How to Prepare For and Survive a Layoff

In this troubled economy, there's no such thing as job security. You can have a steady paycheck today, and receive a pink slip tomorrow. Everyone has financial obligations, and losing your job can result in foreclosure, repossessions, etc. But there are ways to survive a layoff - advance preparation is the key.

Difficulty: Moderate

Instructions

1. Start a savings account. Financial experts recommend an emergency fund that's equivalent to six month's income. Even if you can't save this much, something is better than nothing. Resolve to deposit 10 percent (or more) into a savings account every pay period. The money adds up quickly, and you'll have funds to survive a layoff.

2. Simplify your life. Having a large mortgage payment, car payment and other expenses makes it difficult to survive a layoff - especially if you don't have a savings account. Unemployment compensation is only a percentage of your regular take-home pay, and it can take months to find new employment. Get rid of a few "luxuries", and you're able to live on less money.

3. Eliminate unnecessary debt and control your spending. People with few debts are more likely to survive a layoff. Create a plan to pay off your credit cards and other loans. If necessary, limit the number of times you dine out, shop or go on vacation. Instead, use this money to pay off debts, or deposit it into a savings account.

4. Start a business. Having a side business in conjunction with your full-time job creates extra income. You can use this money to supplement your income, pay down debts or start an emergency fund. And if you were to lose your job, this money can keep you financially afloat.