Archive for Thursday, August 23, 2007

Take steps to soften effects of layoff

August 23, 2007

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With thousands of people losing their jobs across the country, many are worried what to do next. In a recent online discussion, one such worker wondered how to manage her probable layoff.

The Fort Lauderdale, Fla., resident wrote: "I am in a really tight spot right now. I am employed with a firm that is having financial trouble. It is likely that my position will be eliminated within the next six months. The job market is really tough out here, and I will have to take a drastic pay cut. Do you have any suggestions for helping me stay afloat until the dust settles?"

When you're faced with a layoff, it's time to do things differently. For example:

  • Start cutting your expenses right away. Unless you have another job lined up, you've got to attack your budget like a sushi chef chopping fish. I understand the urge not to disrupt the status quo. But things can turn bad financially quicker than you think.
  • If you suspect you may be laid off, this might be the time to line up a home equity line of credit, says Sheryl Garrett, founder of the Garrett Planning Network Inc. "But this goes with a big warning," Garrett said. "Do not use this unless it is absolutely necessary."
  • Take advantage of all counseling, career seminars or outplacement assistance.

    If your employer isn't offering assistance, go to www.careeronestop.org, which is a U.S. Department of Labor-sponsored Web site that offers career resource information. Click on the link for "People and Places" and then go to "One-Stop Career Centers." Among many other things, the centers offer help with writing a resume.

    "A lot of people don't take advantage of these free resources," said Kim Rhim, executive director of The Training Source Inc., a Maryland-based nonprofit employment training and job placement assistance program.
  • Immediately start looking for a job as if the search were your full-time job. And don't be too proud to get a "JOB, as in a 'Just Over Broke' job," Rhim says. "Take a sustainability job." That's the type of employment that will at least pay for the basics - rent, food, utilities. Rhim recommends accepting a position with evening hours to leave your days free to look for the type of work you really want.
  • Stop contributing to your retirement plan. Having a cash reserve trumps retirement planning during this time. Resist thinking that if you run out of money down the road, you can tap your 401(k). That's a costly move. You'll be looking at a penalty of 10 percent for an early withdrawal, plus you have to pay income tax on the money.
  • Make minimum payments on your credit cards as soon as you know you're losing your job. Again, you need to save as much cash as possible.
  • If you are getting severance money, don't invest it. If you are getting a lump sum as part of your layoff, put it in the highest-yielding savings account or money market account you can find. This is money you may need in the short term so it's unwise to risk losing it.

Comments

packrat 8 years ago

Step 1. Don't use credit cards for anything that is not a true emergency.

Step 2. Always save money in case this happens.

Step 3. Don't buy a bigger house just because we can afford the payments with an adjustable rate mortgage.

matahari 8 years ago

on a more realistic level...eat at LINK, get on Section 8 housing wait list, enroll for food stamps, apply for any or all aide that you know of, volunteer (you will be linked up to many resources this way) encourage your kids to get a paper route..start looking for beans and rice recipes, develop a taste for white bread, peanut butter and jelly, don't purchase anything new (only second hand necessities...cause there ain't no JOB s around here to be had! (just above broke)

PS sell anything you have of value, including family heirlooms to pay your rent~

The don't buy a larger house, use credit cards, or save money comment spurred this very cynicla but real post.....welcome to the real show "survival"

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