How to Survive Financially when You’ve Lost Your Job

Losing a job can happen to anyone at any time. Job insecurity is more of the norm these days than job security. The resulting stress can be tremendous even in circumstances where the layoff was inevitable or occurred for reasons outside of your control. Job layoffs are usually not a surprise. Managers information, internal notices and/or news reports of economic slowdowns in certain industries, are some of the ways employees become aware of pending change.

The good news is that there are plenty of resources to help you cope mentally and financially with these stressors. A number of steps are outlined here to help you minimize the impact.

Inform Those Closest to You to Help Cope With the Loss
It’s usually best to inform your family and friends as soon as possible about your job loss. Many people identify themselves through their employment so losing a job is difficult for one’s sense of self. It’s not easy to promote yourself daily in looking for work especially if the loss of employment is a new experience for you and you have been in the same job at the same company for years. Talking about it can help you alleviate and deal with the mental stress. Other than family and friends, talking about it with a therapist, your doctor, spiritual leader, or a career counsellor can also help. Keeping up with good eating habits, fitness and adequate rest is critical to help you manage your stress and change your focus from a job loss to a job search.

Examine the Termination Terms/Severance Package
When you receive a termination notice, you will want to review and discuss the termination terms, including any severance package for which you are eligible. Be sure that you are provided with the statutory benefits that you are eligible for under Part 2, Division 8 of the Employment Standards Code, including termination notice and pay, temporary layoff and recall rights. You can take some time to think about the offer and should not be afraid to try to negotiate terms which are more favourable for you. Consulting with a labour lawyer might help you obtain better settlement terms. Be sure to keep all interaction with your employer respectful. Aside from discussing and clarifying your termination terms, you will want to request that your employer provide a good reference for you in the future and/or provide you with a reference letter currently so that you can commence a new job search armed with up-to-date supporting documents.

Review Your Annual Income
Ask for your record of employment for your files, which will enable you to see how much you earned year-to-date. Assess whether you are eligible for employment insurance benefits and apply if so. Determine if you have other income sources you can rely on for the next while (e.g., spousal support, rental income). Try to forecast your income for the year (based in part on your prior year’s income tax return if this is still applicable and beneficial for planning). Determine how much income you will receive for the remainder of the year if nothing changes.

Review Annual Expenses and Total Debt
Assess your monthly expenses and total debt. Review your bank account transactions and credit card statements. You may find it useful to pull out statements and take an average of the past year’s monthly expenses for: housing, utilities, food, transportation, child support obligations or child care (if any), spousal support obligations (if any), household maintenance and repairs, personal allowances, clothing, education, medical expenses, recreation and entertainment, life insurance, loan and credit card payments, income taxes, seasonal sports, travel and vacations, gifts and festivities, and any other expenses to estimate your total monthly expenses. An awareness of your average annual and monthly expenses is a starting point for budgeting.

Financial Planning and Budgeting
Compare your assets and income to your expenses and debt in order to arrive at a budget and financial plan. Assess how long you can manage financially with the resources you have without incurring further debt. Determine the level of income you need to support your expenses and figure out the reverse; how much you must reduce your spending to manage through this period of unemployment.

Prepare a new monthly budget that eliminates as much discretionary spending as possible, revising expenses down to a lower amount if possible. Cutting back is a common sense strategy for debt management, and often the most viable approach for individuals after a layoff. Remember that this is simply a short-term cut back during your unemployment and not your long-term plan.

Get Creative
All the while you are job hunting you may still need extra cash, so, take an inventory in your home of old valuables that are no longer being used and could be sold (e.g., online), including baby furniture, power tools, musical instruments, sports or fitness equipment, photo equipment or a freezer. If you need money, consider selling off luxuries such as a second car, a boat, fur, or unused jewelry. Collecting on old debts or favours owed can be helpful too.

For an additional income source, consider selling your skills for extra cash (e.g., preparing taxes, tutoring students, giving music or dance lessons). Or, you might trade services with someone who has a service you are seeking (e.g., you teach a sport for computer or tax services). Renting out a room in your home to a student or renting out your basement is another way to obtain an extra income (check with City Bylaws).

Don't be put off by applying for interim work at pay levels below what you were making at your old job especially if these funds help prevent you from acquiring more debt. Money is money. Avoid more debt load (payday loans, credit card advances, etc.

Explore New Employment & Retraining Opportunities
Once you’ve been home a short time, you will be keen to get back into your career groove and related income. You will also want to find out if there are employment opportunities available with your past employers and any competitor firms and where there is career counselling available, including assistance with your resume and interview skills. Take a retraining or skills upgrading course if you think it can help you with your job search as you may make new friends and contacts along the way and employers like to see that you are skilled with fresh information sources.

Seek out job search assistance from online sources such as the Alberta Learning Information Service and Alberta Work Search Online. Look at online groups (e.g., through linked-in) to find job postings and industry associations as well. These days, most advertised jobs are listed online, though there are still a high volume of jobs that are never advertised.

When conducting your job search, keep in mind that family and friends are part of your network. Don’t limit yourself to jobs immediately within your field and instead consider expanding your interests. Nearly seventy percent of the unemployed find new jobs through friends and relatives from referrals and word of mouth. Look optimistically at the new employment opportunities and potential experiences available for empowerment in this stressful time.

Options of Last Resort
If you cannot manage your finances by reducing spending or working an interim job or contracting your skills, assess if there are other available options that you can take while continuing with your expense reduction plan. Many people facing a job loss make the mistake of liquidating retirement plans in order to make ends meet. This option can be most hurtful in the long run since it will reduce retirement savings and significant investment growth. Talk to us before depleting any retirement plans.

Several more people borrow from their personal line of credit or other credit sources even though interest will be incurred. If you want to borrow funds, you need to be highly mindful of not only the interest costs but the extra debt burden generally (loans on top of loans).

If you cannot pay what you owe and can’t keep up with new bills, get expert debt financial advice first before trying to negotiate your situation with creditors. You will also want to obtain professional help to find out about all your options for dealing with the mounting debt you may be unable to pay.

Obtain Professional Advice
As you go through the steps needed to recover financially and mentally from your layoff, you may decide that professional advice would be helpful. You may need to reach out to professionals if you have specific questions about conducting a job search, about feeling depressed or wanting to know how to better manage your debt. You could learn new tips and strategies in the process that you never thought of previously.

A debt professional can help you get through the next months while you work on regaining your financial footing. There are no consultation fees from speaking to a representative at our firm. Call us at A.C. Waring & Associates Inc. in Edmonton for more information. We are trained to deal with financial and debt management in all kinds of situations. We are the Debt Solutions People.

A.C. Waring & Associates

First Edmonton Place, 410-10665 Jasper Ave NW, Edmonton, AB, T5J 3S9|
Main: 780-424-9944 | After Hours: 780-423-3328 | Toll Free: 800-463-3328
 
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A.C. Waring & Associates is your trusted Edmonton-based regional bankruptcy trustee and debt solutions company. We specialize in debt solutions for personal or business matters, including debt and credit counselling, debt consolidation, consumer proposals, bankruptcy proceedings and other debt help solutions. If you are overwhelmed by debt and need solutions, A.C. Waring & Associates will help you find the path to a debt-free life. We proudly offer services to Northern Alberta communities as far as Grande Prairie, Fort McMurray and the surrounding areas. Contact us today for a free consultation at 780-424-9944 or toll-free at 1-800-463-3328.