Mighty Bargain Hunter is doing a group writing project on what to do when preparing or dealing with job loss. This project came about in response to Northwest Airlines giving employees they laid off a list of 101 ways to save money. This list insulted a few (many) of these ex-employees especially in regards to suggestions such as “46. Don’t be shy about pulling something you like out of the trash.” As Northwest Airlines found out, this list was not the way to go. Even if the company was trying to be helpful, usually any suggestions are met with anger and resentment.

Unfortunately, when an employee is laid off, many of their decisions are based on their emotions which may lead them down a wayward path. Thus, the first areas that need to be addressed are the emotional issues. If people let their emotions get in the way, they will have less power to change their situation. Some of the emotional issues to look at are:

• Shame – For many, their jobs and money signify who they are. When they are let go, they start to feel unworthy and may even try to hide the job loss.

• Guilt – Many start to feel sorry that they can not support their children and family. If they were a good provider, they would be able to buy the things that their family wants. Thus, they keep on buying items that they can not afford and get into a serious debt problem.

• Anger – It is normal to get angry at your boss or company for firing you. Yet, anger and blame will not solve the situation.

• Resentments – Looking at upper management who kept their large salaries and bonuses while lower level employees were let go may be frustrating, yet it is only distracting you from what needs to do.

• Fear – What will happen if you can not find another job right away? Where will the money come from? Fear keeps people stuck where they are (in fear) instead of moving forward towards a solution.

Many employees who are laid off may feel one or more of these emotions. It is important to release these emotions because having them can lead you to make an improper financial decision. Northwest paid offended employees by making a few suggestions on how to save money. Yet, it is these laid off employees who were offended, who may have really lost out of trying some other suggestions on ways to cut back in hard times. If they stayed calm, they may have found some of the suggestions helpful instead of being offended due to being angry at Northwest. So what to do:

• Do not sign any papers, especially legal documents while you are upset and can not think clearly. In particular, do not sign documents stating that you are quitting instead of being fired until you have discussed it with a financial planner and/or lawyer because you may jeopardize unemployment benefits and/or legal recourse by quitting.

• If there was any counseling offered, take it. If it is free, you have to lose by talking about what you are going through. If counseling has negative connotation for you, go talk with a friend or spouse to release some of the emotions that you are holding on to.

• Use this as an opportunity to define who you are from the inside (I Am) instead of from a job or money.

• Do not be afraid to explain your situation to your friends and family, including your children because this reduces feelings of shame and guilt. In addition, you never know who may be able to help you out.

• Release the anger even if you need to take a baseball bat and beat the sofa cushions. This is a lot better than getting angry in the middle of a job interview or at others when life is not going your way. When we suppress our feelings (including anger), it will just build up until the littlest thing sets it off (like rush hour traffic).

• Create a financial plan. We sometimes fear the worst. By taking charge of your financial plan, your fears will decrease because you can take action to minimize what can happen (usually it is not as bad as we fear).

You need to look at your finances with a clear head because it is a difficult subject to breach especially with your spouse or partner. Thus, make sure you plan when you have no other distractions and avoid a time where either one of you are tired and irritable.

• Find out what you have coming to you via severance or unemployment benefits. It may not be a lot yet any little bit may help.

• If you have not done a budget, prepare one know. Having a budget will help you take control of a situation where you may not feel that you have much control of (due to being laid off and due to economy and job outlook).

• Split your budget into needs and wants. Note, some needs have a want component like food (need bread, water and beans to live on but we want steak and fish).

• List all your assets and liabilities – look at your assets and categorize which assets you want to use first (e.g., emergency fund) and which assets are later (e.g., stocks). Figure out how long you have for each asset class to live on.

• Relook at your budget and see what you can cut to extend your assets.

o Look at your contracts for gym memberships, cellular phones, cable television, etc. and see if any of these can be cut even if there is a small fee involved (e.g., one month of expense – so by the second month you are ahead by cutting your expenses).

o Look at needs (food, gas, electricity, etc.) and challenge yourself on if these can be cut until you get on your feet again.

o Brainstorm 30 or more ideas where nothing is off limits in order to make sure you are challenging yourself on everything.

• Look to friends and family members, if needed, to help you out during the transition via a loan or a place to stay. We sometimes let shame stop us from asking for help. Yet, think about if your best friend or brother/sister came to you for some help during their rough time. Would you turn your back on them?

• Consider COBRA health insurance even if it is costly. Having to go to the emergency room being uninsured may be costlier. In addition, having to wait after finding a new job to be insured again due to a pre-existing medical condition can be costly as well. Insurance policies use pre-existing conditions to avoid people buying insurance after they find out they have a life threatening condition like cancer or heart disease. However, having continuous health insurance (via work or COBRA) will help you avoid this.

• Avoid feeling like you hit rock bottom and need to cut out everything. This may cause you to feel shame (feeling less than) which will show up in interviews. If so, find one or two small items that will bring you piece of mind that will help you avoid shame (whether it is going golfing or going out to eat every once in a while or having a special perfume/cologne). Having a few wants can pick up your energy, yet do not get into the trap of going into debt because you do not want to cut out any of your wants.

If you are in a situation where you are ahead of this step and still have a job

• Create financial flexibility by

o Creating an emergency fund

o Make sure you have flexibility in your budget (do not burden yourself with fixed payments that are too large and can not be cut if needed)

o Preplan how you will survive being laid off or being disabled if it occurs (know what expenses can be cut)

• Determine how you are a financial asset for your company. If you can not come up with a reason, you need to create a reason because if you do not know why you are valuable to the company, there is no reason for the company to keep you.

• Keep up your skills and contacts. It is common to have 3-5 careers and 12 different jobs these days. Make sure you have the flexibility to change careers and to call an old contact if the need arises.

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This entry was posted on Sunday, August 27th, 2006 at 4:19 pm and is filed under Career. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.