Everyone knows that famous Mike Tyson quote: Everyone has a plan until they get punched in the mouth.
We all love it … until we are the ones getting punched in the face.
Twitter made headlines this year when it slashed half of its workforce and Meta cut 13% of its staff in early December. In 2022, there were 2.12 million layoffs in business and professional services.
For many, this was the first time they’ve been laid off in their career.
So what do you do when you get punched in the mouth? How do you keep going when you are between jobs?
Before diving too deep on investing, I talk to everyone about building up their savings in case of emergency. For married couples, that means putting aside at least six months of savings and for individuals nine months.
But, when you are talking about a family of four, six months of expenses is difficult to accumulate and harder to leave untouched when its Christmas or the roof leaks.
So, what do you do when your savings are exhausted? When the clock is ticking, what’s next?
- Get to Work. The first few days after losing your job, you will be mired in self-doubt and depression. This is totally understandable, but you can’t let it consume you. You need to begin looking at your professional networks for your next job.
- Learn About Your Benefits. Apply for unemployment. Make sure that you are accessing all of the benefits you are eligible for.
- Assess Your Accounts. If you’ve accumulated retirement savings, now is the time to assess what you have and in what types of accounts. A brokerage account is the best place to begin, but most young and middle-aged people facing a layoff have probably started saving for retirement with a 401(k). You can take money from a 401(k), but a fee will be assessed. Loans can only be taken from a 401(k) if you are still employed. If you’ve worked for a few employers, you can consolidate your 401(k) plans into an IRA and take a hardship withdrawal from that IRA.
- Borrowing and Credit Cards. This should be your last resort. The interest rate on credit cards can be as high as 24%. Borrowing against your home will be difficult for anyone that is unemployed.
It’s important to remain calm. Forty percent of people are laid off at least once in their life, according to data from Zippia. The best defense is preparation. The second best is perseverance and resilience. You will get through this and you will be better prepared for adversity and the next punch.
The information in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. Integrated Financial Partners does not provide legal/tax/mortgage advice or services. Please consult your legal/tax advisor regarding your specific situation.