What Should You Do if You’re Laid Off?
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The U.S. economy may be in recovery, but that doesn’t mean that layoffs are a thing of the past. Nope, there is simply no such thing as guaranteed employment these days – unless you are a tenured professor or have some extremely rare talent or skill.
So, what do you do if you’re laid off? Reader Mandy wrote in the other day with this exact question. Here’s what she asked:
“I read your post about tips for surviving on a freelance income on the same day I was laid off from my job of 11 years. I want to start a side hustle, but what should I do in the meantime?”
-Mandy
What You Should Do If You’re Laid Off?
First of all, getting laid off really sucks. I’ve never been laid off before, but I know plenty of people who have, including my own brother. When you’re used to receiving that steady paycheck, getting laid off can turn your life completely upside down.
The risk of getting laid off is also an excellent reason to start a side hustle of your own. It sounds like Mandy had the right idea before she got absolutely shit-canned. When you work for someone else, you rely completely on your employer for your livelihood. But when you create multiple income streams through a side hustle or two, no one can take that away – and you’re in a much better position to weather any type of financial storm.
If you get laid off, here are a few things you should consider doing right away:
Cut Your Expenses Immediately
When you’re getting ready to lose a steady stream of income, it’s essential that you learn to live on less – at least temporarily. Getting laid off is the perfect excuse to take a closer look at your budget to see what you can cut. If you’re not sure where to start, go for the low-hanging fruit first. Expenses like cable television, a pricey smartphone plan, and dining out are the first things that should go. Keep cutting from there until you’re only planning to spend on bills that are absolutely essential.
Apply for Unemployment Benefits
If your employer lets you go, there is absolutely no shame in applying for unemployment benefits. Â If you qualify, you might receive a certain percentage of your pay for a limited amount of time. In order to receive benefits, you must have worked for at least one quarter in the previous year and have been laid-off by your employer. You don’t qualify for unemployment benefits if you quit your job, however.
Figure Out the Logistics
When you’re being laid off, you aren’t just losing your job – you’re also losing your benefits. If you’ve carried your family’s health insurance, for example, now is the perfect time to figure out how long you’ll be covered and what to do next. Also, check to see what other benefits you may be losing. See if you can negotiate an extension on those benefits until you can find an affordable way to replace them.
Inform Your Network
Everyone I know who has ever been laid off has reached out to their network of colleagues, friends, and co-workers as one of their first steps. This is a smart strategy because a) your friends and colleagues may not know you were let go unless you tell them, b) they might know of available jobs in your field, and c) your friends and colleagues might be able to connect you with someone who can help. Informing your network of acquaintances is a great way to put out your feelers and begin a new career in the same or different field.
Start a Side Hustle or Business
Getting laid off usually means having some extra time on your hands. If you’re smart, you’ll use that time to cultivate a side hustle or passion and turn it into a money-making enterprise. My husband and I did this several years ago when we started this website and our subsequent businesses, and now we do it full-time. No matter what your talent or passion is, chances are good that someone will be willing to pay you for it.
- Related: How I Earn Over $100,000 Online
- Related: 52 Side Jobs You Can Start Today
Making the Most Out of a Layoff
When you’re getting laid off – or when you leave your job voluntarily – it can seem like the end of the world. A steady paycheck is something that you learn to rely on, and the idea of losing it can make you feel desperate and out of control.
That’s why it’s important to make sure you’re never in this position again. Start a side hustle, build your emergency fund up to epic proportions, and learn to live on a small portion of your income. The true security that these steps create means that you’ll never again have to worry about losing a job.
Getting laid off is never pleasant, but it might be just what you need to build a new life that is less reliant on someone else.
Have you ever been laid off? What would your first step be if you lost your job?
Additional reading:
I have never been laid off, though it’s one of my big fears. Hubs and I work in an industry that is heavily influenced by the whims of the Congressional budget… And since we are both in the same field, I worry about BOTH of us getting laid off at one time. A furlough almost happened once, which would have affected him, but not me (I was considered “mission essential”).
My first reaction would honestly be to start applying for any and every job. After I breathed more, I’d probably focus on hustling. I would definitely put my house up for sale and sale anything in my house that I could. No sense in keeping “stuff” if I am going to get kicked out on the street. I would call my student loan companies and ask about deferment or forbearance, and I’d probably call the mortgage company to see if they could offer any help, too.
Sounds like you have a plan! Working in the same industry makes it tricky. My husband worked in the same industry and even for the same employer before.
Great advice. We’ve been selling stuff on eBay for the past few years. That extra $500+ per month could pay a lot of bills! We are also less nervous because of the savings we have built up. Would hurt to take from my 401k/IRA but its still better than going bankrupt.
Reselling on ebay is a great way to make some extra cash! I used to sell a little bit but haven’t for a while.
You could even try selling items on Facebook through local yard sale and bulletin board groups. It’s a quick and easy way to sell stuff.
I think that you raise a great point- the best way to prepare for a layoff is well in advance of it ever happening, by keeping your expenses low and maintaining a solid emergency fund. However, for this reader, I think the best advice would be to find a job- any job- quickly, even if it’s unrelated to her field. If it’s something flexible then perhaps she could continue it as a side gig even after she finds another full time position. That would help build up the emergency fund again, which may become depleted after this period of unemployment.
I would definitely find a job – any job – as quickly as possible! Got to start making money again, even if it’s not as much as you did before.
Starting a side hustle would be the best thing to do if you’re laid off. Also, by reviewing your expenses and you can also try to sell some of your stuffs to earn extra money.
I love selling extra stuff to make $! Having a garage sale this weekend actually.
Going through this now. Having an e-fund is a big help too. Your network is a big key, but it’s important not just to let them know you’ve lost your job and looking. You don’t want to burden them with having to find your next job. Have details when talking with them, ask for their advice, say thinking like I know you don’t have a position in mind for me, but I need your advice on my transferal skills. Get the conversation started with people, build relationships and they are more likely to help you.
Smart advice. Rick and I have both been laid off before. All of the steps above are great advice. I think too, it’s important not to panic. What’s done is done, and it’s vital to move on to recovery mode and just get going with the steps above. Not that you shouldn’t allow yourself to be upset, but realize that “this too shall pass”.
Solid tips Holly. I’ve never been laid off, though have had family members in that situation and it’s never fun. I’d be looking to cut expenses to the bone so as to avoid dipping into the EF too much and being purposeful about starting for work/starting a hustle right away. Depending on the situation, that latter part is really important to help you move on.
I really believe that everything happens for a reason, and if you’re laid off that means it’s time for you to be doing something else. I think even though getting laid off has to be a difficult period in someone’s life, it’s also a great opportunity to reinvent themselves and make a major comeback.
Agree completely. Having spent 15 years in the corporate world, losing my 9-5 job turned out to be a blessing in disguise. I was getting unemployment, which helped our family budget break even (my husband was still employed full time). I then had an opportunity to work part-time (22 hrs/wk) for a non-profit, at about the same amount of take-home pay as the unemployment benefits. Since we had already grown accustomed to living on less, I was able to jump at the chance instead of worrying about whether we’d be able to make ends meet if I cut back on my work schedule.
I am fortunate that I have never been laid off, but the first thing I would do if I were would be to cut expenses to the bone. The tricky thing is that it often costs money to network – lunches/coffee with contacts, networking events, etc. – so it can be an expensive endeavor to find a new job!
Same here! I would cut all of my expenses down to the bare bones pretty quick!
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Thanks Chris!
This is good advice, having gone through something similar last fall myself. The one thing I would add is about unemployment benefits. Depending on your state’s requirements, you could have a couple of hoops to jump through before you will actually see any money. In my state (Ohio), you have to have made a “meaningful attempt” to find employment during the week before they will cut the check. There was an online portal where I had to log the company name, address, contact person and choose the type of re-employment activity (sent application/resume, phone interview, in person interview, etc.).
Another good point! I’m sure the hoops you have to jump through depend on the state. I’m not sure what the rules in my state are (Indiana).
I’ve never been laid off, a benefit of working for yourself I guess, but if I was in that situation, I would cut spending to the bare minimum. We can do without things like dance lessons and rec center passes if we need to and there are always things you can cut from the food budget. In that situation, having an emergency fund can mean the difference between being desperate or viewing the lay off as a new opportunity. Without savings, I think you have to take whatever opportunity you can find that pays while searching for a new job and/or side hustle.
Yeah, a big emergency fund would really help during a layoff!
Layoffs can happen at anytime hence why having an emergency fund is such an important thing to have in place.
These are all great tips. I’ve never been laid off, but Wes has been in the past. It was always such a scary time!
Yep!
The only thing they have to be concerned about is the side hustle business while receiving unemployment benefits. My mom was recently on unemployment and the people in the office said that if you have another job or source of income that you could lose the benefits. It totally sucks to be unemployed, but I always view it as an opportunity to find your next career path, you may not have thought you needed a change, but the universe did and now you have the perfect opportunity to find it.
Yep, very good point. I have heard people say that their side hustle reduced their unemployment benefits – or disqualified them completely. I think that’s BS….but…..
My brother (61 and single) has fallen on hard times many times. Right now his employer has cut his hours down and he’s not making enough to pay his bills. He had to call me the beginning of May to ask for a loan. He is waiting for his income tax refund to come but the IRS is holding it up because some how they have him mixed up with someone else because they say he can’t collect an earned income credit because he was an inmate all of 2014. My brother has NEVER, EVER been incarcerated in his life. He’s never been in any trouble – ever! He has had to send the IRS all kinds of documents to prove who he is, where he lives and where he works. I hope that this isn’t some kind of scam because the form he received had a phone # and case # but didn’t give the name of a contact person and when he called it seems that they couldn’t really help him and he had to send all kinds of documents to prove who he is. I didn’t see the form that was sent to him so I’m only going by what he has told me. Anybody else ever hear of anything like this before??
I’m worried that his employer may be getting ready to lay him off. He should be able to collect unemployment (he’s worked for the same place for 11 yrs.) but the last time he tried to collect, he was denied benefits because he doesn’t have a car. He lives across the street from where he works so he doesn’t need a car to get to the job he has now. He had had his car repossessed back in 2001 because he was only working a part-time job and couldn’t make the payments. He lost that job because he needed transportation to get to it. It was a late night job with very erratic hours and no public transportation available. He applied for unemployment and was denied – he said because he didn’t have a car. He got a job in a Kmart that was located across from where he lives but after about 3 yrs. he got laid-off from there. When he applied for unemployment, he was once again denied because when they asked him if anything had changed since the last time he had applied, he told them “no” nothing had changed. So I assume that they denied him again because he doesn’t have a car. He is working for a supermarket but like I said his hours are being cut and I’m worried. I am a single, senior (71) living on SS and a very small pension. My brother is what you would call “book” smart but not practical. If I try to say to him “what if” you don’t make enough money to pay your bills then he will say that I’m being “negative”. We live in South Jersey about 45 miles apart. My home is very small and very old so there’s no way I could make room for him to come live here. I hate feeling this way but I keep waiting for my phone to ring, or an email, or a text message asking me for another “loan”. I call it a loan but in reality I know I’ll never see the money again. He never even mentions the fact that he’s never paid me back for the money I loaned him from 2001 to 2004. Guess I’m lucky he hasn’t asked me for a loan since Apr 2004. Sorry about my ranting but I just had to vent a little. If anybody has any advice, I would appreciate it.
First of all, I hope he isn’t being scammed! Sounds fishy to me, but hopefully it is legitimate IRS business.
Second, can you really be denied unemployment if you don’t have a car? I’ve never heard that in my life! I don’t see what having a car has to do with anything. Are you sure that’s right?
And no problem on the venting – vent away! =)
About 40% of my team was cut recently, though we are in a high demand field. If you happen to be in a high demand field during a layoff, reaching out to the recruiters who have been pestering you on LinkedIn is not a bad way to go.
I personally have tried to keep a good relationship with many recruiters as well as HR people and a few directors at local companies just to keep my options open should I get cut as well. I try to consistently provide them with value (especially with recommendations of possible candidates), so that they keep coming to me with job openings even if I don’t want to jump ship.
Great point. My sister is in a high demand industry and she is constantly contacted by recruiters. Keeping in touch with people is smart!
Great tips, Holly. I have not been laid off but my husband was during the Great Recession and we followed almost all these tips (he didn’t start a side hustle). He really networked (LinkedIn was great) and he found a great, new job that he really loves and is treated well by his Company. It was definitely a scary time but he ultimately landed in a much better position. We were also very fortunate because we had a substantial emergency fund and why I always advocate people have funds to cover at least a few months because time goes very fast, especially when you are draining funds.
Working in Silicon Valley is like living a good horror movie – anyone can get laid off at any time. I\’ve been laid off 3 times, and survived layoffs at companies more times than I can count, most recently last month.
The only thing that makes a layoff survivable is a large emergency fund. Having the cash keeps you from having to take a bad job just to pay the bills, and keeps you relaxed enough to be able to do a successful job search.
My one additional tip is to think about assistance besides just unemployment. For example California has a mortgage assistance program for unemployed which is low interest and the possibility of never having to pay it back. I found out about it too late, but that could have saved me about $10,000 in my last layoff.
So think outside the box and ask everyone what assistance programs are available. You\’ve paid the taxes, you should get the benefits.
I’ve never been laid off, but my husband was laid off from one of his first jobs after college. It was really scary at the time, but he ended up finding something much better, so it was a blessing in disguise. As soon as it happened, we cut expenses as much as possible. I can still remember how badly I wanted to go out to eat or to see a movie during that time, but we cut out any and all non-essentials!
While I haven’t experienced a layoff, I did recently lose a side hustle. Though it was extra income, I became reliant on it to beef up my savings and retirement plan., and occasional splurges like a dinner out with friends or vacation fund. After I received the call that this client was winding down the relationship, the engine in my 2005 Jeep blew and a bunch of uninsured medical bills came rolling in. Luckily, I kept enough room in my budget to mitigate any possible financial strain and felt secure knowing my emergency savings stash would help me through some of these unfortunate circumstances. It’s always a good reminder that nothing is a sure bet and why you need to stay prepared if you get laid off! Love your tips.
I really appreciate this post! I think sometimes the pf blogosphere focuses only on the “sunny” topics and the success people are having doing this or that. In reality we need to talk about tough topics and provide practical advice to people.
I have been very blessed to never have been laid off from any job I’ve had. Most of the people I know who are mid 20s and beyond have been laid off at least once. Each time it was a pretty terrible experience. No one likes to lose their job and we all know it’s easier to find a job when you already have one. With that being said I think you have some solid advice for people who get laid off. I think each career and job will be different as far as how to bounce back from it. I would recommend that people reach out to their network, update their resume, and treat finding a job like a full time job (cliche but so important). It can really be a numbers game, too, as it’s not uncommon for jobs to have 100+ applicants. Other times hiring managers struggle to get ANY applicants! So the key is to just keep trying.
My husband and I thankfully have never had to deal with being laid off, but my dad was laid off every 2-3 years when I was growing up. He’s just in a tumultuous industry where that is the norm, and it was pretty stressful. My Mom worked as well so we had her income and they had savings, but they would really cut back expenses until he was back in the workforce again.
I have never been laid off but my first step would be to start looking for another job! I’d also look at volunteer positions in the hopes of gaining a new skill set- for free 😉
I have not so far (touch wood) but partner has. It is SO stressful and I wish her luck!
The day I found out I was laid off, I called Comcast to cut my cable. Soon after, I canceled my house-cleaning service. I also jacked up my 401k contribution percentage with my impending-former-employer so that, in case I didn’t get a new job within that calendar year, at least I could max out my 401k contribution for the year during the period of my severance pay. Finally, I continued to get lunches with work friends and other business contacts for socializing and for keeping a toe in the search waters. Ultimately, I converted that layoff into a more extended sabbatical.