The economy is rolling but it might not always. In fact, things won't always be so great. It's just the cycle of economics. I've been at my job for 12 years. It's great and I feel secure, as I'm sure do many. Still, it never hurts to prepare in the event of a job loss. Here are some financial considerations in the event of a job loss. These are tailored for my family, but are applicable for many.
I would expect that any state unemployment benefits that I would receive would be eaten up by health care premiums, whether it be COBRA or a privately funded insurance policy.
Paying the Bills
We have an emergency fund specifically for events like this. The money isn’t earmarked for anything else. We would use this to pay essential bills.
If unemployment were to continue for longer than that time, we would look into one of several options. First, we could sell some investments. We have non-retirement investment holdings that I could sell that would sustain us for another 6 months or longer. Second, we could re-evaluate some of our other cash holdings. We have additional dollars alongside our emergency fund that are earmarked for things like a new car, home repairs, etc. These can be be re-allocated if necessary.
Concentrate on the Job Search
Due to having a fully funded emergency fund, I wouldn’t be panicked. Since we could pay the bills without fear of ‘going under', this would allow me to focus on a job search.
As of now, there are lots of contract positions available in my field. I am not inclined to work contract for a considerable length of time. Many are fine with this. I'm not. But, in the interim, to put food on the table, I'd definitely look at these positions. It could end up leading to something permanent. That's how it worked for my current job!
There are definitely some expenses I would look to cut as a method to reduce our cash outlays. Even though we have a fully funded emergency fund, the fact remains that with a job loss, it would no longer be fully funded after I found new work, and would need to be re-built. I would employ the following strategies to make sure that our cash lasts as long as possible and to ensure that we could get back on track as quickly as possible once I found new work:
- Eliminate eating out
- Unlevel some of our spending – I currently put aside an equal amount every month so that our monthly spending is fairly even. But, this has increased the amount of cash that is on hand. We could essentially draw down some overfunded accounts. Of course, we'd work to replenish them later!
- Let the lawn go brown
- Reduce or eliminate the A/C and cut back on heat.
- Cut back grocery spending. We could save some money at the grocery store. First would be working through food we have stocked up. The pantry and freezer would be good for this.
When faced with a job loss, finding work is the most important goal. But, making sure you and your family have the basics is just as important.
Nobody wants to think of a potential job loss, but preparedness is key. It does happen. It's happened to me and while I hope it doesn't happen again, it's good to know we are ready in many ways.
Readers, have you faced a job loss? How did you deal with it? What job loss preparations do you currently have in place?