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Actions 7 Steps to Take When You Lose Your Job
Key takeaways
- Always review what's in writing with professionals before doing anything else.
- Your budget, insurance and investments may need adjustment until you find work.
- Consider reworking your skills, education, brand and connections before applying for a new job.
Losing your job is never pleasant. But if it happens, knowing what to do right away can alleviate some of your stress—and improve the odds that you'll make sound financial decisions and stay solvent until you're on a new payroll.
Here are seven key steps to take when your employment ends.
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1. Review your contract/HR forms with both HR personnel and an attorney (if possible)
Reviewing any formal work documents you may have ensures you understand why you were let go, whether the termination was legal, and what obligations you and your former employer have. You might find you’re entitled to additional benefits, or your attorney could explain and get the ball rolling on legal options.
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2. Contact your creditors and adjust automatic payments
While some lenders are extremely strict, many have hardship programs that allow you to reduce payments or put them on hold for as much as a year. Interest often continues to accrue as agreed, but these types of arrangements can prevent late payment fees.
Tip: Make sure you understand whether you're required to close your account to participate, and ask what the creditor will report to the credit bureaus. (If you must close the account, ask the lender to note it as "closed by consumer”; this looks better than the alternative and could help you with creditors down the road.) Also, because you might have to pause some services, decide which accounts to continue paying automatically.
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3. File for unemployment
Typically, you’re eligible for unemployment Opens in new window as long as you left involuntarily and weren't let go for cause (i.e., for doing something illegal or explicitly against company policy). Contact your state’s unemployment insurance program to get started.
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4. Adjust your health insurance
You might be able to get health insurance coverage until your next job begins through COBRA Opens in new window, Medicaid or CHIP Opens in new window. These can be less expensive than paying out of pocket. Another option if you’re part of a couple: See if you’re able to switch to your domestic partner/spouse's insurance plan.
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5. Tweak your budget and investments
With less money coming in, you might not be able to enjoy the same type of lifestyle you're used to or save as much toward financial goals as you want to. Rework your budget and investments based on your new income.
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6. Prepare for your job search
Now might be the time to take classes, volunteer or serve on boards to keep your skills fresh or, if you want, shift gears with your career entirely. Clean up your social media profiles and get your résumé (on your computer and online) up to date. Contact fresh references, and reach out to the professionals in your circle of friends and colleagues to let them know you're job hunting. Be clear about your plans and objectives—and don’t be shy about asking for assistance. (You might be surprised by how many people you know have been in your shoes and are willing to help.)
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7. Look for work
Beyond scouring and replying to traditional on- and offline job postings (the hardest way to land a job), talk to people in your network and follow hiring activity through companies' social media pages. It can help to get a side gig or part-time work until you find something permanent. In many states this won't affect unemployment eligibility, though it might reduce the payment for which you qualify.1 Check with your state’s unemployment office for detailed information about how your benefits could be impacted.
What you can do next
Follow our steps as soon as you can—but don't forget to take care of yourself. Between updating your résumé and taking care of the paperwork from your last job, do things you enjoy, and maintain your relationships. The better you feel about yourself and the more support you have, the more likely it is you'll keep the negative aspects of unemployment (e.g., depression) at bay—and emerge emotionally and financially healthy.
Footnotes
1Alison Doyle, "Can You Collect Unemployment If You Work Part-Time?" The Balance Careers, updated Sept. 17, 2020
Wanda Thibodeaux is a freelance writer whose work has appeared in publications such as The Finance Base, Legal Beagle, Bankaroo and Inc.com.
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