12 Action Steps to Take When You Lose Your Job
Out of a Job so Now What?
What to Do When You Lose Your Job
You’re suddenly out of a job due to downsizing, facility closure, or job termination. Feeling confused, sad, and angry, you grieve the loss of not only an income but also social connections. What now?
As you try to process next steps, here are a dozen action items that will help you survive this career hiccup. They are arranged in three "buckets" of items, all designed to keep you moving forward:
- keep the money coming in
- prepare for the future and
- take care of yourself.
You can do this!
What's the most difficult part of losing a job?
Keep the Money Coming In
The Bills Won't Pay Themselves
First things first: your priority is to keep an income stream flowing. There are those who depend on you (even if it’s just you and your dog.) The bills won't pay themselves.
If you have any of the following situations, you unfortunately may not give finances the front-and-center focus it deserves:
- a severance agreement
- sizeable savings, or
- another income you can currently rely on (e.g., spouse).
However, you may be unemployed longer than you think. Failing to prioritize finances is therefore a huge mistake, as severance and savings will disappear more quickly than you realize. HR professionals recommend that for each $10,000 in pay, you should allow yourself at least one month to find a new job (e.,g., 6 months for a $60,000 job). Allow more time, however, when
- economic conditions are tight
- you have significant relocation restrictions
- you’re over 50
- are highly educated
- have niche or outdated skills or
- have occupied the same job for more than 10 years.
Don't Skip Applying for Unemployment Benefits!
Action Item 1: File for Unemployment
Unemployment compensation is awarded to eligible workers who lose their jobs through no fault of their own. This is a type of social welfare program that is funded by employer-paid taxes. Apply for unemployment benefits immediately. Typically, there is a one-week waiting period, meaning that for the first week of unemployment, benefits will not be paid.
Unemployment is NOT a need-based program. Instead, benefits are awarded to anyone who meets eligibility criteria. Benefits are based on prior earned wages. The eligibility criteria, formula for determining unemployment wages, and the number of weeks of unemployment benefits you may be eligible for can all vary by state.
To make a claim, register with the state agency that handles unemployment insurance. Often you can do this on-line. It could be called the Workforce Commission, Employment Commission, the Unemployment Insurance Agency, the Employment Development Department, Division of Employment Security, etc. Note that if you live in a different state than where you worked, you'll need to file with the state where you worked.
Also during this step you must determine whether you need an attorney for any wrongful discharge claims. Why? Because any statements you make during the unemployment process can compromise later complaints.
It's astonishing how many people who have lost their jobs skip this fundamental step. It doesn't even occur to them that they are probably eligible. They may assume the payout is so meager and difficult to obtain that it's not worth applying. Or, the fact that it's a social welfare program embarrasses them.
Stop thinking like that. I've known people who had made six-figure incomes and also received a generous severance payout yet they qualified and successfully collected unemployment . (Who do you think encouraged them to apply?) There's no shame in that.
A Note on Severance Release Agreements
If you left with a severance package, finances may not feel like an immediate burden. However, those severance release agreements can be a double-edged sword.
All too frequently, they lull people into inaction, believing they have plenty of money and time to replace that lost job. Additionally, severance release agreements can also bind ex-employees legally by stipulating, for example, that you
- release your employer from any legal causes of action, such as complaints of discrimination, wrongful discharge, and unpaid wages
- can never work for the company or its subsidiaries again—even if it should merge with another organization and
- agree not to speak negatively about your employer (even if it’s true).
If you left your job with a severance agreement, I hope you hired an employment attorney to review the document before signing it.
Action Item 2: Work on a Personal Budget
If you don't have a personal budget, now is the time to get one. If you already have one, then rework it to
- eliminate all unnecceary spending
- reduce fixed expenses by looking at money-saving alternatives (e.g., alternative cell phone plans)
- slash variable expenses through more frugal living (e.g., fuel, groceries) and
- prioritize debt payments (i.e., living expenses like mortgage or rent, secured expenses like auto loans, then credit cards)
Your objective is to reduce outgoing expenditures.
Know precisely where your finances stand by obtaining a free copy of your credit report from annualcreditreport.com, (or call 1-877-322-8228). Do not rely on credit cards as an ATM or a backup plan for when your severance runs out.
Also, keep paying more than the minimum on them if possible so that your debt doesn't balloon. However, if your credit card debt looks like it will be unmanageable, contact your credit card companies' hardship department before missing a payment. Tell them that you have lost your job and want negotiate a solution (e.g., debt forgiveness, skip a payment).
Action Item 3: Get a Side Gig
You’re still grieving your job loss, but this is no time to crawl into a dark hole of inaction. If you have unemployment benefits, pay from a part-time job will typically reduce your benefits.
However, there are a variety of simple sources for generating side (ahem, unreported) income: babysitting, house sitting, walking dogs, eldercare, handyman/handywoman services, lawn care, running errands for seniors, selling unwanted items, offering services on Fiverr, etc.
In addition to gaining some spending money, you’ll see the benefits of continuing to stay active. Make sure that everyone you have contact with knows you’re looking for a job. You never know what type of connections people have!
Prepare for the Next Chapter (And the Chapter After That)
Set Yourself up for Success
While trying to make ends meet now, you’ll also need to prepare for the future—the next chapter in your career and beyond. You’ll need to set yourself up for a successful job search while also ensuring that your retirement savings aren’t depleted by this temporary career hiccup.
Action Item 4: Consider What to Do with That Retirement Plan
If you had a retirement plan with the job you lost, decide what to do with it. Options typically include:
- leaving it where it is
- rolling it over into an IRA
- waiting to get a new job, then rolling it over into your new employer’s plan or
- cashing it out.
Too many people make the mistake of cashing out the retirement savings that they worked years to accrue.
But be warned: Raiding your retirement will cost you big. That early withdrawal will be taxed as ordinary income, and you’ll incur a 10% tax penalty (although there are a few exceptions). In addition, creditors can now have access to that money in the event that you file bankruptcy, whereas retirement money is untouchable. Most importantly, you’ll have to start all over again in saving for your retirement.
If you don’t know what to do, don't make an emotional decision. It’s better to leave it where it is while you research your options.
Get Ready for the Job Market
Action Item 5: Assess Your Personal Brand
Crystalize what differentiates you from your competition in the career marketplace by asking yourself the following questions. Make sure to document your answers:
- What special knowledge, skills, abilities, or other attributes do I offer? (These formulate the foundation of the unique value proposition you can provide a potential employer.)
- What are my key career accomplishments?
- What three or four adjectives describe me best as an employee?
- What do I still want to achieve?
Now condense this down to an "elevator speech," a memorable and persuasive, 30-second explanation of who you are, what you offer, and what you're looking for. Use this elevator speech repeatedly in your networking.
Action Item 6: Update Social Media Accounts and Blogs
If you're not updating your social media accounts—or worse, if you don't have an online presence yet—then you're making the task of job hunting all that more difficult on yourself.
Determine which social media accounts you need and which ones you don't. Then pick a small, manageable number (e.g., Facebook, LinkedIn, Twitter, Google+) and vigilantly ensure that you are
- connected, and
In addition, review any blogs or other on-line content that you have generated. Compare your personal brand with publicly available information about you by Googling yourself. Also see if your data is available on Spokeo, a secondary data aggregatory.
Delete old accounts and posts that you wouldn't want a potential employer to see. Areas of concern typically include
- photos of drinking or drug use
- sexually revealing photos or posts
- discriminatory remarks based on race, religion, gender, etc.
- complaining about your previous employer, co-workers, or customers and
- negatively commenting on prospective employers.
Then set up a free Google Alert for any future mentions of your name on the Internet. You want to be the one who controls your narrative.
Although you need to periodically review your privacy filters, treat the Internet as if nothing you post is sacred. That's because privacy settings can change with limited notice. (Anyone with a Facebook account understands that.)
It's not enough to eliminate the negative. You also need to use social networking to enhance your job search. Work on creating strong social profiles and posts that highlight your personal brand. Share your expertise and build a strong network of connections that can boost your visibility to potential employers.
Action Item 7: Reach out to Colleagues and Industry Contacts
No matter how you are feeling, this is not the time to be shy. Get out there and connect with former coworkers, mentors, and other professional contacts in your industry. Also continue to stay active in professional organizations. If you were part of a mass layoff, don't forget to maintain contact with others who are job searching, as they may come across an opportunity that is perfect for you and vice versa.
Pick up the phone, do lunch, email, and connect online, using those cleaned up social profiles and your polished elevator speech. Ask trusted contacts if they would serve as references when the time comes. Finally, your focus should always be future-oriented when you talk with contacts rather than lamenting the circumstances of what happened. Skip the trash-talking of your old employer or boss.
Action Item 8: Retool Your Resume
Dust off that resume! Update its format to reflect what employers expect to see now. For example, replace your snail mail address with your LinkedIn profile, personal website, or other key social accounts that you want employers to know.
Make sure your resume's format is simple enough that an applicant tracking system (ATS) can scan it. You want it to see human eyes, don't you? Additionally, give it a refresh by overhauling your work history and skills so that your wording is tight, action-oriented, and devoid of outdated skills and technology.
Practice Makes (Almost) Perfect
Action Item 9: Interview for Jobs You Don't Want for Practice
Like any other skill, interviewing requires practice. The more exposure you have to different interviewing questions, styles, and settings, the more relaxed you'll be when the job you really want comes along. Besides, you never know what could happen. You might be pleasantly surprised.
Take Care of You
Action Item 10: Check on Health Insurance Options
Medical expenses are the number one reason for personal bankruptcy. Another cause is job loss. A recent Harvard study debunked the myth that most people who claimed bankruptcy are the uninsured when it found that that about two-thirds actually had some kind of health insurance.
However, you're likely one accident or illness away from financial ruin. Sure, being jobless hurts. But try being sick and unemployed. Research your health insurance options and make the choice that is right for you and your family. Here are some places to start:
- Spouse's insurance program
- COBRA - under this federal law, you can continue your employer-provided health insurance at your own expense for a short-term period, an expensive option
- CHIP (Children's Health Insurance Program) - state-administered programs that provide free or low-cost health care for children (and in some cases pregnant women)
- Private health insurance
Action Item 11: Stick to a Schedule
Getting a job IS your job now. Don’t give in to the temptation to sleep until noon. Instead, stick to a schedule so that you remain productive and goal-oriented, and use the time to productively propel yourself forward. That includes
- researching your career field
- updating/upgrading your skills
- networking in a purposeful way on social media, in person, through email, on the phone and in person
- practicing interviewing skills, etc.
To keep yourself honest, make a plan and track your progress.
Soon You'll Be Back on Track
Action Item 12: Attend to Your Physical and Emotional Well-Being
Don't forget to take care of yourself emotionally and physically. Exercise, eat healthy, and de-clutter your life to bring a greater sense of order and control to it.
Look for free and low-cost ways to restore your energy, self-confidence, and enthusiasm so that when you find that job you'll be refreshed and ready. Regard this period of unemployment as a temporary setback. With any luck, you'll soon be back on track!
Questions & Answers
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