Like millions of Americans, my family will likely face a layoff. And, like other families we aren’t sure when we will get the news. Tomorrow? In another month? The suspense makes one reach for the bismuth.
My husband has been a teacher all his adult life, but could be laid off at the end of the school year, thanks to a combination of lower state tax revenues, a $15 million school district shortfall, and gloomy state economic projections. His administrators predicted there will be heavy personnel and curriculum causalities in all parts of his school district.
So, the shoe is raised and hovering and we – like the other employees and their families – are waiting for it to drop. “Our Plan” is a constant topic for my husband and I to chew over once the kids are in bed. It’s comforting yet scary to discuss these issues with him – we have the benefit of knowing our fate, if it happens, and therefore the time to plan our next steps.
We’ve narrowed down some actions we need to take and talked to many friends and family about what they would do if they lose their job. Here’s the best advice our friends and family have shared so far.
Write down a spending plan with your significant other: This pen-to-paper technique requires real discussion with your spouse, a.k.a. financial partner. This is a perfect opportunity to go through the spending and discuss what is necessary or not. It may not be easy, and it’s wise to do this over several sessions if necessary, so each party can either cool off or brainstorm new ideas.
Don’t forget to include interest on debts when talking about spending. That interest building up on your credit card balance is spending of a sort – that is money you are eventually responsible for paying. Don’t forget about your student loans and second mortgages as well.
My husband and I found there were several places we could reduce what we spend. I am now adding coupons to my grocery shopping and following through better on menu-planning. My husband has set himself limits on the spending he does for his hobbies, and we both have found ways to further reduce the reliance on our vehicles. I, for one, will be glad when things can loosen up a little, however by that time, I wonder if these habits will be securely ingrained?
Reduce spending where you can, when you can: I know that our country’s economy rises and falls with its citizens’ spending habits, but when your job may be leaving I believe people can be forgiven for tightening the purse strings.
Despite our best planning, emergencies will arise. I remember one Christmas, my father was between jobs and the water heater finally gave up. You can imagine what we bought with our Christmas money.
The bottom line is that despite the unexpected, it is important to get back on track after the crisis is fixed – while you still have a job. Continue spending even less and socking it away to cover what you spent on the emergency.
And, since you are reducing spending on “non-essential” items, you may find some money leftover in your paycheck. Use that surplus wisely. Pay off high-interest debts and put some away in savings. As more of your high-interest debts are paid, more of that money can go to other debts and then finally the whole surplus into savings. Before you know it, you’ll have enough to cover several months as an unemployed person.
Better yet, your new habit of monitoring and reducing spending on non-essentials will keep your debt down whether you become unemployed or stay gainfully employed.
Polish off the resume and/or consider moonlighting: When you feel your present job is in jeopardy, my father advises updating your resume, pressing your interview clothes, and getting a haircut. You may be interviewing for another position soon. It’s also the time to consider applying for a part-time position or develop a freelancing sideline built on your present job skills.
If you are already freelancing, now is the time to take on new clientele if you can find them. The extra income will help of course, and you’ll have additional contacts that may want to hire you for bigger projects when their finances improve. You could also meet someone who could offer your spouse or teenager a good job in the future.
Get to a doctor while you have health insurance: No job for my husband means no health insurance for us, so we are considering if we can afford to use COBRA, a federal program that allows you to maintain the same insurance coverage when unemployed. The data are still out, but I know from past experience that it can be expensive. Depending on your employer, you may be paying for both your premium and what your employer once paid. So while we still have our insurance, we’re getting our teeth checked, physical exams completed and aches and pains addressed. If something needs to be fixed, we still have the health insurance right now to help us out.
Consider moving, but remember all the costs: Relocation may be an option should my husband get laid off. It seems so simple – we could move across the country to be near some family where there seem to be a lot of jobs. My work can be relocated, so that isn’t a problem. But we then remember that before moving, there is an imposing list of things to do and pay for: we must sell our house in a declining market, deal with our belongings (take it or leave it?), rent a moving truck, and finally transport ourselves and our belongings to the new area. It’s beginning to sound really expensive at a time when there will be little income.
At face value, it seems worth staying in our area for a while if this layoff comes to pass. Looks like we’ll have to crunch the numbers on that issue some more.