With the exception of being let go from a retail position after a store closing when I was in college, I have never been on the receiving end of a layoff. However, I was unfortunate enough to have to deliver the news to team members who worked with me at my last job, and it was one of the most unpleasant experiences I have ever had to deal with at work. Through their painful experiences I have been able to gather a few tips for surviving a layoff.
Sink or Swim
I personally don’t believe in layoffs because I am sort of a “sink or swim” kind of guy. When an employee devotes their time and energy to a company they deserve some loyalty in return. Sink or swim, employees and companies should be in it together. Unfortunately, corporate America is mostly concerned with bottom lines, so they frequently take the opportunity to “weed out” employees who earn too much, produce too little, or are nearing retirement benefits. If “dead wood” exists in an organization it should be dealt with individually, but not by taking otherwise hardworking casualties along with them as part of a massive layoff. OK, enough of my rant, back to surviving a layoff.
Keep Your Ear to the Ground
If your company has announced a round of layoffs it means there are storm clouds on the horizon, regardless of how secure you may feel about your particular job. If you are lucky enough to be notified ahead of time, use this advanced warning to your advantage. Put your financial turnaround on hold and quickly begin stockpiling cash. Here are a few ideas to guide you though this most difficult event:
Pay minimums on ALL debt, nothing extra.
It is important not to get behind with storm clouds on the horizon, so continue to stay current on all debt accounts. If you were making additional debt snowball payments, suspend those temporarily until the storm clouds have passed, or until you have found another job.
Pile up cash in an emergency fund.
Using the debt snowball amount you were previously paying on that smallest debt as a starting place, throw every single dollar you can find in an emergency fund. Have a yard sale, sell stuff on eBay, and look for some quick-to-hire part time work. This emergency fund will have to sustain your family until you can find new employment, a period that could take weeks, or even months.
When you get your pink slip, negotiate as many benefits as you possibly can before your exit interview is over. Don’t be satisfied to just get a promise of a good reference and any unpaid vacation. Companies, especially large companies, want to make this as smooth a transition as possible to limit any negative publicity. Use that to your advantage and ask for an extension of health coverage, or additional paid weeks per year of service. Work any angle you can to maximize your severance package. Remember, you have a family to feed! Don’t worry about appearing ungrateful, or making anyone mad. What’s the worst they could do – fire you?
Use severance funds first, then the emergency fund.
It isn’t easy dealing with a drastic drop in income. Consider depositing severance funds in a separate savings account and set up biweekly withdrawals in roughly the same amount as your previous take home pay. You can set this up with most any online savings account. Do not touch this money for any reason other than living expenses and perhaps some small job hunt expenses (travel, new suit, etc.), and in that case be extremely frugal. Remember, this money supply is finite. If you get frivolous now because you feel sorry for yourself you will be broke in no time and find yourself feeling even worse.
Find a new job, and fast.
Now is not a time to sit around having a pity party. Get out there and find a new job by working on the following tasks:
- Work your network of friends and family.
- Update your resume and submit using a service such as Resume Rabbit.
- Keep in touch with other colleagues who have been rehired and ask them for any leads. Brush up on your interview skills.
- Order some business cards with your personal contact information (I have had good luck with Vista Print).
- Learn what not to do in an interview.
- Post Your FREE Resume today to attract top employers!
Treat this job search as your full time job. Sure, it would be fun to take a couple weeks off to rest and relax, but you can’t afford it. The faster you find a job the less you have to use of your severance money, making what’s left a nice bonus towards your financial turnaround.
When employed again use any remaining severance and emergency fund stockpiles to pay off debt, down to the original amount of your beginner emergency fund. Now is not the time to blow money to celebrate. If anything, this experience should have taught you a valuable lesson – there is no such thing as job security. In an ever-changing global economy filled with uncertainty, any work could dry up in an instant leaving you unemployed. There is no better time to get out of debt, build your emergency savings and work towards financial independence.