Monday, January 26, 2009

Another 62,000 jobs bite the dust

Welcome to the club. We're sorry you are here.

Losing a job is tough. I'm still dealing with the first few months of being downsized myself. I recently had lunch with a friend celebrating what he sardonically called his golden anniversary - 50 weeks of living on unemployment benefits and some rapidly dwindling savings. We ate cheap and used buy-one-get-one-free coupons. Deals like those become small triumphs in the days ahead.

You can get through this. It won't be pretty. My brother, a software engineer who has seen this movie several times, gave me some of the best general advice for dealing with what's next.

Breathe deeply, he said. And drive very carefully. Your mind will wander in some strange places as you adjust to new realities.

There are some specific things to do now too:

  • Cut spending now. Organize your budget like a financial fire drill. Postpone or cancel buying anything you don't absolutely need.
  • File for unemployment benefits immediately. Those will provide short term cash to tide you over as many as 26 weeks, longer if you qualify for extensions. Some states have exasperatingly picky instructions to follow before you get any money. Follow them.
  • Borrow money. But do it more carefully than ever before. Forget about new loans. Use existing credit to pay for big, one time critical emergency expenses if the alternative - paying cash - would deplete too much of the food, mortgage and other money you need to live on.
  • Use your savings strategically. Postpone tapping them for as long as you can, then take out as little as possible. Start with accounts that won't trigger penalties or interest if you pull money out. If you need to tap retirement savings, start with your Roth IRAs. You can withdraw your contributions - but not the money those contributions earned - without penalty even if you are not 59 1/2.
Finally, plan to budget your time too. One thing that many working unemployment pundits almost never mention is that everything you need to do next probably will take more time than you expect.

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