A Protocol for the Newly Unemployed to Weather the Storm

Two of my friends lost their jobs in the last month. One had worked for a large computer services company for 31 years. Another was an information technology manager whose position was eliminated in a restructuring. Both men are in their 50s.

Having been laid off more than once, I have a certain protocol I share with friends. I hope it's of value to them; I know it's paid off for me. Here's the plan that has worked for me in the past:

The best strategy is to be ready for a potential layoff with several months of cash, no credit card debt and an up-to-date resume. But don't lose heart if you're one of the more than 15 million unemployed and 1 million "discouraged" workers who can't find openings suitable to their skills and have stopped looking. There are strategies to lessen the pain and to improve your chances of finding a new job.
Ideally, don't leave your employer without knowing what benefits are available. Many large companies offer a suite of outplacement services to laid-off workers. Always take advantage of them.

One of my newly laid off friends got help in writing a resume, branding statement and doing interviews. He also got to keep his company-issued laptop. You're also entitled to at least 26 weeks of unemployment compensation, and in some cases as much as 99 weeks (assuming Congress extends long-term benefits by year-end).

You'll also need to make decisions about health care and your 401(k) plan. You have a choice of whether to keep your 401(k) with an employer or roll it over into another plan. Take your time in deciding what to do. I generally recommend that people look at the offerings of the largest fund companies (Fidelity, Vanguard, T. Rowe Price) and see if they can get better service, lower expense ratios and more diversification.

If health insurance is not covered in a severance plan, you may be eligible for it through a COBRA extension. This is a federal law that says an employer with more than 20 workers must extend their health plan to you if they lay you off. There's a nasty catch, though: You may have to pay for the premiums, although they can't be more than 104% of what employees are paying.

Of course, with no income coming in for a while, a large insurance premium could be unaffordable. If so, look at trade or alumni associations that may offer less-expensive group coverage. You'd have to be a member to qualify. A third alternative is to shop for short-term policies online.

Price high-deductible health policies first. Although out-of-pocket expenses range from roughly $1,200 for individuals to $11,900 for families, they are designed to cover most catastrophic health events such as heart attack, stroke or cancer. The premiums are much lower than full coverage policies and don't offer "soup to nuts" coverage.

Cash reserves are also essential. My friends were diligent savers, but they needed to do cash-flow statements to see how long their cash would hold out. That's a simple matter of adding up all basic expenses such as mortgage/rent, food, property taxes, health insurance and utilities to come up with a monthly "nut" number. These are the core bills when all discretionary items such as restaurant meals, movies/entertainment and cable TV are stripped out.
Need quick cash? Don't forget, that in a pinch, you can cash in or borrow against a life insurance policy -- if it carries a cash value -- or go down to one car.
And if you absolutely need the money, you can tap into your retirement plan, although I don't recommend it, because if you do it prior to age 59 , you'll pay income tax plus a 10% federal penalty on withdrawals. That money's awfully hard to replace.
The nonmonetary part of joblessness is no less important. How well networked are you? Have you updated profiles on social media services such as LinkedIn? Have you told friends and associates that you're looking for work? Have you checked college alumni association for job services? Use all social media options.

Often the hardest emotional toll is the long wait before another job is secured. Prior to the 2007 recession, the average wait to reemployment was five weeks, according to the U.S. Bureau of Labor Statistics. Today the wait is double that, and potentially longer if your chosen profession or industry is contracting.

New perspectives and brainstorming are essential. Forget about what you did; what can you do? Write down your life skills. What are you best at? What have you accomplished on the job and outside of work? What are your social skills? Do you need additional training? Don't forget skills you may have mastered outside the office volunteering.

The best jobs are often not advertised. Look at business headlines to see if companies are expanding. What kind of people are they seeking? Drill down into the story to see which executive is quoted and pitch them directly.

My recently unemployed friends are optimistic. They have decades of experience, are highly motivated and are well organized. One friend has already been on two interviews, and the other one has spent hours with an outplacement firm refining his resume.

Ultimately, getting a decent job is a numbers game. Job candidates need to make contact with the people who are doing the hiring -- and do it on a daily basis. Resumes are useful, but they may not sell their talents well enough.