Getting laid off effects your income. Our second Five on Friday question for the laid off advisory council asks about finances:
Did you adjust your finances after your layoff?
A common theme seems to be yes, but not as much as expected.
Nancy: Yes I made financial adjustments almost immediately.
I took a look at all of those items that are enjoyable but not necessary, monthly massage, wine clubs and the cable TV contract were evaluated. I did cancel a few and kept others. It did forced me to go through the exercise of realigning my priorities. I also met with my Financial Adviser within the first few weeks to evaluate my position and ran through some worse case scenarios. In addition, our spending habits changed regarding non-essential expenses immediately and continue to this day.
Daryl: Yes, but not as good as I had hoped. Not easy to adjust ones style of living after u are accustomed to it
Sydney: Boy howdy, did I!
No severance package, and Montana’s unemployment compensation is not generous. The max benefit was about $400 a week (for context, it’s $500 a week now). I was going to be starting a job search from zero, with the expectation that it would take minimum 90 days and more likely 6-12 months. I had the usual expenses – car loan, cell phone, pay tv, now a COBRA payment, credit cards….. Luckily, no house payment.
I got on the phone with my credit union and activated the job loss protections on all my accounts. That gave me six months of car loan and credit card minimum payments. I trimmed the cell phone packages for the whole family, and I shut off the pay tv. I applied for COBRA for myself and my spouse, helped the older child enroll in her university’s insurance, and (gulp) signed my youngest up for CHIP. (NOTE: This was possible because in 2008 my marriage was not recognized, so the state of Montana said I was single parent and only took my unemployment compensation into account). I also had to work with my oldest to submit a revised FAFSA and special circumstance letter to the financial aid office at her university.
We reevaluated everything we spent money on, and cut as much as possible. The idea was to try to live on the unemployment compensation and not reach into savings. We’ve kept a lot of those habits.
Pete: Yes, first thing was always to make sure health insurance was taken care of.
Next thing is to set up my home office to finding my next job was my full-time job. In each case, I got a decent severance package so life wasn’t too disrupted. Not only would I apply for every job in my field (Software Quality Assurance), I would set up informational interviews. Each informational interview I got I would ask for three others to talk too. This referral chain managed to fill up all the time I wasn’t applying and interviewing for jobs. This method did net several job offers but none that I eventually took. All capital purchases were put on hold and we’d make few if any restaurant visits while this was going on. The longest I was ever out was 6 weeks. In all, I was laid off 4 times.
Scott: Yes, and no.
I was lucky enough to have a time-built severance package and be in a relationship with a good income. New discretionary spending was examined more closely, but my laptop failed and I purchased a new computer, which is essential for job hunting. I didn’t disconnect entertainment services, for example, but outside entertainment was cut way back.
My Answer: Yes and no.
We cut back, but not nearly as much as I thought we would. We cancelled some memberships, and we ate out less. But, we still went on our planned vacation. Part of that was advice from everyone, part of that was that I got a decent severance. Part was a belief I’d go get another job and start making money pretty quickly……little did I know!
We also have some advice from our financial adviser on some financial adjustments he recommends after your layoff.