Losing your job is about as comfortable as getting sucker-punched in the gut. With the unemployment rate surpassing 10% for the first time since 1983, nearly 16 million people are having to learn how to deal with that sucker-punch. Those with the least amount of experience (like recent college graduates) are often the first to take the hit.
So what do you do if you’ve been handed the pink slip? Some feel lost, even feeling like God has abandoned them. Others sit back and say, “Okay God, I’ll wait for you to provide.” And plenty of others just find themselves sitting on the couch, renting the collected works of Michael Bay, too paralyzed or stunned to wrap their minds around what just happened.
Budget counselor Rick Dernberger says that while you can, and should, take time to grieve the loss of a job, you should be careful not to over or under-react. “Sometimes extreme over-reaction can transition into extreme under-reaction,” he says. “It is our mind’s attempt to protect us from all of the unpleasant consequences of the job loss. If you find that one or two weeks after a job loss you are still not sitting down and ‘facing the music’ in terms of impact to budget and some of the long term financial implications, chances are good that you have gone into ‘turtle mode.’”
Ah yes, “turtle mode:” That blissful feeling of denial that says, "as long as I don’t think about being unemployed, maybe it won’t be true." But of course that can’t last for very long. And whether or not you have gone into that mode, it’s important to seek out help.
“The number one mistake I see is that people wait too long to get help with their financial challenges,” says Gerri Detweiler of Ultimate Credit Solutions, Inc. “Generally I would say Americans are pretty optimistic, believing in self-reliance, and so we think ‘I can handle this all on my own.’”
While a Google search for new jobs might be the first thing on your radar, take a step back and look at your finances. Though it may be difficult, figure out what your expenditures are: bills, groceries, rent, insurance … anything that causes money to leave your pocket and not return.
“You need to figure out the essentials,” recommends Detweiler. “What has to be paid and what bills might be negotiated? If you owe, try to explain what’s going on and ask if you can pay less or defer for a while. Only spend what needs to be spent, cutting out the luxuries.”
This may mean canceling cable TV, riding your bicycle to save on gas and not buying the extra bag of snacks at the grocery store. Instead of spending $30 eating out for lunch each week, PBJ’s and apples could only cost you $5.
Taking the “expect for the best, prepare for the worse” approach, two areas that need to be taken care of as soon as possible are school loans and unemployment insurance. If you have student loans, you will want to talk to the provider immediately to try to get those loans deferred or payments decreased. For other loans, some lenders will be willing to be a gracious as long as you make every effort to pay a little and and let them know what’s going on.
“What happens is people wait, the paperwork takes a little while, and if you miss a student loan payment, you may not be eligible for a forbearance program or deferring it,” Detweiler cautions.
Information on unemployment insurance can be found here. While the rules differ from state to state, the general idea is that anyone who loses their job involuntarily, without fault, and is seeking employment is eligible. They can collect for up to 26 weeks, though President Obama is expected to sign a bill that extends that number to 14 weeks, and for up to 20 weeks in states where the unemployment rate is above 8.5%.
Once those two priorities are nailed down, you can begin to think about what’s next. Do you have a budget? Have you talked to a non-profit credit help agency? Most will give a free first consultation, even if you don’t have extreme debt. Detweiler recommends Crown Financial Ministries, which offers free financial mentoring.
And speaking of credit, do not depend on your credit card to sustain your standard of living. Credit card debt runs up fast; adjust your standard of living and if possible, put those cards out of sight, even giving them to a trusted friend or relative. Many rely on credit and by the time they find another job, it takes years to pay back what they charged. Instead, consider asking a friend or family member for a loan.
“If you need a gift, ask for a gift; if you need a loan, ask for a loan,” Detweiler says. “If you need a loan, make it official; there are services that let you get a free promissory note online. If you approach someone professionally, it is a lot different than just asking for a couple hundred bucks.”
Another common mistake that both Dernberger and Detweiler caution against is cashing in your retirement plan. By doing this, not only would you pay taxes on the earning but also incur a 10% penalty. By the time you actually get the cash, there’s not much left.
“What they should do is roll it to an IRA, which sounds complicated, but if you go to an agency like Charles Schwab, they will have the paperwork for you to fill out,” says Detweiler. “If you roll over into an IRA, there are typically no fees.”
When you have taken care of the basics, get back out there looking for a job. Tell friends and contacts about your predicament and use your network to locate opportunities. If you haven’t done so, update your resume. It won’t be easy and it might be slow going, but losing your job isn’t the end.
“Learn to embrace change,” Dernberger encourages. “Many people report some of the most significant positive growth that has ever occurred in their lives happened after an involuntary loss.”
As you go through these changes, learn to trust God and rely on His provision of peace and comfort. It is not an excuse for inaction, but it will be a way to find peace within the craziness.