Damage Control in the First Few Weeks of a Job Loss

The most recent unemployment numbers show almost a return to pre-pandemic levels. Of course, that's still 6-million people out of work. Not to mention those who can't seek other employment (not counted), entrepreneurs, and this scenario…

The washer malfunctions, flooding your basement; you have a fender bender on the way to work; or a moment of inattention causes a small kitchen fire. The upside to this kind of loss is having an insurance agent who guides you through the claims process. But what happens when you (through no fault of your own) lose your job? Who is there to walk you through the initial weeks of unemployment? This daunting and unsettling time can be overwhelming for anyone; especially for the sole breadwinner of a young family. 

Since 2015, my family and I have endured three significant job losses. Both times my husband’s job was eliminated, we were without the main source of our family’s income. Navigating those first few weeks of unexpected unemployment necessitated a shift in spending, saving, and our overall financial outlook.

Here’s what this experience taught us:

First Thing’s First

Before we could even think about the financial ramifications of my husband’s job loss; we had to pause and talk about the emotions of the situation.

Unemployment was something that had never previously happened to my husband. He is a hard worker, honest, conscientious, a veteran, and knowledgeable in his field. Losing his job felt like a sucker punch. I learned that the very first step on this journey is providing your spouse or significant other with the reassurance of your love and emotional support.

The Big Picture

After taking time to process the emotions of being newly unemployed, we took inventory of the recurring expenditures we had and determined which financial resources would be used to pay them. It’s a good idea to create a spreadsheet that addresses the following:

• Which bills absolutely need to be paid each month?
• Which bills could be negotiated for a lesser payment?
• How much income can we expect going forward?

Absolutely Must Be Paid

For our family, the “must be paid” category included the mortgage payment, property taxes, insurance, and credit card bills. We prioritized these bills and paid them in full every month. I would add car payments to the “must be paid” list as well; especially if the loan rate is not zero percent. 

Negotiated Bills

Not every bill can or needs to be paid in full every month. I called or met with service providers; told them about the job loss and was able to negotiate reduced monthly payments on medical bills, utilities, school tuition, cellphones, and internet charges.  Most of these service providers would rather have a smaller monthly payment instead of no payment at all.

If your local community participates in utility aggregation, this could save you money by locking in supply rates for a six, 18- or 24-month term. One summer, our electric company offered a one-time bill credit of $500 for its customers who were currently unemployed. We filled out the paperwork and received the credit which paid for the majority of our electric bill that summer. 

Both of our children were in private schools during my husband’s times of unemployment, making tuition payments a serious concern for us. Since putting them in public school wasn’t an option for our family, I met with administrators at each of their schools and explained our financial situation. We were blessed to receive a half-tuition discount for our oldest child and a six-month tuition credit for our youngest child. When my husband started a new full-time job, and our financial situation improved, we paid back the tuition credit.

The bottom line in negotiating bills is this: most companies will work with you. But if you don’t ask, you’ll never know what unemployment assistance programs are out there.

Income Going Forward

Another benefit of having your finances on a spreadsheet is knowing how much and what kind of income you can expect during a time of unemployment. Our sources of income included unemployment insurance, my earnings as a freelance photojournalist, a small nest egg of savings, and severance pay from my husband’s former employer.

Though unemployment insurance is typically paid twice a month, the amount was less than one-third of my husband’s net pay as a full-time employee. This underscores the idea that unemployment insurance is not meant to be a viable means of income.

Relying on my freelance assignments during his unemployment was also not a consistent source of income. That said, I actively pursued new assignments and lobbied my editors for additional work to help fill in the gaps. Many times, it is up to the ‘stay at home’ spouse or significant other to take on additional jobs or reenter the workforce on a full or part-time basis.

In addition to looking for more writing gigs, I launched Conner Creative Concepts, an entrepreneurial effort to market my photography and videography skills. I produced videos and digital slideshows before branching out into jewelry making. After fashioning a number of pendants, rings, and pins from vintage buttons; I sold them at craft shows.

Beyond enjoying the creativity of this project, I was happy to be helping the family finances too.

Being Savvy About Severance

Though we had some accumulated savings, we tried not to dip into those funds if at all possible. Instead, we looked to maximize the severance pay my husband received from his former employer. The primary way we accomplished this was by purchasing private health insurance which was considerably less expensive than paying for COBRA coverage.

I am convinced that going without health insurance would have cost us much more in the long run. Ironically, a week after the private health insurance went into effect; I broke my elbow which meant a trip to the ER, two surgeries, hospitalization, and several doctor’s appointments. Because this unexpected medical expense happened while my husband was unemployed, we were eligible for and received financial assistance from the hospital.

Rethinking spending habits during a time of unemployment can also look like:

• Cutting back on entertainment subscriptions and utilizing free streaming services
• Shopping at thrift stores and buying groceries according to weekly specials
• Canceling unused memberships and apps which aren’t free
• Going on cheap dates and looking for free kid-friendly activities
• Asking a friend who has mechanical expertise to help with necessary or urgent household repairs

Unemployment can be a roller coaster ride of uncertainty both emotionally and financially. Unemployment can also be a teachable family moment where everyone shares the responsibility of teamwork, thrift, and enterprise.

This article was produced and syndicated by Wealth of Geeks.