Mr. Krabs: Patrick, you’re fired!
Patrick: But I don’t even work here.
Mr. Krabs: How would you like a job, starting right now?
Patrick: Boy, would I!
Mr. Krabs: You’re fired.
- from an episode of SpongeBob SquarePants
As the economy continues to falter, more people are getting laid off everyday.Â Very few of us are seemingly immune from the specter of receiving a pink slip from our employers.Â In fact, last night I found out that a married couple I know both got laid off on the same day.Â Â Hopefully, they’ll find new jobs soon.
I’ve seen lots of advice on the web centered around the theme “You’re laid off, now what?”Â Â But that is a pitifully reactive response that doesn’t offer the maximum protection to you, your family and your household finances.
A competent household CEO doesn’t wait until he or she gets a pink slip before figuring out what to do next.Â This is especially true if they, like me, are the lone bread-winner in the family.
As the household CEO, it is your duty to ensure that you take an offensive posture regarding potential layoffs in order to minimize disruptions and impacts to your family.
Having and implementing an action plan now is kind of like immunizing yourself from the layoff bug that has spread across this country like an epidemic.Â True, it won’t necessarily prevent you from getting the bug, but it will lessen the severity.
Everybody’s circumstances are different, so no two action plans may be exactly alike.Â Here is my action plan that I am using to protect and prepare me for any potential layoff that may eventually strike:
Step 1 – Make Your Emergency Fund Your Top Priority
To be effective, the action plan’s first steps shouldn’t commence at the moment one receives a pink slip.Â Any household CEO that is serious about running their household like a business should ensure they have at least three, and preferably six, months of living expenses in a rainy day savings account.
You need to cut to the bone and sacrifice now to build up that fund.Â Â Scale back your vacation plans, cook all your meals at home, and put off those home renovations and other big-ticket ideas until that account is fully funded.Â If you wait until you are laid off to do this task, you will risk putting your family and household finances in a very precarious situation.
“But, Len, you’re being unrealistic.”
Am I really?Â One of my favorite quotes is: “Don’t tell me where your priorities are.Â Show me where you spend your money and I’ll tell you what they are.”Â Â James W. Fricke said that and although I have no idea who he is, his observation is spot-on.
Step 2 – Expand Your Network at Every Opportunity
It is my strong opinion that when you look at all the factors responsible for getting a new job, 90% of it is attributable to who you know.Â Expand business and social contacts at every opportunity.Â Sign up for social networking sites like Facebook and business networking sites like LinkedIn.Â Â Again, don’t wait for the pink slip to get started on this.
Step 3 -Apply for Unemployment Insurance Benefits
Because it can take several weeks to take effect, I intend to apply for unemployment benefits as soon as possible.Â This may sound crazy but some people forget to do this.
Step 4 – Take A Week (or Two) Off
If I get laid off I intend to take two weeks off to put aside emotions and think rationally about practical questions that need to be answered regarding my future.Â Depending on how much money you have saved up, you may only want to take one week.Â Use this time to think about questions such as ‘Should I try to get employment with another company?’Â ‘Am I willing/prepared to uproot my family and relocate?’Â ‘Should I go into business as a consultant, or maybe look into new business opportunities?’Â While you’re enjoying the time off, also work on…
Step 5 – Assess Your Household Finances and Reprioritize Accordingly
If you are a serious household CEO, you should already have a jump on this.Â If not, immediately determine where your money is being spent and determine how long you can make it solely on your severance package, unemployment insurance and rainy day savings funds.
Again, sacrifice is the order of the day.
At $160 per month, I intend to stop the kids’ music lessons.Â The wife’s manicures and pedicures and my golf and Dodger game excursions will have to be set aside too.
“But, Len, why penalize the kids?”
Because this is a life-lesson and a golden opportunity to teach them that money is a finite resource that doesn’t grow on trees.Â Those that understand the difference between a want and a need will have a much easier time accepting this task than those that don’t.
If you are the sole bread winner, and determine that you just aren’t going to be able to make it too long, or are unwilling to make drastic cuts, your spouse should get a temporary job to help supplement the household income until you can find a new job.
Under no circumstances should you use credit cards to make up the slack. If you can afford it, you should also avoid tapping your 401(k) retirement plan to avoid the onerous tax penalties.
Step 6 – Delay Your Decision Regarding COBRA Benefits
COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act, is a federal law that allows you to continue your health care coverage after you are laid off.Â You are responsible for paying the cost of the coverage, which tends to be expensive. The law gives you 60 days to decide if you want to elect COBRA.Â Because election can be made retroactively, I intend to wait until the end of the 60-day period before deciding whether I need the coverage or not.Â After all, I may get a job before the 60-day time period has elapsed, so why commit up front for expensive coverage I may not need?
Step 7 – Treat Your Job Search As If It Is Your Temporary New Job
Once your one- or two-week “reset” period is over, start your new temporary job of finding new employment.Â Get up at the same time you did with your old job and wear business attire.Â Then concentrate the bulk of your work day on finding a new job.
Most importantly, do not dwell on the past.Â Instead, commit to focus on the new opportunities that lie ahead.Â Â If you take an offensive approach and establish and implement an action plan to handle the loss of a job before you are laid off, you will be in a much better position than if you wait to act after you get that dreaded pink slip.
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