Jobless But Not Hopeless

The basics to get you through the hard times after being laid off or fired

Your Money

May 16, 2004|By Novelda Sommers | Novelda Sommers,Special to the Sun

Go to the mall, take the bus or look around at your next family reunion. Chances are, you'll see someone who was laid off from a job in the past three years. Maybe you need look no further than the nearest mirror. A recent poll by Rutgers University found that nearly 20 percent of workers had lost their jobs because of layoffs since 2001. Among workers earning less than $40,000 a year, 27 percent said they had been laid off in the past three years. Here's how to cope if it happens to you:

Step 1: Get your financial house in order

The best advice for coping with a layoff is to be ready for it, said Bernard Kiely, a Morristown, N.J., certified financial planner. That does not simply mean setting aside three to six months of living expenses. As soon as you think a layoff is possible, take a hard look at your budget, Kiely said.

"What is necessary to pay, and what could you get out of?" he asked. "You stop going to restaurants."

For David Vigil, who in November lost his job paying $12.50 an hour as a truck driver in Phoenix, cell phone service was among the first luxuries to go. Vigil and his wife, who works full time in a computer firm's shipping and receiving department, also cut off Internet service and gave up premium cable channels.

After five months, Vigil found a job that pays $8.50 an hour.

"Now I'm starting at the bottom again," he said. "I would have taken anything that came my way."

Ann Terranova, a certified financial planner in San Francisco, recommends making a six-month budget early after the job loss.

"The situation is usually more desperate in our heads than it is on paper, but we are afraid to look," she said.

If you're a homeowner, secure a home-equity line of credit before you lose your job, Kiely said. Without an income, you won't get approved. Interest on the home-equity line will be lower than on credit cards or other forms of consumer debt.

Step 2: Think ahead to your next job

Ann T. Ulrich, a Minneapolis consultant, says any laid-off worker should throw a party -- for networking, not boozing and grousing about what happened.

Ulrich recently launched "I Got Fired! Party," a business that helps laid-off workers organize networking and brainstorming sessions.

Guests rotate through activity stations where they share stories about their job losses, tell what they did to find jobs and recommend networking contacts.

Ulrich sells her 19-step "job loss coping manual" at www.igotfiredparty. com for $39 and offers consultation packages starting at $197. Visitors to her site can sign up for a free e-zine for the unemployed. She got the business idea after her husband lost his job as a human resources executive.

"People don't know what to do when a friend gets fired," Ulrich said. "I've created a response."

Todd Rosenberg, creator of, a humorous Web site the jobless can visit to commiserate and share bad-boss stories, said it is OK to ask how the job search is going. Just don't be pushy, and follow the laid-off person's lead.

"Sometimes, people will acknowledge the fact that it's an easy lifestyle, without taking into consideration that being laid off could have just as much stress as when you were at work, if not more," Rosenberg said.

As with a lot of workers, Rosenberg said, his layoff turned out to be a good thing.

After he lost his job in 2001 as business development director at AtomFilms, an Internet movie distribution site, Rosenberg used his time to learn more about computer animation. At home in New York, he created a cartoon called "Laid Off: A Day in the Life," which ricocheted around the Internet. It was the genesis of his Web site and a book, The Odd Todd Handbook: Hard Times, Soft Couch.

Now, along with the book, merchandise sales and the $30,000 he has collected from his Web site's virtual "tip jar," Rosenberg is working on an Odd Todd animated series for Comedy Central, set to run next year.

"This has actually turned into a job of some sort or another," he said.

Step 3: Protect your retirement funds

As soon as you're out of work, if you think there is a possibility you will need to invade your 401(k) funds, adjust your investment-risk profile to something close to that of a retired person, said George Paquin, a certified financial planner in Chelmsford, Mass.

If the balance is over $5,000, and you don't plan to touch it, you can usually let it sit. Once you find another job, you can roll it over to the new employer's plan.

When Irvine, Calif., financial planner Robert Bubnovich's wife was laid off, he advised her to leave her 401(k) balance with the former employer because the plan offered a desirable fund that had closed to new investors.

Bubnovich recommends cashing out the 401(k) as a last resort only. Workers who are younger than 59 1/2 lose 10 percent to an early withdrawal penalty on top of federal, state and local taxes.

Step 4: Keep your health insurance

One of the most vexing problems laid-off workers face is finding and paying for health insurance.

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