Despite Valentine’s Day occurring in February, the “L” word you’re most likely to hear this month is “layoff.” That’s because unemployment, the number one issue concerning Americans, is continuing to accelerate as companies are shedding jobs and cutting profit margins by double digits. Unemployment is currently at 7.6% and is expected to reach over 9% by 2010. No industry is immune to the economic slowdown, so here are 8 steps to help you and your family prepare for a layoff.
1. Reduce your personal expenses. You’ll be surprised to discover how much you can save by trimming unnecessary expenses from your budget and developing a good savings strategy. You should be thinking about the mortgage, car payments, utilities, debt and necessary expenses (in that order), not the deluxe cable package and cell phone data plan. You can also try to reduce interest rate payments by repairing your credit and qualifying yourself for lower rates.
2. Expand your online/offline network. Continue building your network if you have not been doing so, because your next job could come from anywhere. Just as important as going out and meeting people is increasing your presence on social media and job sites like LinkedIn, CareerBuilder, and Facebook. These can be powerful tools in helping to locate a new job, especially because they give you access to a much broader network.
3. Reevaluate your cash reserves. Do you have an emergency fund in case you stop working? It’s important to have at least 6 months of expenses in reserve in order to continue making payments and protecting your assets if you lose your job. Even if it means cutting back heavily on other expenses, you need to start bulking up your emergency fund now.
4. Update your skills. Now more than ever, managers will be paying special attention to the individuals on their team when trying to figure out who they can’t afford to lose. How do you stack up against your coworker in the next cubicle? By adding on new skills, you’ll beat out the competition and make a stronger case for keeping yourself on board.
5. Open a home equity line of credit (HELOC). If you are one of the lucky people who still have equity in their home despite declining property values, you should immediately take advantage of it by opening a home equity line of credit. You can qualify for one while you are still employed, and it can act as a great emergency fund. Being informed by checking mortgage rates could pay off big. Also, get a free credit report and know your score so you know exactly which rates you qualify for.
6. Avoid being laid off. Although you’re comfortable in your position and have been performing well in recent memory, when’s the last time you did something above and beyond for your company? Going the extra mile by arriving earlier, staying later, and taking on extra projects can have a positive impact on your manager’s perception of you. It could mean the difference between keeping your job and an extended vacation.
7. Pay off old debt and avoid new debt. Pay off your debt as quickly as possible, starting with short term debt first. If you lose your job, it’s a good idea not to owe any money. Plus, it’s good to do even if your job is secure. Although a new luxury car is tempting with auto sales down so much, skip the European auto and build up your reserves instead. Your focus should be on cash, not debt. Also, avoid any expenses such as renovations or projects that can drain your cash.
8. Think about changing careers. If you think you might be laid off, plan ahead by looking into a career change. Now is the time to consider new industries that will survive the economic downturn. If you are eventually let go, you can view it as a chance to start fresh in a new industry. You’ll thank yourself when the market finally recovers.
If you are in the process of being laid off or suspect it will happen, remember not to panic. Follow the above steps and do your best to plan ahead and protect your assets.
Do you have any other suggestions to help deal with a coming layoff?