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Surviving a Layoff or How I did it.

I see the light at the end of the tunnel and it is not a train.  My house is under contract and I’m making a decent profit on it. I’ll be able to pay off all my outstanding debts, put away a good chunk for the kid’s college fund and have enough to live on for the next year if I manage my money well. Next week, I’m moving my furniture to the new house in Pittsburgh.

Here are some of my tips for surviving a layoff in the Little Depression.  Please note that if everyone took this advice, we’d be plunged into another recession because when you’re in survival mode, spending money to keep the economy going is not your first priority.

Pre-layoff

1.) Prepare for a layoff well in advance of one.  Have at least 6 months salary saved up.  If you can, set aside a year’s mortgage and tax payments.  My savings combined with NJ’s unemployment pay helped me immeasurably.  Kudos to the NJ Department of Labor.  They were kind, respectful and helpful.

2.) Pay off as much debt as you possibly can.  Don’t buy a new car unless you can pay cash or the monthly payments are low enough that you can still eat on your unemployment check.  Maintain your car.  Payoff your credit cards.  Don’t go on vacation.

3.) Make sure you are healthy.  Get a yearly physical, address health issues when they crop up and you still have insurance.  Don’t put anything off.

During the Layoff

4.) Try not to panic.  I panicked and almost made some major, major mistakes.  Thank goodness I had Katiebird.

5.) Get a Katiebird.  It’s probably best if the person lives in another state and can’t see you everyday.  Just chit-chatting with another person over stuff can calm the nerves.

6.) Don’t take the first job you see.  Take your time and develop a Plan B.  Consider what kind of work you like to do, where you want to live and whether you can afford to stay where you are.

7.) Don’t rule out working for free.  If you’ve saved money and you’re covering your bills, use the time you have to stay current with your skills or learn something new.  I was fortunate enough to hook up with some people I used to work with who let me participate in some projects.  As a result, I’m looking forward to a publication that was recently submitted and have been invited to stay on an ongoing project.  I’m now getting paid a small amount but the whole experience kept me sane and I appreciated every minute of it.

8.) If you can’t afford to stay where you are, move.  I used the last year to fix up my house, learned how to install faucets, wire lighting fixtures and garbage disposals and experienced the joys of ripping out 25 years of creeping juniper in order to create “curb appeal”.  In the meantime, I looked for a bargain house in my target city and found one.  I paid cash for the house I bought (more on how I did this later).  Now, when I move there, my biggest expense will be my health insurance.  I will have no mortgage and the house is about 1/4 mile from the bus line.

9.) Do whatever you can to keep your health insurance.  COBRA is ridiculously expensive.  In fact, it cost me about half of my unemployment checks. There really should be a law preventing that. But you never know when you will need medical care so don’t drop your insurance under any circumstances.  Also, keeping continuous coverage will help you transition to an individual policy.  Don’t skip this step. I’ve known people who thought they could get away with not covering themselves or their children and they are now regretting it because after 63 days of no coverage, it’s really difficult to get affordable insurance on the individual market.

10.) Cancel any monthly bills you can live without.  I cut the cord on cable but kept internet.  It turns out that Brook and I didn’t really miss much.  I reduced my car insurance because I was no longer commuting to work.  Don’t buy a lot of clothes and other material goods but don’t forget to treat yourself once in awhile to a Grande Cinnamon Dolce Latte or a Gelati from Ritas.

11.) Use your IRA carefully.  I rolled my 401K into an IRA and purchased my new house with part of it.  You can do this without tax penalties if you return the money to your account within 60 days.  That 60 day thing seems rather arbitrary and rules out using the money for things like starting your own business but that’s the deal.  This is what Congress legislated.  It’s a shame that my generation has been snookered by fast talking financial planners in expensive suits to socking our nest eggs and rainy day funds in “instruments” and retirement plans that are not liquid without huge, and I do mean HUGE tax penalties, but there you are.  You *can* use this money but you need to be very clever about it and ask a lot of questions over and over again to make sure you’re doing it right.

I recently met a woman who created her own IRA real estate investment fund.  She now invests her IRA money in this fund and uses it to purchase houses all across the country.  She fixes them up and rents them and plans to earn enough money to retire from this fund.  In her case, since she’s not taking the money out, there’s no tax penalty.  Something to think about.

So, now, I’m just waiting for the final pieces of my move to fall into place.  I don’t have a regular full time job yet but for now, I’m Ok.  I have some money left over, my kid’s future is not dismal and my health insurance is covered.  I didn’t lose my house and my credit is still pretty good.  When I move, my standard of living will be about the same as it was in NJ.  My house is about the same size and I’ve got more land.  It’s in a nice neighborhood and my neighbors are about the same socio-economic status as before.  It’s just in a different city.

I can work from home but I’ll probably be looking for a job when I get there.  At this point, I can bartend and still be fine.

That’s not to say that there weren’t bumps along the way.  There were plenty, including one major one that I will tell you about someday.  But in any case, it *did* get better.  Whether all this frugality is good for the country is another story and there’s no doubt that the idea that researchers can afford to do research on their own without the economy of scale of a bigger lab or company is just utter nonsense.  I don’t believe in “creative destruction”.  As Gandalf said, “He that breaks a thing to find out what it is has left the path of wisdom”.  Breaking the economy, breaking up R&D facilities, breaking up families and lives, just to see what happens and assuming that everyone will land on their feet all ticketyboo is not a good economic strategy.

But I survived.

****************

What are your layoff tips?  Add them in the comments.

 

 

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18 Responses

  1. Ah, Riverdaughter!! Thank you. But, I don’t think you realize how much I have relied on you through this same period.

    It’s been a crazy couple of years for both of us, hasn’t it? And I’d say that 2013 has been just about the worst year ever, even considering the crap that’s happened since 2011.

    I wonder if the Internet has kept the country together through this depression? Just imagine the rage that could be building if we (the BIG We) didn’t have friends from all over the country (really, the world) helping us through each day.

    It is REALLY going to be fun to hear about the changes you’ll make to your new place. And the fun day trips you make on your bus line.

  2. I lost my job after 8 months and moving across country for a position I thought had a shelf life of at least 3-4 years. Because I had worked in two states in one year, I had to apply for unemployment in both states. My HR department was clueless and useless. It took 3 weeks to get a human voice in my home state and she said in addition I had to contact the other state in which I had worked. That was NJ and the NJ Dept. of Labor and RD, you were right, they are helpful in the process, considerate to your situation and very well organized. They were a big partr in helping me through this very sressful time.

  3. Jobs are scarce. Good jobs more so. The industry that provides compounds to improve our lives strongly opposes any restrictions when a doubt exists as to causality. I see you coming down on that side in this case, right?
    The our geed friends governing the UK voted against the ban.

    The silence of the bees: government refuses to act on pesticide evidence | Environment | guardian.co.uk

    Here’s an illustrative tale of how science is used and abused in government policy making. In some circumstances, as with the imminent badger cull, you can take scientific evidence and extrapolate it to breaking point in order to justify the decision you have already taken.

    Today, on the issue of bees and pesticides, we see the opposite. Despite serious evidence of great harm being caused to bees by sub-lethal doses of neonicitinoid pesticides – published in the world’s most prestigious journals – the government has decided that no changes to regulation whatsoever are required, because the case has not been proven beyond all doubt.

    http://www.guardian.co.uk/environment/damian-carrington-blog/2012/sep/18/bees-pesticides-neonicitinoids

    • My typing and lack of proof reading:
      “…our good friends governing the UK voted against the (european neonicitinoid) ban.” And sorry to be OT again.

  4. We have been fortunate this time around in that Hubby is still working at 72. I quit last year as the work I was doing just wasn’t worth the effort for the pay I was receiving.

    We did go through what many people are now suffering in the early eighties. We lived in the woods for the summer until snow came and then were forced to live with my Mom. Advance planning is good, but can’t always be as complete as yours was,if only because the layoffs can come suddenly. The hardest part was to keep a sense of self worth and know that this can and will happen to anyone sometime. I agree that the most important thing is to be realistic and make any lifestyle changes immediately, like your suggestion of moving and cutting off cable.

    Industries end their boom cycle. Don’t stick with it. Hubby was an urban planner in the Northwest. I was a social worker in the CETA program. When funding dried up, he went to the Hanford electrical project as a laborer. A year later that was gone. We eventually wound back in CA where he started as a roofers apprentice, then I did. Both of us eventually became roofing/waterproofing consultants. That career did well for both of us even in this downturn.

  5. Interesting post. I am so glad you have been able to cope so well through these trying times. I know it must have been a difficult adjustment losing your job. I can only imagine how stressful it must have been. You sound really positive and upbeat. I hope you enjoy your new home.

  6. RD,

    Pleased to read that you were able to come up on top,
    and thanks for the tips. Somewhat OT, but I am curious of your
    reaction to this post:
    http://techcrunch.com/2013/05/05/there-is-in-fact-a-tech-talent-shortage-and-there-always-will-be/

  7. When I was laid off, I tried to cut unnecessary expenses and I applied for every assistance program I could. What was a family of three at the time two years ago qualified for SNAP as well as local customer assistance programs to aid with utility costs (even so, thank goodness I’d replaced every incandescent in the apartment with CFLs).

    My severance package allowed me to keep my company health insurance for six months, but unfortunately my unemployment lasted longer than that. COBRA was priced such that I’d have to decide between not paying the rent or utilities in order to afford it. Thankfully my daughter was covered under a state program.

    Being laid-off is scary and people need to make a plan. I only wish I had had half the plan Riverdaughter did.

  8. I got my layoff notice when I turned into the plant parking lot and saw other employees standing around. We were locked out.

    l should have seen it coming after the wage and benefit cuts but I was young and naive.

    One thing I would add to your list is never vote for a Democrat ever again until Obama, Pelosi, and Reid are gone.

    • Not voting for Democrats is probably the most important part.

      Our system really does require you to save up a year’s worth of expenses, not including whatever you expect to retire on, if you want to be even a little bit secure. Saving up a year’s worth of expenses is impossible for about 90% of the population. Therefore 90% of the population should vote to have a different system. But they don’t.

  9. Natch, this will be verly hepfull advice.
    Sorry to say, I’m a grasshopper married to another grasshopper.
    We play and dance all day—-oops !

  10. That’s helpfull.

  11. Reblogged this on manifestingtalent and commented:
    Great Piece

  12. Congratulations and good luck in Pittsburgh.

  13. Bartending. Hmmm. So RD, is it the end of the road now for you and science?

  14. Not sure I agree with you on health care. If you are healthy and have no long term problems I’d ditch insurance after getting a basic exam. Then again, if I’m in survival mode then I’d have no problem using an ER that I may or may not ever be able to pay for, for my care if I was a basically healthy person. *shrugs* I’d sock away what I’d be paying in premiums. Then again, I’m not a big fan of the system we have and with high numbers of people still undergoing medical bankruptcy WITH insurance I tend to think the importance of insurance is overestimated.

    I think it’s going to be a judgement call though based on what level of insurance you had with an employer and if you have other safety nets(hubby and I are both veterans so if worse came to worse we could go to VA.)

  15. I was laid off from my Govt Job in 2009 (thanx bam-bam) I’ve been working ever since at a Govt contract mcjob. The work is not steady, but I have actualy found that to be an advantage. When the work picks up after a few weeks they call you back so I’ve never fallen off the unemployment rolls, & I can use the off time to work around the house & try out other jobs. This mcjob has become my hole job. It has given me the luxury of being very picky. If another job isn’t working out (& so far none have) I can always fll back & work the mcjob til I find a real job that I like

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