For many people, getting laid off is emotionally distressing, but it can also be financially devastating.
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Panic is typically the first reaction after receiving a pink slip, but financial advisors say that’s one of the worst things you can do.
“When you panic, it doesn’t provide the best opportunity to do your best thinking and strategizing immediately which is what the situation calls for,” says Kevin Luss, owner of financial services firm The Luss Group. “Remember to breathe and take stock in the inventory of talents and abilities that you bring to the table.”
If you’re getting laid off, negotiate as much severance as you can and then immediately apply for unemployment benefits once you are no longer employed, recommend money management experts. It can take two to three weeks before you receive your first unemployment check, so don’t delay the process any long by not filing.
Once you’ve applied for your unemployment, Christopher Zelesnick, senior managing director of Ziegler Wealth Management says it’s time to sit down and honestly evaluate your budget and financial picture.
“Look at current sources of income like unemployment, spouse and investment income, and current expense obligations,” he says. “If possible, pay off credit cards with high rates.”
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Taking a financial assessment right away can help avoid racking up massive debt, identify spending cuts and provide a realistic of idea of how quickly you need to find a job.
“Unfortunately, you don't know how long you'll be out of work or if your new job will pay as much,” says Zelesnick. “It's important to hope for the best while you plan for the worst, so adjust your lifestyle to accommodate long-term unemployment.”
Now is also the time to delay any major purchases and be extra mindful of spending. If you were living pay check to pay check before losing your job, start looking for part-time work to help make ends meet during your job search.
Experts recommend treating your job hunt like a full-time job and to get the search started immediately. It’s normal to feel a little deflated, but experts say staying positive and active during the job search will help find a better opportunity.
“Opportunities come and go at such a fast rate that it's important for you stay motivated and not lose hope,” says Zelesnick. “Never panic. Looking for a new job can be more trying than doing your old job, so it's important to treat it like a full- time job.”
If you expect to remain unemployed for a while and the unemployment checks won’t cover all your expenses, work with your creditors to get some relief. According to Luss, many utility companies have special programs, discounted rates and payment plans to decrease some of the burden.
Credit card issuers often will reduce your interest rate if you call showing a credit card with a lower rate and requesting a similar from your existing lender, he says.
“There is a risk to upsetting the apple cart too much unnecessarily if your unemployment is short lived,” says Luss. “Take it step by step."