What to Do If You Lose Your Job

Your first instinct is probably to start looking for a new job. But that's not the only action you should take.

File for Unemployment Benefits

Unemployment insurance benefits are paid to eligible employees who, through no fault of their own, lose their jobs. Each state sets its own benefit amounts, eligibility requirements, and benefit length.

To apply, contact an office of your state unemployment agency. It generally takes two weeks for benefit payments to begin, the first being a "waiting week," which is not reimbursed, and the second being the time lag between eligibility for the program and the first benefit actually being paid.

Feeling ashamed about taking government welfare? Good for you — glad to see you're uncomfortable with taking handouts. Your attitude will help you return to gainful employment soon. And in the meantime, recognize that you've been paying into that system, precisely so the government can provide you with income while you're out of work.

Examine Your Finances

Identify your sources of income, including severance, unemployment benefits, and cash reserves. Find out if you can generate income from your (non-retirement) investments to reduce any gaps between your income and your expenses. And you don't need me to tell you to reduce spending, right?

Evaluate Your Health Insurance Coverage

Find out how long your former employer will maintain your coverage. See if your spouse has a plan you can join, and explore buying an individual policy.

If you worked for a company with 20 or more employees and were let go through no fault of your own, you're eligible for COBRA, a law that ensures you can continue coverage for 18 months. The only problem is that you must pay for it, and it's expensive.

Transfer the Money in Your Employer's Retirement Plan to an IRA

If your employer is experiencing financial trouble, get your money out of its retirement plan. Even if it isn't, most employer plans have limited investment choices, so you can likely build a better portfolio — and secure greater ease of access to your funds — by moving the money to an IRA. Done correctly, there should be no fees incurred or taxes due.

Follow Up on Employer Termination Benefits, Including References

Losing your job is traumatic, and you may not have paid much attention when you were told about all the benefits available to you if you were laid off. Go back to your employer for a complete list, which might include career counseling, job placement assistance, and references.

Realize That Your New Job Is to Get a New Job

No matter how generous your severance package, it is finite. That means you must start looking for work immediately.

Update your resume. Tell everyone you know that you are looking for employment. (Don't be embarrassed that you lost your job.) Your search might take time, so use the eight hours of free time you now have each day to search for your new job.

Be willing to relocate and undergo new training to broaden your skills. Both ideas can improve your ability to find a new job.

Consider a New Career

Losing a job is an opportunity to transition to the career you've always wanted. Go beyond your field and consider jobs that can exploit your skills.

Talk with friends and family about the possibilities — they know your strengths — and write a resume targeting those fields. Create different versions of your resume targeting each job you're seeking. Consider hiring a career coach to help you.

Know When to Lower Your Expectations

If you're not having luck with your search, you may need to compromise. Create a series of deadlines for yourself: one for when you will settle for less than your dream job; a date for when you will lower your salary expectations; and a date for when you will accept any position so you don't run out of money.

It probably won't come to that, but you'll feel a little better knowing you have a plan.

Enjoy Your Time Off

Consider yourself on a forced vacation. You have a guilt-free opportunity to spend more time with your family, recharge your batteries, and support the community through volunteering. When an interviewer asks you what you've been doing since you lost your job, they'll be impressed with your outlook and positive attitude.

Originally published in The Truth About Money

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