How to Handle a Job Layoff When You Have No Savings

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It’s happened to so many people in the last six years or so: you walk into work, and instead of a happy greeting, they hand you a pink slip.  Some people might find this a reason to celebrate, but if you have little to no savings and/or a good chunk of debt, a job layoff can be devastating, especially if it’s unexpected.  Here are some tips on what to do if you find yourself in this situation.

Stay Calm

A financial expert once said, “There is no shortage of money; you just have to figure out how to get your hands on some of it.”  That quote has been instrumental in helping Rick and I stay strong as we work on paying off our debt.  There are many ways to make money come into your household: you can pick up a part-time job, find a side hustle, sell stuff, make stuff to sell, sell advice and so on.

However, if you’re wallowing in fear or self pity about a job layoff, you won’t have the clarity to think big-picture about how to solve your money problems, so it’s important to stay calm, focus on the task at hand (bringing in money), and start devising a plan.  Even though it needs a lot of your focus right now, don’t let your job layoff take over your life from an emotional standpoint, and remember that you are a strong, smart individual.

Get a Clear Picture

If you don’t already have one, now’s the time to get a clear picture of your financial life.  Start by writing down all of your debts/bills, how much you own on each one, the monthly payment amount, and the interest rate you’re currently paying.

Now that you’ve got a clear picture of how much you owe and to whom, start writing down your current income and assets.  Did you get a severance package with your job layoff? How much will it amount to per month, or will it be in a lump sum payment?  Do you qualify for unemployment insurance because of your job layoff, and if so, how much money will you get each week, and when will it start? Do you currently have any dividend/investment income?  College Funds?  Retirement funds?  Obviously, you don’t want to tap into college or retirement funds unless it’s absolutely necessary, but knowing how much money you have in each of these areas will help you devise a survival plan.

Make a Budget

If you don’t already use one, now is the time to make a budget that takes into account your job layoff and figure out how much money you spend each month. Make a list of every expense – both necessary and non-necessary – including grocery, toiletry, clothing costs, eating out and entertainment costs, etc., so you know how much money goes out of your bank account each month.

Now divide that list into two separate lists: necessities, and non-necessities.  Being honest with yourself at this point is crucial: You may want dance lessons for your kid, but you don’t need them.  You may want new clothes each month but you don’t need them.  You may want cable TV but you don’t need it. Making specific and truthful lists in this way will give you an idea of how much money you need to come up with each month, and how much money you’d like to come up with each month.

Devise a Plan

Now that you have a clear understanding of how much money you have, and how much money you need to have to survive each month, you can devise a plan to help you survive your job layoff until you find a new job.  First, figure out how you can cut down on both non-necessity costs and your necessity costs, such as groceries.  Then take your income sources, such as severance pay and unemployment insurance, and calculate how many months you’ll be able to pay all of your bills.

From there, devise a plan for how you’ll make up for any income shortfalls.  Will you sell stuff you no longer need or use?  Will you pick up a side hustle, such as dog-walking, house-cleaning or babysitting?  Can you use skills you have, such as home repair skills or car repair skills, to start a side hustle in that arena?  Figure out potential income sources, and get them up and running as soon as possible if you find you’re going to experience an income shortfall due to a job layoff.  You may find once you’ve analyzed the big picture that you’ll do just fine simply by cutting out unnecessary expenses.

Work on Getting Back to Work After Your Job Layoff

Now’s the time to brush up your resume’, and start networking to get yourself back into the work force.  Scour the papers, Internet, and other sources, such as LinkedIn to get your name out there. Let people know you’re available and what you’re looking for.  Let family members, friends and acquaintances know that you’re looking for work and ask them if they’d keep an eye out for leads.

The important thing here is not to let your emotions run the show. I realize that this is often easier said than done in a stressful situation, but just remember that you are smart, resourceful and that with a bit of effort, you can get through this stressful time.

Have you, or anyone you know, ever been the victim of a job layoff? How did you handle it financially? What lessons did you learn?


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Laurie is a wife, mother to 4, and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom, and to a simpler, more peaceful life.


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