Overcoming Layoff F.E.A.R.s – Part One: Financial Fear
This is the first post of a four-part series on Overcoming Layoff F.E.A.R.s (Financial Fears, Esteem Fears, Achievement Atrophy Fears, and Rejection Fears)We often hear FDR’s quote in our world today, “We have nothing to fear, but fear itself.” There is a lot of fear today around being laid off. Either you have already lost your job and fearful that another job will not be there for you, or you are fearful that you may be the next person in the office to be let go. It is true; fears that are managed and controlled are ones that can be overcome. But, they feel real none-the-less.
One of the most prevalent fears about being laid off is that with a few unfortunate missteps, we could find ourselves in a real financial bind. The statistic that many Americans are one missed paycheck and one unpaid mortgage payment away from homelessness fuels our fears – as do the pictures and stories in the daily news. I previously wrote about how to get the most from your severance, which include some financial tips for extending employment and benefits in the wake of a separation agreement, but there are many actions that people can do now even if you’re still employed – just in case. The good news (a hard statement to make these days) is that most of us have pulled in the reigns as the tide has gone out. Most people are spending less already, taking the pressure off of having parties, big nights out on the town, vacations, etc. Still, it’s a good time to be thinking, preparing and removing the financial fear of a layoff. Be ready now by:
- Refinancing your mortgage, renegotiating your rent, or finding a cheaper apartment now, while you still have a job. Every credit lender requires employment verification and if you aren’t employed at the time of change, in today’s world, you may be in trouble. So, get that taken care of now.
- Ask your employer now what the monthly cost of COBRA benefits are for your level of health coverage and begin saving up for 18-months worth. This can be a big number and a scary one if you don’t have a paycheck coming so start putting aside that amount now to have that critical nest-egg ready.
- Find a Financial Advisor/Accountant/Bookkeeper who you trust to help you manage a potential lump-sum severance payment. Ideally, you’ll negotiate salary and benefits continuation for the same amount of weeks or months they offer as separation payments (see below). If this doesn’t work, then seek budgeting help to have someone else purse out your money every two weeks against what you need to live. Lump sum payments will disappear sooner than you think if you don’t have checks and balances in place. A trusted advisor can make a difference and be worth their weight in gold.
- Sit down now with your spouse, partner, and/or best-friend and write down what you will and won’t spend money on for the next year. Then make commitments to hold each other accountable to put your mind at ease. I have a friend who looked at his clothes closet and determined that he doesn’t need any new clothes in 2009. He and his wife have made that agreement. The small things add up and for some of these things – like lattes and dinners out — could be a big savings.
- Find an attorney who you can talk to now about how to negotiate a general release agreement from your company to receive separation benefits if needed. Have your desired package and structure defined and on paper for that first meeting. Areas like salary and benefits continuation versus a lump-sum and staying on payroll, can extend your runway.
- Be looking for that part-time job or project work now versus later. Having something lined up will relieve some of the fears of no income coming in at all. These opportunities are not easy to find and it may mean having to give up some discretionary time now for delayed gratification later, but not only will this help financially but it will also help in the other F.E.A.R. areas: esteem, achievement atrophy and rejection.
Check back in for more on how to help overcome the other F.E.A.R.s of layoffs. Next post: Esteem.