What to do when you lose your job
(MoneyWatch) Recipients of pink slips -- for whatever reason -- will tell you that, without doubt, being unemployed is one of the most traumatic experiences in life, topped only by serious illnesses or family losses. But in the face if such an emergency, what is to be done?
The obvious response: Dust off your resume, go directly to the Internet and start looking for new opportunities. But there's much more to it than that, so don't stop there.
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I recently came across some solid unemployment advice offered by LearnVest. The financial planning firm catalogs some dos and don'ts when you are laid off, including the following:
1. Don't cash out your retirement fund. If your income stream stops abruptly, you might start looking for other sources of money to tide you over until you can find work again. But don't raid your 401(K). If you do so, you're not only robbing from your future, you'll pay dearly -- taxes and a 10% penalty -- for cracking it open before turning 59 1/2.
2. Rethink your budget. This is the time to reevaluate your standard of living. Determine your budget priorities, and see what you can do to make your expenses measure up to your new financial reality.
3. Consider your health insurance. If your former employer was your provider of health care benefits, you are likely to lose them. Cobra is an option, but it's expensive. With a little research, you can probably do better. Assuming your spouse is employed, his or her plan may provide coverage. Alternatively, contact a broker or compare plans online.
4. Tell the world. A loss of work is not a happy event. You may be reluctant to share the news with your peers, feeling that the state of unemployment carries a stigma. But you do yourself a disservice if you are not open and honest with friends and former colleagues. Networking is paramount -- on LinkedIn, to be sure, but also on Facebook and anywhere else where you have contacts.
Photo courtesy of Flickr user David Blackwell
