Unexpected Unemployment with Bridget Todd
We are at the beginning of a New Year and many of you are planning on making changes in your lives. Unfortunately, so are companies. For many people, they are going to start the year off unemployed and this is the case for one of my listeners, Danielle, who was unexpectedly let go last week and asked if I could do a show about what to do if this happens to you. I fortunately/unfortunately thought this was a great show idea and immediately recruited my girl and lead trainer at the Financial Gym, Bridget Todd, who has counseled a number of clients through this unfortunate surprise. She joins me to share some of her best practices and how you can take the experience of getting laid off and turn it into the best change of your life.
What are we drinking?
Bridget — Hot Toddy (Tea & Whiskey)
Shannon — Vodka and Tonic
Podcast Notes
One of the listeners asked for a discussion on becoming suddenly unemployed due to layoff or being fired.
Bridget has had at least five clients in the last six to eight months who have been in this same situation and she has helped them come up with a plan to stay out of debt.
Companies plan on layoffs for several months and often choose the beginning of the year to stay away from the holidays. Another reason to do layoffs in January, is that it gets them out of paying bonuses in February or March.
There are a lot of people looking for work in January and there tend to be more openings due to those leaving their jobs in December.
Shannon discusses her experience at Bank of America in 2007 and 2008, when there were big layoffs.
Everyone who made it through the 2007 layoffs thought they were safe and were caught off-guard when more layoffs happened in 2008.
All of the people who were laid off ended up someplace new.
A common theme that Bridget sees with clients who lose their job is that they were surprised by the layoff, but they told her in previous meetings that they didn’t like their job and they wanted to do something new.
This gives them the time and focus to build a new skill set and move in the direction they want to go.
The first goal for clients of the Gym is the emergency savings goal. Having three to six months of monthly expenses saved in an emergency fund is critical. It could be health, new tires, getting laid off, etc. You have to be prepared! This is top priority.
When a client loses their job and doesn’t have an emergency fund, Bridget first looks at the debt situation and the client’s credit score. The best thing to do if there is no emergency fund is to have a zero percent interest credit card - if you need to pay something, you will need to put it somewhere. How are you going to pay your bills?
Figure out some way to make money in the interim between finding the next best job. You may need to take a job you don’t like in the meantime.
Using a zero percent interest rate credit card is better than borrowing from your 401(k). When you take money from your 401(k), you lose half of what you take out between penalties and taxes.
People get laid off all the time - it doesn’t mean that you are a shitty employee or that you will never get another job, it just means the company needed to cut costs. Hiring managers know this.
As a hiring manager, Shannon wants to see how the person responds to the situation, especially if they were willing to take a job that was not ideal in the interim.
The longer the gap between jobs lasts, with no employment, employers start to question why the person hasn’t worked.
Figure out what you want to do and where. Go on LinkedIn and look at the jobs available in the field. Email everyone in your network and do the work. Your new job is to find a new job - work every connection you have that is relevant to something you want.
Don’t worry about taking a job knowing it is not the one and that you are not going to stay there. Keep looking. It is easier to find a job when you have a job.
It is not typical to stay in a job for 20 or 30 years anymore. Hiring managers know that the trend is for people to job hop until they find the right position. Shorter stints in a job does not look bad anymore.
How do you manage your finances when you are unemployed? How can you get your expenses to the lowest possible point to give you more flexibility?
Can you move home with your parents and sublet your apartment? Can you rent a room in your home? How are you going to resolve paying for your biggest expense?
Cut out everything! Netflix, Spotify, etc. Little expenses add up!
What are you obligated to pay? If you have credit card debt, start paying the minimum. If you have federal student loans, can you put them into forbearance or are you eligible to defer them?
Make a list of necessities, like food, and come up with a grocery budget. Can you cut your cable and internet? Can you switch your phone to a lower cost provider?
Give yourself a little money to do something you want or so you can go out with friends once a month.
Contact your lender to see if you can get a month or two reprieve. Negotiate everything you can.
Come up with your bare-bones number and learn to live within that budget, until you find your next job.
It will never be comfortable, you just need to manage through it.
The lowest lows will lead you to the highest highs.
The trainers at the Financial Gym stress the importance of the emergency fund, because they have seen clients in that position.
If you get laid off at the beginning of the month, use your health care. If you end up with a medical bill, remember, you can negotiate those and work out a payment plan with the provider.
If your company gives you a severance, read through it carefully, consult with someone, and try to negotiate for more weeks of pay and insurance.
Apply for unemployment right away online. It will be at least a few months of some money that will help keep you afloat. Check with your HR person to see if you will be eligible. If you are being fired due to your performance, you may not be eligible.
If you are getting unemployment or a severance, still go to your bare-bones budget. You may not have another job once the pay ends. Try to bank the severance by getting another job quicker.
Flex Spending Account (FSA): tied to the employer; use it up within the deadline.
Health Savings Account (HSA): you can take this with you.
401(k)/Roth 401(k): roll these out of the company into individual IRAs.
How do you manage through the process of competing for your job, against your co-workers, when your company is doing layoffs? Your co-workers are feeling the same way. Keep a list of your work achievements and times when you’ve gone above and beyond. It is every man for himself. Never speak badly about your co-workers. If you are in a competition environment, you should be looking for another job.
Shit happens, but it doesn’t stay shitty. It is just a period of time. The best way to shorten that period of time is to be proactive. When you lose your job, it is the universe forcing you to make a change. The quicker you accept that, the quicker the universe gives you what you want.
It is all about how you react when you get pushed down. You need to put yourself out there and start working.
TAKEAWAY: Remember that even the most unexpected events in your life happen for a reason, and if you lose your job, keep up your positivity and remember that this is the kick in the butt from the universe that you need to lead to you the next big adventure of your life.
Random Three Questions
If you need to relax, are you going to a hot tub or a massage?
If you could travel anywhere in the world, where would you go and why?
If you were to win $1 million, what would you do?
If you’ve found yourself unexpectedly unemployed and need a game plan for how to get through it, please reach out to my team at the Financial Gym. We will get a game plan together for you for free. It’s hard to move on to the next great adventure of your life if you’re stressed and uncertain about how to get there, so don’t be - my team is here for you. You can schedule a free call here to find out more.