Every year my company goes on a hiring spree during peak season, only to get rid of them later when it slows down. But instead of getting rid of the contractors, they replace the regular employees with some of the newer, faster contractors.
A lot of my coworkers are worried that they will be next. To comfort one of my colleagues, I told him that having 6 months off to travel/recharge might not be a bad idea.
He surprised me when he said he has no savings and can’t afford to live on unemployment. He is tired of living in fear, afraid to take vacations or spend any money, for fear that he’ll come in on a Friday to not have a job to return to on Monday.
Is this really how we want to live? Being controlled by our paychecks? How would you be money-wise if you got laid off today? Would you take that time to travel or would you be so stressed out that you can’t even sleep?
PIN IT FOR LATER!
I have been fortunate enough that I grew up with two frugal parents. They always try to prepare for rainy days. No, scratch that. They prepare for a tsunami. I am not as extreme, but they have influenced me enough to know how to be prepared.
Don’t let it happen to you. Be prepared so that you don’t have to live in fear.
STEPS ON HOW TO PLAN FOR A LAYOFF
1. Create a Budget
You know that you need to have an emergency fund, but do you know exactly how much? Start by keeping track and making a list of your monthly expenses. Go through the list and eliminate all the non-essential things such as cable, daily Starbucks coffee, eating out and entertainment, etc. Put that extra money towards your savings account/emergency fund.
2. Start an Emergency Fund
We’ve all heard that a good rule of thumb is 6 months, but is it enough? You should aim for at least 9 months. It doesn’t hurt to have that little extra cushion. Determine the bare minimum cost to cover 9 months worth of expenses and begin contributing to it.
But how can you save if you live from paycheck to paycheck? It’s time to get creative, trim all the fat away (non-essential things), clean out your closet and sell things on Craigslist or have a garage sale, any bonuses or pay raise go straight to your emergency fund. I put my money in index funds, which earns me extra money and I can withdraw anytime.
3. Line Up Credit
I never would have thought of this if I didn’t know someone who does this – and does it very successfully. This person has extremely high monthly expenses and sometimes only needs a few months of borrowed money to stay afloat. I don’t believe in living on a credit card, but sometimes it might be the only way. It is definitely a lot easier to get a credit card while you still have a job. Make sure to get one without the annual fee and all the hidden fees.
4. Maximize Your Benefits
I have a habit of waiting until the end of the year to use my health benefits. Go get your yearly check-up and/or dental work now. If you have vision benefits, go use it today. I didn’t know my vision plan has a 12-month rolling period. I waited until December of last year to use it and now I have to wait until December to be able to use it again. They’re getting smart too.
5. Get Educated on Your Unemployment Benefits
Every state has its own requirements. You can go to their website and estimate how much you’d receive. It most likely will not cover your monthly expenses if you live paycheck to paycheck. You need to know a rough estimate of how much you will receive and how much you will need to save in order to have enough to cover your monthly expenses.
Most employers offer COBRA, a continuation of your healthcare benefits. Unfortunately, it is extremely expensive and you’d be better off looking for a private insurance on your own.
6. Keep Resume Up-To-Date
Update your resume every couple of months. If you get a new certificate or do extra projects, update it right away. It is a lot easier to update your resume as you go instead of doing it all at once while looking for a new job. It’s an added stress to an already stressful situation.
7. Side Hustles/Income
There are so many ways for you to earn extra income online by becoming a virtual assistance, teach English via Skype, freelance writing, take surveys, etc. Many people have turned online side hustles into a full-time income.
- Related Post: 12 Side Hustles to Make Extra Money Fast
8. Start a Blog
Did you know that there are many bloggers out there who earn a full-time income blogging? I wish I knew about this years ago. I am not there yet, but I hope to be one day. This is not a get rich quick scheme. You have to put in a lot of work to get results. While my coworkers were panicking today, I wasn’t worried. I have money saved up and I already have this blog to work on. If anything, being let go would free me up to focus on my blog.
You can click here to follow my step-by-step instruction on how to start a blog for non-techies.
You never know what will happen. You want to be prepared for the worst or at least, for another opportunity. For me, I wouldn’t look for another job in my profession if I got the pink slip. I would focus on my blog and online marketing because I really enjoy it. This is only possible because I’ve been preparing for it.
Are you prepared for it?