Financial Expert Offers Advice on Surviving a Layoff
By Greg Wright
In this time of economic uncertainty no worker is safe. The job cutting axe could fall on your head at any time.
But getting laid off does not necessarily mean personal financial disaster, says Edwin Gaskin (www.yourfinancialarchitect.com), a financial planning expert with MetLife who sees clients at offices in Greenbelt and Baltimore.
Taking steps to protect yourself can help you survive a layoff.
“You have to see that this is something that you can’t take lightly,” Gaskin said. “Take it like warfare and a battle.”
The U.S. has lost 6.7 million jobs since the recession started in December 2007 and about one out of 10 Americans are now out of work, according to Labor Department statistics. That is the highest jobless rate in 26 years.
Are you recently laid off or think you could be? Even if you don’t have a lot of savings, there are steps you can take to survive financially until you land your next gig, Gaskin said. Here they are:
• If you are laid off, immediately ask your former company to give you a bigger severance package or postpone your termination date a few more weeks or months. This will keep paychecks coming while you start to job hunt. “They can’t fire you again – what do you have to lose?,” Gaskin said.
• Take a cold, hard look at your expenses and cut luxuries. Do you really need a cleaning service and all those movie channels on cable? The savings from cutting off these services could really add up.
• Apply for unemployment insurance as soon as possible. You can usually draw unemployment for at least 26 weeks and many states offer benefit extensions.
• If you have skills take on odd jobs but make sure the extra income does not affect your unemployment benefits.
• If your money is short, prioritize your bills. Shelter, food and even transportation (you will need to drive or take public transportation to interviews) are the bills you should pay first. Unsecured debt such as credit card bills should take a lower priority.
• If you have a mortgage talk to the lender about modifying the loan to lower payments. However, be aware they may not be willing to work with you.
• Try not to dip into your 401K for emergency cash. You must pay a significant amount of taxes if you cash out a 401K before retirement and you will lose money you need to carry you through old age. “I would only touch a 401K if it came to shelter or put food on the table,” Gaskin said.
• Don’t be proud. Consider asking family members for financial assistance, especially if you are in danger of losing your home.
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