How to Survive Financially After a Job Loss

Number 1 - Don't Panic. Job loss is a fact of life; just about everyone loses a job at some point or other in his or her work life. You will survive, and things may even turn out for the better. Keep your family informed of what is happening. Let them know that family income has been affected, and the result will be that family expenditures will be affected. Seek cooperation from family and from friends. Show strength and leadership to your family, and let them know things will be OK.

Number 2 - Understand what your former employer is offering. The idea is to maximize your income from this employer - offer to work part time beyond the termination date; explore the possibility of consulting work; ask what you need to do to extend health benefits. Add severance pay to your emergency fund and start your emergency budget at once. Your family now can buy only essentials - no new clothing, no eating out etc. Make sure you get a letter of recommendation from your former employer. Don't burn any bridges; be remembered as a good, responsible worker.

Number 3 - Apply for unemployment and look for a new job right away. Calculate how much unemployment you will receive and determine when the first check will arrive. Factor the unemployment amount into your emergency family budget and make the necessary adjustments so that you do not spend more than you have. Be creative in your job search; network widely; put volunteer time into your schedule; reassess your career and obtain new skills and education now that you have the time.

Number 4 - Things you should do (which surprise me when they are not done). Figure that it will take you longer than you anticipate to find a new source of income. I am surprised that many families continue to spend as if nothing has happened. Think downsize, especially where you live and what you drive. Less is better when income is down. Cancel cable TV, stop using credit cards entirely - go to cash only. Ask yourself, "Do I need a cell phone?" (As a hiring manager I would not hire anyone whom I believe is talking on a cell phone while driving a car, nor will I give points to an applicant who has a silly voice mail message or to a phone conversation with marginal reception quality. Call your own cell phone and listen to what your hiring manager hears.) The kids can drink tap water. Move away from processed foods at the grocery store; eat cheap, eat healthy.

Number 5 - Make intelligent decisions about retirement accounts and insurance. Keep your health insurance through COBRA; it is now government subsidized. Don't drop life insurance - you want to prevent an even larger family financial disaster. Keep paying for home and auto policies; these expenditures are part of your bare bones budget. Don't touch your retirement savings.

Number 6 - Develop an emergency spending plan (also called a budget). First, review all sources of possible income: part time work, garage sale (we all have stuff we no longer need or simply can't afford), take in a roommate, cash value life insurance, loans from family and friends, returning wide screen TV, take Social Security early (you can always pay it back), write for Associated Content.com, and (list your creative ideas here). Next, review all spending. The hard part is changing spending habits. Just about everyone can use an "extreme makeover" when it comes to where we spend our money and how we pay for things (ask me about those who end up paying $9 a gallon for gasoline by putting it on a credit card and making the minimum payments for six years at 20%).

Keep your chin up and exercise a lot; things will be better.