Preparing for a Layoff

Secure your financial future by taking action before a layoff.

Be proactive in the event of an impending layoff. Think critically about your finances, insurance and prospects for work. Delete personal files and personnel performance reviews from your computer and take home or shred those in your work area. Contemplate recent work that would emphasize your skills, and update your resume. Get organized before your layoff to protect your financial future.

Stop Nonessential Spending

Prioritize your bills and cut all nonessential monthly expenses. Examine your grocery, dining out and transportation costs, then eliminate or trim extraneous items. Calculate essential items, such as your mortgage, utilities and work-related transportation. This will give you an idea of the least amount of income you need. Itemize unsecured debts, such as credit cards and student loans. Delinquent unsecured debts do not lead to repossession of items but will damage your credit, according to MSN Money. After the layoff, pay the mortgage, utility and grocery bills and forgo nonessential items.

Stash Money

Establish an emergency fund with the cutbacks you made in nonessential spending. Put this money into short-term CDs or a money market account for easy accessibility. Do not touch this money until after the layoff. If you have no money to save and your expenses are high, the "Today" show suggests taking out a home-equity line of credit while you are still working, to be used only in the direst of circumstances after your layoff.

Network

Be aware of others in your field and make contacts within your industry. Give your contacts your cell and home telephone numbers and personal email address. Ask family and friends if they know anyone in your industry and tell them of your impending layoff. Have lunch with coworkers from previous jobs. If the approaching layoff is public, talk to clients, headhunters and recruiters. Stay in touch with others informally through Twitter and Facebook. Limit who you friend to those you know or have encountered through networking. Set up an account on the business-networking site LinkedIn.

Assess Insurance Coverage

If you have a severance package, your company might fund your insurance for a limited amount of time. Other options include COBRA (Consolidated Omnibus Budget Reconciliation Act) or independent health care plans. Federal law allows the unemployed to maintain their coverage for up to 18 months through COBRA. To qualify for COBRA, your company must have a group health plan that covers at least 20 full-time or part-time employees. If you are in good health, take out a short-term health insurance policy. Short-term health insurance policies provide coverage for a short period of time -- usually six months to one year. If you haven't procured a job within one year of your layoff, an individual or family health care policy from an independent company, such as eHealth or Assurant Health becomes an alternative.

References

• MSN Money: A Survival Guide for the Unemployed; Liz Pulliam Weston
• "Today" Money: With Recession Looming, be Prepared for a Layoff; Laura T. Coffey; March 2008
• CNN Living: Six Ways to Prepare for a Layoff; Kate Lorenz
• "Kiplinger": Life After a Layoff; Jessica L. Anderson; January 2009
• CNN Money.com: Networking for People Who Hate to Network; Donna Rosato; April 3, 2009
• Ehealth Insurance: What is Short Term Health Insurance

Resources

• United States Department of Labor: COBRA FAQ