Losing your job can be devastating. With most people living paycheck to paycheck, there’s a lot of panic about what you’re going to do to cover your expenses.
Instead of worrying, use that pent-up energy to keep your finances on track. Let’s take a closer look at what to do if you lose your job.
File for Unemployment
First things first. You want to file unemployment as soon as you can. Sometimes this process can take a while and you want to get the ball rolling immediately. In many states, you can file online. If you have a part-time job or other source of income, make sure you know all the rules that apply to that income and how it affects unemployment.
Investigate Health Insurance Options
Before you leave your job, be sure to ask your employer about any options for health insurance after you leave. Can you file for COBRA to maintain your health insurance until you can find another job?
If you are married and your spouse has health insurance benefits at their job, you could be added to your spouse's insurance plan even if it's not open enrollment since a loss of coverage is a qualifying event. You can also check into getting health insurance on the exchange too.
Talk to Your Family About Changes
You need to sit your family down and discuss how things are going to change. Explain to your kids that you’ll have to cut out the non-essential expenses. You and your spouse will also have to be on the same page of what can and cannot wait when it comes to purchases. Make sure everyone is open and honest with each other.
You will need to cut anything you absolutely do not need. This means the satellite or cable bill, streaming subscriptions, gym memberships, etc. If you don’t need it, get rid of it. If you do need something, look for less expensive options. This is a great time to get new quotes on insurance, check other cellphone providers, etc.
Update Your Resume/LinkedIn Profile
If you've been in your current job for a long time, you may not have updated your resume or LinkedIn profile for a long time. Be sure to freshen up your resume and LinkedIn profile and make sure that it includes all relevant information for the job you're looking for.
You might also want to Google yourself to make sure that everything looks good to a potential employer (who is likely to Google you also). You might need to think about cleaning up some of your social media profiles if there's something that could be potentially offensive to an employer.
Start Looking for a New Job
As soon as you lose your job, you want to make sure you’re looking for a new one. Hit the online job boards, look through local classifieds, etc. Don't forget to let family and friends (and old coworkers) know that you're looking for a job too. Many times it's who you know that will help you get your next job (or at least help you get an interview).
Start applying for any jobs that you’re able to do. Remember, fast food may not pay much, but it will get you through until a better job comes along.
You want to make sure to contact any creditors and explain your situation. Companies are much more willing to work with those that reach out to them. The worst thing you can do is ignore your bills. If you have protection programs on your accounts, you may be able to have your debt forgiven or put on hold for a certain length of time.
Sell Off Unneeded Items
Last, but not least, sell off any items your family no longer uses. You’d be surprised at how much you can make on old video games, books, and even used clothing. If you don’t want to deal with selling items online, have a yard sale.
Decide What to Do with Your Retirement Plan
What happens to your retirement plan once you leave your company? If you can, roll your 401(k) or 403(b) into an IRA account that you control. You don't want to leave it with your old employer. Also, do you qualify for a pension plan. Find out information from the company about the pension, and when you're eligible to start getting payments in the future.
Do not cash out your retirement unless you are in danger of foreclosure or bankruptcy, since you'll pay a 15% penalty (if you're younger than 59 ½) plus any income taxes on the money.
It can be hard to lose your job, especially if you live paycheck to paycheck. Thankfully, there are things you can do to keep your household running.