10 tips for surviving a layoff

I was laid off last year. I honestly had it a lot better than some people I know. I got about 9 months advance notice and ended up getting about 5 months of severance. I am well aware that cases like mine are few and far between. That said, there are things you can do to help you survive a layoff, should it happen to you.

j0407531 If you are fortunate enough to get advance notice, I suggest taking these steps as soon as you find out about the layoff. The sooner you get started, the better positioned you are going to be financially to handle it.

1. Cut expenses like crazy

If you are getting laid off, it is time to be ruthless and cut anything other than things you absolutely need. I wrote about 15 ways to cut expenses, but you have to cut the fat. It would be a terrible thing to get a few months down the road and realize that you can’t pay your electric bill because you couldn’t break your daily Starbucks habit.

If there are any small debts you can pay off quickly, it may be worth it to pay them off to eliminate the expense each month. For anything other than small debts, I suggest…

2. Start paying the minimum on your debts

Take the money that you used to be paying above the minimum payment and start building up your emergency fund.

3. Calculate your bare minimum monthly income

This part is very important. Start by downloading a free budget spreadsheet. You have to find out how much money you need each month to survive. After cutting your expenses, this number should be a lot lower than your current monthly income. If it isn’t you need to go back and cut more! The goal here is to figure out your bare minimum income that you need while in “survival mode.” and figure out the minimum that you can live on each month.

4. Start filling your emergency fund any way you can

If that means selling your stuff on Ebay, getting a part-time job, or other ways to make money, you need to get some money saved up.

5. Start looking for a job immediately

The first benefit here it is a lot easier to survive a layoff when you know that you have a job lined up. The sooner you start looking for a job, the sooner you will find something.

The second benefit is that you will likely have more competition as time goes on. In my case, I worked in an industry that only had a few major employers in my city. So everyone who got laid off at my firm was calling the few other firms in town. Some people started looking for a job right away, and some people took their time and called just before their job-end date. As you could imagine, most of the jobs had already been filled.

6. Ask your friends

I know an accountant who sent out an email to everyone he knew explaining that he had gotten laid off and what type of of job he was looking for. He ended up getting referred to a job by one of his friends. He then rewarded the referrer by taking his family out to a luxury restaurant. Not a bad idea.

7. Don’t burn any bridges

It isn’t uncommon to feel some animosity, but burning bridges is never a good idea. I noticed that many people in my department had previously worked at the same company together. At the previous company they worked in different departments and different roles, but they all ended up working together. You never know when you might run into people again.

8. Don’t spend your severance check!

I was blown away to hear one of my co-workers say that he had already spent his severance check – months before his job-end date and without another job lined up! As soon as he found out how much his check was going to be for he went out and bought a car and a swimming pool or something on credit. I mean seriously, there must be 50 reasons why that is a terrible idea.

Instead, when you get the check, stash it in a high-interest savings account. I like ING Direct for a lot of reasons, but you may be able to find a higher rate elsewhere.

9. Figure out how long your severance will last

After completing #1 you should hopefully be able to make your severance last longer. Once you figure out the bare minimum (#3) that you can live on each month, add your severance and emergency savings and divide it by your bare minimum number. This will tell you how many months you can last without additional income. This gives you a concrete date of when you have to find a job by.

10. Consider taking a job that pays less

This is a tough one. Some people don’t want to sacrifice income, so they will stay in the job hunt without any income for a year or more waiting until they get the pay they want. Personally, I subscribe to the theory that you should get anything just to keep money coming in. Preferably something that will allow you to continue your job search.

In my case, after doing #9, I realized that my severance and emergency fund would last twice as long if I had some part-time income coming in. So if your severance and emergency fund would last 9 months, you may be able to increase it to 15 months just by working part-time at Starbucks during your job search. This essentially gives you 6 more months to find a job that pays what you want.

Side note: Last I heard Starbucks offers health insurance to part-time workers (20-hours per week)

Summing it up

These are a bunch of practical things to do when dealing with a layoff, but the most important is to seek God and His wisdom. Wisdom is one of those things that He promises to give when we ask. Be diligent to do your part, but keep trusting Him and stay encouraged!

Other articles about surviving a layoff: How to survive a layoff, Surviving job loss

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  1. Christian debt management

    Thank you so much for your post! You really hit the nail on the head with this one. With the economy the way it is right now with all the layoffs and more to come; government spending and deficit out of control; the continued housing slump; one wonders where to turn for help. It sure is nice to know that there are debt management companies out there that can help folks avoid bankruptcy and still keep their heads above water. Thanks so much for the taking the time to post this information.

  2. bob

    Thanks – glad you enjoyed it!

  3. Craig

    Cutting costs is an obvious. I am just curious about the recommendation to paying the minimum of debt. If you do this, you will get into more debt with high rates, which could hurt in the long run. I would think you would want to cut expenses, but still pay off all debt to insure that is doesn’t build up.

  4. Matt

    Great advice. I have one question. Where would you factor in unemployment pay?

    I was listening to the WSJ podcast this morning and they were discussing a similar topic and one thing they suggested was filing for unemployment as soon as you are laid off (without severance, of course).

    Are you opposed to that?

    Out of Debt Christian

    • bob

      you know, I have heard that filing immediately is a good idea…. thanks for pointing that out…

  5. Candy @ Deal with it, simply

    Thanks for the post. We closed our business the end of June and am always looking for tips. The Lord has provided, Thanks!

  6. Financial

    This is good information to have in this kind of economy. Thanks for sharing this sage advice.

  7. Alec

    Great tips, I was laid of this past Jan and the available jobs are very slim.

  8. John

    Your article on ten tips for surviving a layoff is interesting and informative. Many people today are facing unemployment and need any advice they can get to survive in these hard economic times. While your article may be very helpful to those who receive advance notice of a layoff and, like you, are fortunate enough to collect a severance package. However, it really falls short of helping those who find themselves in dire need from an unexpected layoff and the inability to obtain financial compensation. I would like to propose another plan that I have personally had to incorporate in my own life in the past two years that would benefit those who are not entitled to a severance package, including workers who may or may not be entitled to unemployment compensation. If people are unfortunate enough, as I was, to be suddenly laid off without available income they should follow my following prescribed steps for survival:

    1. Immediately go to Social Services and apply for unemployment. If you wait as much as two to three days to file, you may find your first unemployment check delayed in reaching you. Remember also that most people have to wait a hold week before receiving unemployment. Only those who have been previously laid off during the year may not have to wait through this hold week.

    2. Immediately file for food stamps. If you don’t qualify for unemployment, this is a must! Food stamp qualification is based on income and available cash in the claimant’s possession. It’s a bit of an inconvenience to fill out the paperwork, but if you have a family to feed, it is well worth the headache. The amount you receive will also be determined by how many dependents you have. Even if you receive unemployment, you may be entitled to some food stamp funds

    3. While you are at Social Services, ask the social worker assigned to your case if there are any cash funds available to your family. The office of Social Services usually receives allotted funds from the government to help those who can’t afford to meet their rental, house, or utility payments. These funds can be sometimes available as a monthly payment assistance check or as a “one-time” lump payment to get your family over the immediate hurdle of a financial crisis.

    4. The Social Services office will also provide a list of charitable organizations in your area that allocate emergency assistance to needy families. Utilize this list, as you will find at least a few more places that will provide emergency help. In my case, there was one church that occasionally provided a $10 voucher to needy individuals so they could buy groceries from a local supermarket.

    5. Visit the local Salvation Army office. The Salvation Army has a soup kitchen open at lunch to any individual in need of a meal. Also, the organization has access to government funds that may be available to needy individuals who may not qualify for emergency funds at Social Services. Social Services and the Salvation Army confer with each other regarding whether an individual already obtained funds from their offices. You are not allowed to receive funds for certain items at two different locations. For instance, if you obtain government-funded assistance for a utility payment at Social Services, the Salvation Army will not provide you with their government funds for the exact same purpose. This helps distribute the needed assistance evenly to all those in need.

    6. Apply at HIP if you are in danger of getting evicted from your rental property or can’t make your house payment. HIP stands for Homeless Intervention Program. Under this program you may be qualified to receive aid for an amount equal to your monthly payment. Funds might be loaned on a short-term basis or, in some cases, given to you outright. As with the other social programs, qualification is also based on your financial circumstances. HIP is available at the Salvation Army in some areas, but the program may be offered at other facilities in different cities.

    7. Always ask workers at the Salvation Army, Social Services, or any other needy assistance outlets you visit if there are any other available services offered by other groups in the area. You will be amazed at the number of places in your area that happily offer help to financially needy people.

    8. Consider going back to college, and fill out a FASFA loan request. There are certain Pell grants that don’t need to be paid back that may be available to you if you attend college either at a nearby campus or online.

    9. Check temporary agencies for any available work. There are some agencies that offer temporary work even on a daily basis. One such agency is Labor Ready, which is a nationwide agency. You can work at a certain site for $8 an hour and get your cash at the end of each day you work. The type of work may not be for everyone, but speaking from experience, it can get you out of a bind.

    10. Update or upgrade your resume. Submit your resumes everywhere, including online employment sites. Most people agree that word of mouth is the best method of finding work. You can also inquire about available employment and post resumes through your local unemployment office.

    11. If you don’t have insurance for your family, submit an application to Social Services for health benefits.

    12. Many of the organizations you will be steered to will have free used clothes and non-perishable foods, so don’t forget to inquire about those services as well.

    Well, the above list pretty much sums up my “Things to Do When Faced with Unemployment List.” There are certainly other avenues to take, but if you at least start with these crucial steps, you will find your road to recovery to be more manageable and less overwhelming. Many people refuse to use charitable or social agencies to aid them in recovery. To some, pride steps in the way. We all like to think of ourselves as being self-sufficient. First, we must remind ourselves that these government organizations are sponsored by our tax dollars, and to not use them to help support our own families when we are in need is simply throwing money away that we have already paid out ourselves through personal tax dollars. In other words, turning down government-funded assistance is neglecting to use money that we have already given to be used for that purpose. Would you refuse to use personal emergency money that you have set aside in your own account when you face an emergency? To turn down available assistance that we have already paid for is not being a good steward of God’s money. The Bible says, “God resists the proud but gives grace to the humble” (I Peter 5:5). Being laid off is a humbling experience, and God sometimes puts people through such circumstances in order to enhance their character or enrich their lives. If you find yourself unexpectedly laid off, ask God to guide you, and use every means available to sustain you economically. You will no doubt find that by going through these steps your life will be more satisfying and meaningful.

  9. Erin Lamb

    I believe that your article on how to survive a layoff is very informative. I believe it could be very helpful to several people even if you come across a sudden lay off or loss of money. Most of the ten ideas could still be initiated to help you, they would just be a bit more delayed in the effect you get. I also agree you should immediately cut expenses and pay off your small loans to open up a future safety net. Getting laid off is a very stressful and frustrating time for any one. Getting your spouse and/or kids involved is also a very good idea to keep the small things off your mind. It is also very imperative to grow a emergency fund, because when your broke this is what you need most so you don’t have to sacrifice things in the future you don’t want to or need to.

  10. Paul C

    I wonder when it’s appropriate to spend – soon after being laid off/fired – on help such as career counseling or coaching or even therapy. I was laid off and had a very nice savings (about 9 months salary) but no severance. I regret not spending some of that savings on “help” early on in the post termination period. Now I am very discouraged because the job hunt and other things haven’t been working, but the money is gone, so I can’t afford to get any kind of coaching or whatever.

    The bigger problem is that my partner and I didn’t really cut expenses and have been depleting my savings and her home equity but you already addressed that above. I wanted to add the comment/question that *some* things (like coaching) even if expensive, might be a good idea if needed, even though it seems counterintuitive to spend like that after a term.

  11. Green Home Building

    Very inspirational, maybe also consider a job that will save the environment!

  12. arizona auto glass

    That is pretty solid advice. Its good to know in this downward spiraling economy. I’m sure a lot of people would greatly appreciate this post as times are rough right now for many Americans

  13. Enigma

    Besides the government grants and cash assistance, facilities such as housing aid, utility bill assistance and food assistance are now made available to help out Single Mothers in distress. Such financial aid for single mothers guides their lives within the correct path. Visit http://www.financialhelpsinglemother.com/ for more info…

  14. Tracy

    I was blessed by this article and found much insightful information about unemployment. Although I resigned from my job after many many years and relocated to a different state. The job was becoming extremely stressful so it was of no consequence that I walked away. Even though relocation is difficult when you know no one in the state, I have found this new experience something I can be proud of. Fear would never allow me to do this and I don’t have the “spirit of fear”.

  15. Single Mother My Choice

    Nice tips. But I believe it is good to follow these points even though anyone is not laid off/fired. Why only follow these after something has happened. If we can follow these steps before hand, they can put us in better shape and very low impact when really unfortunate incident happen.