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A 5-Step Plan for Surviving a Job Loss

Personal Finance Taxes

Have you ever gone through an unexpected job loss?

A 5-Step Plan for Surviving a Job Loss - TaxACT

Losing your job can be a traumatic experience.

You lose your income and benefits, sense of security, and job identity all at once. You may have workplace friends you’ve seen every day for years. The morning after you get laid off, everything’s changed.

It’s important to take some steps to help ensure your financial survival – the sooner the better.

Here’s how to start your 5-step plan for surviving a job loss:

Step 1. Find out what you have to work with

Go to the website of your state employment office, and estimate your unemployment benefits (or go to the state employment office).

Add up your assets, such as checking and brokerage accounts. Make another list with your other income, such as your spouse’s salary, and your expenses.

Step 2. Estimate your taxes for the year.

When you only work part of a year, but you had income tax withheld as if you were working the entire year, you may have had too much withheld.

You may even be smart to have your spouse change his or her withholding at work so your spouse gets more take-home pay.

If you need to have more withheld, ask to have income tax withheld from your unemployment check.

Step 3. Make a baseline budget.

That’s a budget that shows the absolute minimum it takes for you to stay financially afloat.

You may not have to live on this baseline budget, which will have no provisions for lattes, movies, or possibly even cable, but it is liberating to know how little you can live on if you have to.

If it looks like you can get by on unemployment for a time, consider drastic measures.

Sell the car with the payments, move to a lower cost-of-living area or in with relatives and cancel every online, magazine, and gym subscription or membership. (Often they will let you out of a contract or suspend it if you are unemployed.)

Contact your mortgage lender and ask about hardship plans, if necessary.

Step 4. Look for work.

Work is not always a job, although it may be. Don’t limit yourself to a narrow field or geographical location, to working as an employee, or to a job that looks just like the one you just left.

Consider using your other talents, at least while you look for something in your main field. If you don’t have any other talents, now is a great time to develop some. Everyone should have at least two ways they could make a living if they had to.

Don’t overlook temporary or part-time work. It may get you in the door to a “real” job.

Step 5. Stay busy.

Get up every morning and get dressed. Instead of dwelling on bitterness, try to view unemployment as an opportunity for change.

Do volunteer work, work on your resume, take classes. The more people you meet and keep in touch with, and the more up-to-date you keep your skills, the better your chances of getting back to work soon.

If you had a choice, would you rather work for a large corporation, a small business, or for yourself?

Photo credit: Leandro Pérez via photopin cc

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