Can You Survive Losing Your Job?

Bill sat in his company’s boardroom and listened to his boss and a rep from human resources tell him that it was time to part ways. As they explained why they were letting him go, his mind raced to figure out how he would financially survive until he found his next job.

America?s unemployment rate is still at nearly 6% While that might seem like a low percentage, that?s still 9.3 million people. Of course, that doesn?t mean that all of these people were fired, but would you be able to survive the downtime between jobs if you were let go today?

A lot of financial gurus have written articles on how to save money in preparation of disaster striking. However, many Americans simply haven?t been able to save much money over the last decade. The tendency is to believe that your next job is just around the corner and the transition will be short. However, the average time to your next job will be around 10 weeks. If you aren?t proactive right away, the chances will be good that you?ll deplete your funds and turn to credit cards ? which isn?t a road you want to go down.

So, if you find yourself sitting on your couch on a Tuesday afternoon having just lost your job, here are three moves that could help you weather the next few months.

Draw Unemployment

Your first move should be a visit to the United States Department of Labor website. Here, you?ll find all the information you need to determine if you?re eligible to draw unemployment benefits while you look for your next job. According to the Department of Labor, you need to meet two criteria to be eligible.

First off, you?re unemployed through no fault of your own. Typically, this applies to people who have been laid-off, but it can also apply to someone who has been fired as long the employer?s reason wasn?t based on gross misconduct in the workplace. Gross misconduct in the workplace is characterized as an objectionable action that is willful and cannot be described as a mistake or an act of negligence.

Secondly, you need to meet your state?s requirements for time worked or wages earned. Every state is different and you need to visit your state?s website or a local office to determine if you qualify.

As a bonus, now?s the perfect time to see if you qualify for government programs. If you have a family, check into the program for Women, Infants and Children (WIC). They can give you funds to purchase food items like milk and cereal. Also, talk to a representative about your eligibility with the Supplemental Nutrition Assistance Program (SNAP). Through SNAP you can receive funds to purchase food each month for you and your family. Don?t let your pride get in the way of using these programs to help you make ends meet.

Access Retirement Funds

Unfortunately, people haven?t been able to save much money since the Great Recession. However, many people have found ways to put some money into 401k and 403b accounts because most employers have matching policies. If you?ve had a portion of your income go directly into a retirement account, you might have some options to access those funds.

In most cases, if you lose your job, your investment company will give you the option to withdraw the funds you?ve saved. However, you need to be prepared to pay some penalties. Typically, if you?re under 59 ?, you?ll pay an early withdraw fee of 10% from the IRS. Secondly, there?s usually a standard 20% tax withholding from distribution since the funds were invested prior to paying taxes on them.

With some investment firms, you have the option to take out a loan against the funds you?ve saved at reasonably low rates. This usually isn?t the best idea because you?re creating a new monthly payment for your budget. Since you just lost your job, you might not be able to handle that new payment and your money won?t go as far. Plus, not all investment firms offer this option, but it is a route you could discuss with your firm.

Find New Ways to Earn Money

As adults, we often fall into the trap of thinking the only way to earn money is through a full-time job. However, since you?ve just been given some free time through the loss of your job, now is the perfect opportunity to ask yourself what you?re good at. Grab a pen and paper and jot down ways can use your talents to make some cash. Can you write freelance articles for your local newspaper? Can you sing at a local coffee shop? Does your church need its lawn cut? All of these are extra ways to make a little bit of extra money that can help tide you over until you land your next job.

The bottom line is that losing your job unexpectedly creates a lot of stress and sleepless nights. If you have a job, the best action you can take now is to start putting some money each week into a savings account so you?ll be prepared for the worst. However, if you?ve lost your job, stay positive and maximize all of your resources.