Unemployed? 9 Dos and Don’ts of Getting Laid Off

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Most of us wouldn’t think to associate the words “joblessness” and “fun,” but unemployment coach Katie DeVito says she wouldn’t have it any other way: ”The best thing that ever happened to me was getting laid off.”

After the loss of her communications position at a nonprofit, DeVito dispatched a tweet to find out how many fellow New Jerseyans were also out of work. With that tweet, she found her calling: The overwhelming response inspired her to found NJ Unemployed, a support group for job-seekers in the Garden State to facilitate the exchange of stories and advice for moving forward professionally after the loss of a job.

Now the site has over 1,000 members, and DeVito says being part of the community helped her not only find a new job, but put her fate in perspective. That’s one way not to let a pink slip get you down.

We also spoke to experts to find out several key unemployment dos and don’ts  when you want to get back on the career track. Heed these tips and you, like DeVito, could wind up even happier than you were before.

Don’t: Panic

The initial loss of a job is stressful, and it often makes us lose our clarity and focus on planning the next steps, says Katie Brewer, a certified financial planner™ with LearnVest Planning Services. But you don’t have to descend into an anxiety spiral. There are always options, and the key is to let yourself have the time and space to determine what those are, Brewer says. You won’t be able to move forward without a clear head and an open mind. 

This can be as simple as taking the time to gather all of your contacts off of your computer, so you can send a thoughtful email once you get your footing again. One friend, instead of letting anger get the best of her, spent her last hour in the office typing up a letter to HR stipulating why she deserved three months, instead of two weeks, of severance. The end result? An extra $15,000 in her emergency fund while hunting for a new job.

RELATED: Should You Negotiate a Severance Agreement?

Do: Accept Your Situation

Stave off panic by stepping back and taking stock of your own feelings. “Validate your right to feel miserable,” Dr. Robert L. Leahy, author of  ”The Worry Cure,” advised on NPR. “You’re a human being. You have a right to feel unhappy.” Once you’ve given your emotions space to exist, you can start to see the big picture more clearly, enabling you to act in ways that will help you and your career.

Don’t: Borrow Blindly From Your Retirement Account

When your cash flow begins to dry up, you may be tempted to turn to your retirement account, Brewer says. But you should think twice before cashing out part of your 401(k) or IRA while unemployed. If you do, you could find yourself with the extra burden of taxes on the funds you withdrew (for contributions to retirement funds that are pre-tax) and a 10% penalty if you crack into your nest egg before you’re 59.5 years old. In general, breaking into your retirement savings early could erode 40-50% of the money you take out because of taxes and fees.

Not to mention, if you’re still unemployed when the tax bill comes around for your withdrawals, this could cause yet more problems. Meanwhile, Brewer says that if you choose to file for bankruptcy down the line, your retirement assets are usually one of the few assets you can keep (depending on state rules). Bottom line? Unless these funds are the only thing standing between you and losing everything, try to hold off. After all, that’s what your emergency fund should be for.

Do: Rethink Your Priorities

Once you’ve established a particular standard of living, it can be tough to adjust that downward, but Brewer says it’s crucial to separate your wants from your needs and make the necessary changes to reflect your new financial reality. Tweak your budget in the LearnVest Money Center, where you can edit your (new) monthly income and see how much you have left to spend on each part of your life. Particularly if you’re living off of your emergency fund, you’ll need to think about where you can cut back so you don’t eat through your savings so quickly.

RELATED: Do You Qualify for Unemployment?

For example, after her husband was laid off, Deborah Dunham managed to cut the family’s budget by $1,000 a month, and once he found a job again, they still kept many facets of it in place, allowing the family to increase their savings long term.

  • Linda

    I’m sorry, but “Don’t avoid creditors” just doesn’t work. When I got laid off in 2009, I worked out a budget where I could make payments to my mortgage, & car loans (I had a car for me me & one for my daughter) IF I could make interest only payments. I called my 3 creditors, explained my situation, said I’d be collecting unemployment, & asked for a deferral. They each said because I wasn’t working, they couldn’t give me a deferral. ( ??? ) So I asked for a forebearance. (Forebearance payments are sometimes interest + a fee.) Again, I was told I’d have to be working. ( ??? ) So, I asked if I could do an interest only payment. Again, I was told no, I’d have to be working. ( ??? ) I then asked to speak to a manager. I got the same answer… So, I told them to come & get the cars, & foreclose the home, and hung up. Only the mortgage lender called me back & offered a plan. The plan was to put the house on market. If after 3 months it didn’t sell & I didn’t make ANY payments, then they would put the house up for a short sale. If after 9 months, the house didn’t sell, then they’d take a “deed in-lieu of foreclosure”. Eventually, that’s what happened. What happened to the 2 car loans? The lenders tried to squeeze money out of me. I told them, either work w/me by giving me a deferral, forebearance, or interest only payments, or come & get the cars. After 4 months of harassing me, they finally came for the cars… What happened to me?… I ended up being out of full-time work for 3.5yrs. Yes, eventually, they would’ve had to come for the cars, but they would’ve gotten more money out of me, because last January, I filed for bankruptcy… AND NO! I didn’t trash the cars or the house, because I knew they could’ve come after me for it. (Remember, if they have the title & you owe a balance, the car or property IS NOT YOURS!)

    • disqus_7u1iRNS5VM

      been there done that for several years, banks are not your friend regardless, however you do have some power in the situation, you used it well, i would have billed them for storage of the cars since they did not come get them for a while and if not paid turn them into a bill collector, hopefully a very aggressive one that will not stop till he gets the funds, since they made it apparent that they had no interest in the consumer after they had gotten a good potion of your money. truth is you do what you have to do since you have to eat, kids need a place to stay and life always goes on somehow. I wish you well in the future, hang in and hang on always..

  • Jean Daniels

    me and my boy friend were layed off 5 months ago our returned date is 5/5/14 well they called him back and three other people in the same dept as well and two of the others that were called back are from an agency what do i do and whats my rights?