job to pay the bills, even if it’s not your favorite job. According to Freedman, if your unemployment benefits are about to end and you still haven’t found a full-time job, you shouldn’t shy away from openings that aren’t ideal.
In addition to contacting friends, family members and former bosses to see if anyone knows of a vacancy, you should take the time to scour online job boards for opportunities.
In the meantime, one or more secondary activities could generate cash quickly – in some cases, without requiring a long-term commitment. Carpooling and deliveries, baby or pet sitting, online tutoring and Fiverr gigs are some of the possibilities suggested by experts consulted by GOBankingRates.
Freedman also recommends making a list of things you can sell to generate extra income during a layoff. For example, she once sold a plastic baseball figurine on eBay for $1,200 when she was going through a divorce and needed the money.
8. Take advantage of assistance programs
Government and community programs exist to help you through difficult financial times. For example, you may qualify for the Supplemental Nutrition Assistance Program, or SNAP, to help cover the cost of food.
Freedman recommends calling 211 — which is the community services clearinghouse number in most areas — to find out what services are available near you and who can help. She said you should explain your situation and be specific about the type of help you need. However, you should take this step before you find yourself in dire straits, as assistance programs may require you to fill out forms and be logged into their systems before you can start receiving help, a- she declared.
Losing your job is a stressful experience. However, if you take the steps listed above to prepare your finances before a layoff, you will be better able to cope with the shock of losing your job. And, you’ll be more likely to stay afloat financially if you’re unemployed by making the right choices and taking advantage of any help available.
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