The loss of a job is a horrible experience that I do not wish on anybody. It immediately alters your finances, relationships, and identity. Although I have never lost a job myself, I have experienced first hand the overwhelming effects of unemployment. To help you navigate a layoff, especially with the coronavirus pandemic, I want to share advice on what to do if you lose your job.
Related Articles To What To Do If You Lose Your Job:
- What Percentage Of Your Income Should Go To What?
- How To Do A Monthly Expenses Snapshot
- Budgeting 101: Organize your Income, Track Expenses & Save Money
- How To Budget If You Get Laid Off During The Coronavirus Crisis
- 5 Positive Outcomes Of The Coronavirus Pandemic
What To Do If You Lose Your Job During The Coronavirus Crisis
1.- Figure Out If You Will Receive A Severance Package
When my husband was laid-off during the 2008 Recession, I didn’t know what to think or do. The loss of his job meant an overnight reduction of 65% of our income. That was pretty scary.
He was laid-off without notice, and he did not receive a severance package. My first reaction was to freak out. I wondered if we needed to pack our things, move out of the rental house, and crash into my in-law’s basement across the country.
I laugh now when I reminiscence. But, the reality is that your first reaction will be to imagine the worst-case scenario. And, that’s normal. After the bad news sinks-in and you can think with clarity, figure out if your employer will offer a severance.
If you will receive compensation, that is excellent news! Preserve that money as it will be your only income until, and if, you receive unemployment benefits.
Your goal is to meet your essential needs with the severance, unemployment, and cash you may have. Hopefully, you have a savings emergency fund to help you get by until you get another job.
Check out this F.A.Q. on Stimulus Checks, Unemployment, and the Coronavirus Plan put together by The New York Times. It includes details on what kind of financial assistance the federal government will extend due to the coronavirus pandemic.
2.- Calculate Your Essential Survival Expenses
When my husband was laid-off, it became evident that we needed to make some drastic lifestyle adjustments. My paycheck alone was not enough to cover all of our expenses.
So, first, we figured out our essential expenses for survival. In times of dire financial crisis, there are only four budget spending categories that I believe you should cover first:
- Groceries
- Rent/Mortgage and utilities
- Gas and transportation
- Access to the internet
Any other expense, like debt payments, eating out, or getting a hair cut, are not essential. And, with restaurants and every non-essential business closing due to the coronavirus, it’s become more evident of what our primary needs are.
Although I know that the few restaurants that are still open are struggling big time to stay alive, avoid spending money on take-out if you have lost your job. Your cash will be better spent on groceries to cook your meals at home.
And, although technically, the internet is not necessary for our survival, it has become a must service, especially now that we shelter in place. The internet is the only safe access to the rest of the world, only tool to prevent isolation while we fight this virus.
3.- Reduce Your Lifestyle DRASTICALLY
Today is the day to rethink every financial decision you have made thus far because if you don’t, you will dig a dipper whole.
When the 2008 Recession hit us, we had no choice but to prioritize our expenses seriously. It was not easy, but we didn’t have any alternative. There was not enough money coming in to keep up with the same lifestyle that two incomes afforded us.
We already had student loans, a mortgage, two car payments, and credit card debt. We had to reduce our lifestyle big time to avoid getting into more debt. There was no other choice!
So, we eliminated all entertainment expenses. We didn’t go out to eat for a long time, or on vacation. I think we even cut our newspaper subscription. We focused, as I said earlier, on covering the necessities.
The only two things we did to get out of the house were going to the park, and occasionally, watching a movie at the $1 theatre. Did you even know there are $1 cinemas? Well, I didn’t either until then.
We were so broke that instead of buying popcorn, soda, or candy at the theatre, I smuggled my own inside my purse. I know I am not proud to admit it, but then it was the only feasible way to feel like ordinary people at the movies.
Get Honest With Yourself!
Now, cut considering that coronavirus has every business shut down, you may have to wait a while to treat yourself to a $1 movie. But, it is still a great time to take a close look at your pre-layoff lifestyle.
You need to ask yourself these questions and answer them honestly. Did you need to finance a new car? Can you live without credit cards? How about budgeting, do you do it on purpose every month? And, have you been building a savings emergency fund?
These are only a few financial decisions you should be considering, and thinking through carefully. Take this time as an opportunity to prioritize and grow up financially.
GOAL SETTING WORKBOOK
Set and keep track of your money goals with our FREE financial goal-setting workbook.
4.- Stop Paying Extra On Your Debt
It feels counterintuitive for me to say, “stop paying extra on your debt,” but if you got laid off, you need to. Right now, paying down debt is not your priority; surviving this crisis and getting another job is.
So, if you have enough money to pay for your necessities and also make the minimum payments on your debt, do that. Staying current will save you a lot of headaches.
And, unlike what happened after the 2008 recession, banks, creditors, utility companies, and many other businesses today are being lenient with their customers due to the coronavirus layoffs.
Contact Your Creditors ASAP!
Many have offered to stop charging interest. Others are willing to postpone payments on mortgages and car payments. So make sure you contact your creditors to find out what options you have. If you can enroll in a program to stop making payments temporarily, that is the way to go while your income recovers.
Many state governments have also put in place orders to stop foreclosures and to prohibit interruption of utility services for lack of payment. Postponing payments will help you stretch your money during a layoff. But understand that sooner or later you will have to catch up with those bills.
With the aftermath of the 2008 Recession, people were getting evicted left and right. Families were losing their homes to foreclosure. Service on delinquent utility accounts was being shut down. Our next-door neighbors moved out of their home in the middle of the night. But I am sure that we are not headed that way.
Yes, coronavirus pandemic is an unprecedented event, and millions of people have lost their jobs. But the government is also taking unprecedented measures to help mitigate the financial impact on many families. That was not the case back in 2008.
5.- Get Another Job
Even though you might be eligible for unemployment benefits, you should try to find a new job right away. Unemployment checks will help you some, but will not replace your full-time income.
My husband received about $240 per week on unemployment benefits. This money helped to get by, but it was nowhere near what he had been making as a full-time employee. So, the sooner you can find another job, any job, the better.
While many businesses have shut down due to coronavirus, many others can’t find enough workers. And I am not just talking about grocery stores. I understand that some people may feel overqualified to stock groceries.
Many Companies Are Hiring!
There are many companies in fields such as technology, manufacturing, logistics, healthcare, and of course, retail, that are hiring more employees due to the coronavirus crisis. To learn more, check out this list compiled by Jazmin Goodwin of USA TODAY.
Also, keep in mind that your layoff is temporary. Losing your job does not mean that your career is over. Yes, our first reaction is to think worst-case scenario, but in a few months, as the coronavirus dies off, things will slowly but surely get back to normal.
Your goals today are to bring in enough money to pay for your necessities, avoid getting in more debt, and to minimize the impact of a layoff in your finances and personal life.
6.- Postpone Student Loan Payments
Did you ever think you could have the option to stop paying your student loans and not face the consequences? In another unprecedented move to help Americans get through the coronavirus crisis, federal student loan payments are being suspended until September of 2020.
On average, a college student graduates with over $30,000 in debt. Add to that burden the expenses of everyday life, and a layoff, and things can get complicated in an instant.
So, if you have federal student loans and have lost your job, I would recommend you contact your loan provider and take advantage of this opportunity.
If you have private student loans, you won’t have the same options as with federal student loans. However, you must contact your lender to find out if you can temporarily stop making payments. Chances are you can, although interest may continue to accrue.
Either way, you need to take action right away and contact your lender to understand your options.
7.- Contact Your Creditors If You Can’t Pay
If you have consumer debt and you won’t be able to stay current with the minimum payments, you need to get on the phone and contact your creditors ASAP. Make sure you explain to them your situation and inquire about options to pause or postpone payments.
Staying current on your credit cards, car loans, and personal loans is not a necessity. It will likely affect your credit if you miss payments, and you may have to pay additional fees, but your credit score today should be your least concern.
I know many of you will stop reading now because you are obsessed with your credit scores. However, according to FICO’s algorithm, the only way to have a good credit score is to be in debt. And the last thing you want to have when dealing with a layoff is debt.
So, what is the point of nurturing your credit if the debt will always be a burden? Your focus from now on should be to recover your income so that you can get out of debt fast. Debt-freedom is the ultimate remedy for any financial crisis, recession, or layoff.
8.- Sell Your Junk
If we focus on the positives, the thing that you do have after a layoff is time. Take advantage of this period to comb through your home, clean closets and the garage, and identify items that you can sell today online.
You can probably generate overnight a few hundred dollars by selling unused furniture, toys, appliances, antiques, clothes, electronics, old video games, etc.
There are many online sites and apps like Facebook Market Place, Mercari, Poshmark, eBay, etc., that allow you to flip new and used items. So, recruit your kids if they are old enough to help and go through every room in your house. You never know what your junk could be worth to others.
9.- Sell The Stuff That Keeps You In Debt
Now it is also time to evaluate if you need to sell your car. If you cannot afford the payments during the layoff, I would seriously consider to list it today. You may end up losing a little bit of money upfront, but if you get rid of that financial burden now, you will come ahead in the long run.
The same advice goes for boats, motorcycles, and any motor vehicle that you are financing. Your car payment is not a necessity. Having a car that can take you to and from work is a necessity, but car payments are optional.
So, while you look up the value of your financed car to put it up for sale, also keep an eye for a used vehicle that you can purchase in cash. There is no shame in temporarily driving an old beat-up car for the sake of your financial well-being.
And, remember, what we are going through is temporary. When you find a new job and your economy recovers, you can save enough cash to upgrade your paid-for clunker.
10.- Take Advantage And Save Money
The closure of so many businesses has brought a new perspective to the idea of wants versus needs. Wait, am I saying that going to Marshalls, Ross, or the mall is not a necessity? I am, believe it or not.
I love shopping. If it were up to me, I would spend all my money going shopping. But in times of crisis, this is the first spending category you need to cut from your budget.
Most, if not, all of us already have enough clothes, shoes, and purses in the closet. If anybody needs to buy clothing are moms with growing kids. Other than that, even your teenage kids have enough. Now is not the time to spend on new clothes.
The closure of nail and hair salons and barbershops will also force many of us to save money on personal grooming. And although I want to be sympathetic to people whose livelihood depends on these services, getting a haircut or a manicure is not a necessity.
Take advantage of the closures during the coronavirus shelter in place season to save as much money as possible. You should also be saving money on gas since many people are not driving as usual.
Conclusion: What To Do If You Lose Your Job Due To Coronavirus
There is a considerable difference between the coronavirus crisis and the 2008 Recession. This time around, unprecedented measures have been taken to help people, and businesses, affected by the coronavirus pandemic layoffs and closures.
If you lost your job, these are ten things you should do right away:
1.- Figure Out If You Will Receive A Severance Package
2.- Calculate Your Essential Survival Expenses
3.- Reduce Your Lifestyle DRASTICALLY
4.- Stop Paying Extra On Your Debt
5.- Get Another Job
6.- Postpone Student Loan Payments
7.- Contact Your Creditors If You Can’t Pay
8.- Sell Your Junk
9.- Sell The Stuff That Keeps You In Debt
10.- Take Advantage And Save Money
And remember, a layoff does not mean the end of your career. Although you will likely default to imagine the worst-case scenario, keep in mind that your struggle is temporary.
Today it might be hard to see it, but as time goes by, you will gain a new perspective and the wisdom to appreciate the opportunities that can arise even from challenging times.
Related Articles To What To Do If You Lose Your Job:
- What Percentage Of Your Income Should Go To What?
- How To Do A Monthly Expenses Snapshot
- Budgeting 101: Organize your Income, Track Expenses & Save Money
- How To Budget If You Get Laid Off During The Coronavirus Crisis
- 5 Positive Outcomes Of The Coronavirus Pandemic
Pin It!
What To Do If You Lose Your Job During The Coronavirus Crisis
Leave a Reply