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Facing Unemployment? Take These Steps to Protect Yourself

March 21, 2019 | By Louis Tully

The thought of losing a job is immediately met with worry, stress, and all-out anxiety. This is especially true when you’re in the middle of paying off several debts; credit cards, your car, your home, etc. Usually, the anxiety is completely invalidated, but there are still some cases when that little worry turns into a big, bad reality.

If you ever did wind up being one of the unfortunate ones to get canned, having some kind of backup plan in place would have come in handy right about now. But luckily, you still have your job, and it's not too late to be proactive. With that said, you’ll need to know what to do next in case you ever are left without a source of income. Some may think this is a waste of time and that you’re just obsessing over nothing, but there’s nothing wasteful about preparing for the worst-case scenario. It’s both smart and forward-thinking. Here are a few tips to help you piece together a plan in case you do end up in the unemployment line:

What to do with your 401(k)

If you had a 401(k) with your employer, that account is no longer getting fed and you’ll have to come up with a new way to carry on saving for retirement through some other means. The funds in your account are yours to do with whatever you like, so choose wisely. A smart move would be to roll it over into an IRA (Individual Retirement Account)

IRAs are specifically designed for retirement savings without the help of your employer. It allows you to purchase investments, and even offers tax breaks that could save you thousands! If you’re interested in rolling over your 401(k) funds into an IRA, contact your primary bank for more information.

Filing for unemployment

If the day ever comes when you do lose your job, you need to do two things immediately; relax, and go apply for unemployment.

Relax

First and foremost, relax. It’s important to remember that this too shall pass and if you can recall other stressful times in your life, you made it through each and every one of them just fine. This scenario’s no different. Remember, nothing is ever that bad. You may not know what lies ahead, and yes, losing your job is scary. But you need to take this time to reset your mind and prepare for the challenges ahead. Breathe deeply, relax your muscles and try to think clearly. The worst thing you could do for yourself right now is to go crazy and stress yourself sick. Go for a walk, talk to a friend, or just lie down. Once you’re relaxed, you’re ready to take the first step to getting back on track.

Go apply for unemployment

Normally, after losing your job, you become eligible for unemployment right away. Unemployment is a government-funded program created to provide financial relief for the unemployed. While it may not be the same income you’re used to getting, it’s better than nothing at all.

Filing for unemployment is easy. You can either apply at your local unemployment office or skip the lines by applying online. The unemployment rules and the amount of income you’re eligible for will vary from state to state. But normally, your benefits will last until you find a new job or until your benefit term expires (usually 26 weeks); whichever comes first.

Go for the severance

Technically, your employer doesn’t have to pay you a severance for being laid off. However, this may not be the case if you’re under contract. Check in with your employer’s HR department and find out what you qualify for.

The amount of cash you may qualify all depends on your employer. Some companies will offer a week’s pay for every year you’ve been employed. Others may just pay a flat sum based on what your salary was. Either way, you should try to negotiate a severance package if your employer hasn’t offered one already. You’re already losing your job, so it doesn’t hurt to knock on their door and ask for some kind of compensation.

If you do receive a severance offer, it’ll come with a legal document disclosing any entitlements for accepting the severance. Be sure to look over this document carefully before signing. You may even wish to have a lawyer look at it for you to make sure you’re protected.

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Keep your insurance going

Hopefully by now you’ve applied for unemployment and were able to get a severance package from your employer. Things are looking up so far, right? Now, it’s time to talk about healthcare. If you were originally getting insurance benefits through your employer, you may be eligible for extended insurance coverage through the Consolidated Omnibus Budget Reconciliation Act or COBRA.

COBRA is not cheap. You pay the full insurance premium including what your employer was originally paying. The good side to this is that you keep the same coverage for a little while longer. The bad side is that it’s expensive.

If you’re married and your spouse is working, they might be able to cover you under their insurance plan. This would the best-case scenario for all you married people out there facing layoffs. Most employers do offer family plans and it’s relatively easy for them to get you onboard.

Further reading: Picking Out a Health Insurance Plan that is Right for You and Yours

It’s time for a change!

While you’re trying to get all these things in order after just being laid off, you might be tempted to think that this is a terrible thing you’re going through; but it’s not. Job loss happens and unfortunately, it happens a lot. But this can be a good thing if you look at it from the right perspective. A chapter in your life has ended, sure. But it’s making way for a brand-new chapter to begin! So get excited!

By the way, job hunting might sound like a bummer, but it doesn’t have to be. Gone are the days of printing a stack of resume copies to hand out to every business in town. No more going around from door to door looking for a “now hiring” sign in the window either. Instead, try job hunting sites like Indeed or ZipRecruiter to get your name out there. These days, finding a job can be really easy and with a little bit of networking and a lot of patience, you could get back on your feet in no time at all!

Once you’ve finally found a new job and things are seemingly back to normal again, your finances may still need a little time to catch up. If that’s the case, talk to a lender near you about installment loans or other alternative loan options that could buy you the time needed for things to level out.

Hopefully, you never have to take any of this advice, but if you do end up on the list of layoffs, at least you have an idea of what to do next. Here’s to a new chapter!