Preparing for a Potential Layoff
My Story: Job Loss Lessons
My Story: Before Job Loss
Preparing for Layoff
Radical Cost Cutting
How to Prepare for a Layoff
My question regards my husband's job. His company has recently been taken over, and it's my feeling that shakeups are coming. He has the least seniority of anyone in his position (lower management), and apparently they have already decided that several of these types of jobs will be eliminated. My husband feels sure he can go back to his previous position in the company. I am not doubting him; however, I have no faith in this new company, and worry about what will happen to my family if/when my husband is laid off or whatever. I am a stay-at-home mom with a part time job that only pays around $175 a month. What can I do besides putting aside all of my paychecks, to prepare for the cut in pay, or loss of job that I feel is sure to come? My husband doesn't want to talk about it so I feel it's up to me to prepare us. We have about a tenth of his annual salary in savings. Help!
It Happened to Us
I also work from home and bring in $200-$300 a month. When my husband's company closed at the beginning of this year, they had given us warning. They paid him severance pay (1 week for each year he'd worked there) plus vacation pay he had coming. In all we had two month's salary plus his unemployment to work with until he found another job.
One thing we did was immediately cut back unnecessary expenses - eating out, buying other than groceries and "have-to-have" things, clothes and other things that could wait till later and save up as much as possible. We also checked into his 401(k) to see if we could take that out instead of rolling it over (don't do this unless it becomes absolutely necessary - you'll never save that money back up). Look for odd jobs that either of you can do in your spare time (I took on babysitting my niece). Get prospects lined up for new jobs, but don't jump at anything available.
You don't want him to lose any benefits he may have coming from his current company and if he can't stand it and quits, he's lost his unemployment benefits, too. Another thing it forced me to do was check my rates on insurance, etc. and to decide what bills were unnecessary. I changed my auto insurance to a company that charged me over $200 a year less and took options I didn't use off my phone service. I called credit card companies to see what kind of deals I could get on balance transfers and not only lowered some interest rates, but it didn't hurt so much when I could only make the minimum payment.
We made it through the layoff, and he ended up with a job he likes making $2 an hour more than he was before. Sometimes that push out of your comfort zone is what you need to make your life better.
Prepare for a Layoff: Get a Head Start
To prepare for a layoff, you may want to consider several of the following:
First and foremost, have your husband start sending his resume out to every potential employer around. Contact headhunters, search firms and anyone else who may be able to help. The interviewing and hiring process can often take months. Don't wait until it is too late!
Look into your husband's benefits. Does he have vacation or personal time that he will be paid for? Will he receive severance pay? If he will be paid for his vacation time, save it. If he will not, use it for interviewing for a new job. Use all of your medical benefits now. Have all routine check-ups, dental work, etc. done now before that insurance runs out. Be prepared now, so that you won't have to scramble for information during an unemployment panic.
Begin to stock up on nonperishable groceries. If it's on sale and you have a coupon - buy it. You will probably need it later.
Consider paying your bills one month ahead. In lean times, you can take a month's vacation from your payments and not get behind.
Go through closets, attic and basement for all the junk you've been meaning to get rid of. Have a tag sale or consign. Better to do it now, than when you are desperate.
Search Dollar Stretcher archives for ways to cut costs and increase your income. You can also find many other great resources on the web.
A Time to Try New Things
My husband was laid off in January after almost 14 years with a Fortune 500 company after they merged with another biggie company. They did give him a nice severance pay, so this has helped a lot. We also, of course, signed up for unemployment right away.
We went on a" bare bones" budget and bought nothing but necessities. We had a daughter in college who was getting married in the fall and a daughter who was a senior in high school and starting college in the fall, so this was not the best time for a layoff. Is there a good one? Although we were already pretty frugal, I went on the internet and looked up everything on frugal, simple living and printed them out to read over and over. I ended up with a large notebook full and hardly touched the sites available. This will give you encouragement, as the laid-off lifestyle is not the common accepted style in this money-crazy world.
I had good, nonjudgmental friends to talk to and who prayed for us and this was very helpful. My husband used several internet sites to look for jobs, as well as the newspaper and anything we heard of. It was a job on the net that he finally landed in August. Yes, it took 8 months for him to find a job. But, he is being laid off again in a week! Here we go again. Keep your marriage strong and don't blame each other. Don't turn a layoff into a divorce. We worked together as a team most of the time, and our marriage grew stronger.
We also started a small part-time business. We already were avid yard salers, so we looked for valuables to sell on e-bay and have started a profitable little business for ourselves, without leaving home to do most of the work.
We had no debt other than our mortgage at the time of layoff, so obviously this was a big help in keeping our costs down to essentials. Since my husband had received a considerable severance pay, we did take a small amount and did some home repairs while he was home to do it. Keeping busy was a big help to beating depression or worry. My faith that God does provide kept me from panic. I had a few moments when the unemployment ran out, but got my bearings back soon. We went a month and a half with no unemployment at the end.
Try new recipes, since cooking from scratch is cheapest. Good meals helps keep you from feeling poor and food is one place where you can save a lot of money without lowering your standard of living. Good luck and work hard and you will all survive. Keep to essentials for now. Things will get better, even if they seem bleak now. I'll be joining you in a week myself. Living through it in the past lets you know you can do it again, if you have to. God bless,
Prepare for a Layoff: Steps to Take Now
My husband has a job that has seasonal pay. I am also a stay at home mom. Some things I would consider: if you need any medical work done, get it completed as quickly as possible while he still has insurance. Take stock of your monthly budget needs and see where you can begin to pare down now. A very simple place to start may be the grocery budget. By items on sale and freeze or store on extra shelves if you have space. Plan a menu based on using meat as little as possible--think casserole. Cook at home as much as possible. Drink water instead of milk or juice at least one meal a day. Cut back on eating out. In other areas--purchase any clothing your children may need through garage sales or a second hand shop now--don't wait until the lay off. Or find a friend who has children a size or two ahead of your children. Use the local library for entertainment as much as possible--they usually have great source of movies, games and puzzles for the kids, and music CDs. Make sure cars are in decent repair now. Buy the cheaper gas now. If your children are old enough, sit down with them and you and your husband can share with them what may be coming up - they need to have realistic expectations of money issues. They do not need to know all the details but things will go smoother if they know ahead of time.
Consider Emotional Issues
Start NOW by 'pretending' that he has already been laid-off. Cut out every expense possible except food [only what you will actually eat, and no eating out!], and bills that have to be paid every month. Also, only make minimum payments on monthly bills - you can catch up once your husband is employed again. Also, have you thought about babysitting in your home? As a new mother, daycare is a constant problem for lots of parents.
Your husband will also need emotional assistance. My husband was devastated when he was effected by a lay-off - he even cried. It was one of the three times I have seen him cry in 10 years. Do what you can to make him feel that he is still worth everything to you and your family. He will need a lot of that once the lay-off occurs.
Would you like to
pay off your credit cards
in less time
for less money?
Prepare for a Layoff: Dark Cloud Has Silver Lining
First of all, don't look at this as a disaster. It is an OPPORTUNITY to improve your situation, make changes you have been considering. I learned I was getting laid off one week before Christmas one year, and indeed my last day of work was Dec. 31. Fortunately, I had realized that things were going bad, and had already begun interviewing for other positions. Knowing that I would be laid off, I negotiated a severance package - one month's pay and the promise that unemployment would not be opposed - which let me go ahead and leave, get a month's worth of salary upfront, and devote myself full time to finding a new position. Since the money was considered severance pay, I was able to begin receiving unemployment as well. Within six weeks, I was working again, with an employer with whom I had interviewed before being laid off. My initial starting salary was lower than what I had been making when laid off, but less than three years later, I am doing much better financially than I would have been had I stayed another three years with the first employer. I also like my job much better. I suggest that both of you prepare your resumes and start looking for work NOW--you should look for full-time work with health and other benefits that replace those you may lose or not be able to afford if your husband loses his job. He may need to be the person taking full time care of the house for awhile. Do not rule out the idea of moving. However, he should not quit his present job unless he has a guaranteed job waiting elsewhere because he will be eligible for unemployment if he is laid off, but not if he quits. Immediately call your state's department of labor and find out the requirements for unemployment (which is NOT welfare--its insurance paid for by your employer), the amount of benefits, and their duration. There is likely a waiting period during which you cannot receive benefits. You may also want to start collecting information about food stamps and similar programs. Some states may even have low-cost or free health insurance available to cover the children (in New Mexico we have a program called Mexicare). Again, this is not taking a handout--YOUR TAXES have paid for these programs which are intended to and DO help tide you over the bad times. Also find out if you can qualify for free school lunches for the children; this can also be a valuable benefit in both money and time savings if you begin working outside the home full time. Go to the library and look up books under listings such as Frugality, Household management, Thrift--books in the same area as the Tightwad Gazetter will likely have helpful tips.
Take the Next Step
- Stop struggling to get ahead financially. Subscribe to our free weekly Surviving Tough Times newsletter aimed at helping you 'live better...for less'. Each issue features great ways to help you stretch your dollars and make the most of your resources. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist And What You Can Do About It for FREE!
- Stop struggling financially. Take these steps to get out of debt and begin the journey to financial freedom!
Share your thoughts about this article with the editor
Debt from my past is preventing me from saving for my future! Tell us: Yes, debt is hindering my ability to save and I could use help dealing with it! or No, debt is not a problem but I am trying to get ahead financially!
More Money Tips & Tools
- How to get a faster tax refund
- Personal finance calculators everyone should use
- Why you should know your credit card payment cutoff time
- Saving-money secrets of the rich and frugal
- 5 low-risk ways to earn higher interest now
- How to save money fast
- 7 IRA withdrawals that don't trigger a penalty
- This week's Readers' Tips