What to Do If You Face a Layoff

The finance and home construction industries have been losing jobs for months, but now the layoffs are spreading to other industries.

The most recent companies to announce layoffs include Best Buy, Yahoo and PespiCo.

So, what should people do if they've just been laid off or if they think they are about to be let go? "Good Morning America" financial contributor Mellody Hobson answers a few of the big questions on people's minds.

null

What do you do if you are afraid you are going to get laid off?

If you are concerned about your job, now is the time to absolutely tighten your belt and suspenders and do everything you can to shore up your emergency fund. Try your very best to cut wherever you can from your spending. Every dollar counts.

Holiday season is right around the corner, so make a commitment now to spend less and save more this season. If that means a potluck Thanksgiving, skipping the fancy Halloween costume and setting a low cap on holiday gifts for friends and family, so be it. You need to do all you can to avoid piling on more debt -- especially on your credit cards. Also, now is the time to be absolutely omnipresent at work -- to raise your hand and volunteer for everything. You want to do all you can to make yourself indispensible.

Also, now is the time to get all of your ducks in a row. First, you should talk to your human resources department to find out if, in the case you lose your job, you would be entitled to any severance and outplacement assistance. Obviously, it is much harder to negotiate with an employer on the way out the door than in the door, but do not be shy. It's unlikely you'd be able to negotiate the amount of severance you may receive. The odds are better if you ask your company to cover the cost of an outplacement service.

Worried About Your Job? Share Your Story With ABC News

Second, make sure you understand your health insurance benefits and are clear as to when your coverage would end. Generally speaking, if your employer has more than 20 employees, they are required to offer you the option to purchase an extension of your coverage, called COBRA, which ensures you and your family coverage for at least 18 months.

Finally, if you own your home, you may want to consider taking out a home equity line of credit before you lose your job. There are caveats here -- especially the fact that you have to have built up a considerable amount of equity in your home to qualify for the loan. That said, it is nearly impossible to get the loan once you have lost your job, so if you are looking to have an emergency cushion, now is the time to act.

If you've been laid off recently, should you keep your money in a 401(k)?

You have three choices when you leave your employer:

Keep your money invested in your former employer's plan.

Roll your money over to your new company's plan or to an IRA.

Cash it out.

The first two are good options. Cashing out is not a good idea, especially if you are under the age of 60 -- unless you have an emergency that requires you to tap into the money.

Page
  • 1
  • |
  • 2
Join the Discussion
blog comments powered by Disqus
 
You Might Also Like...