Recovering from a Layoff: How to Stay Afloat
Three months ago, my life was normal. I had a great job, a baby on the way, and a long list of New Year’s resolutions I was determined to make a reality. Fast forward to today and life looks much different. The coronavirus, formally known as COVID-19, has completely changed the world around us. Normalcy has become a distant memory. No one could have predicted the ways in which this pandemic would affect our economy. It seemed like every day someone I knew was being laid off, and while I knew the concept of job security was a lie we tell ourselves to feel like we’re in control, I would have never guessed I would be the next one in line to lose my job. I found myself in an unfortunate predicament. I just had a baby, and I lost my job. COVID-19 struck again, and this time, it hit home.
The news of losing my job was a harsh blow to my ego, but thankfully, my husband and I made some sacrifices in the past to protect us in the event of an emergency. One of the sacrifices we made was in our resolve to live below our means, way below our means. Before we were pregnant with our now two-month-old, my husband and I were doing great financially. I was gainfully employed and had just received a raise and promotion, and my husband recently made a job transition that better suited his long-term career goals and our short-term financial needs. We were dedicated in our efforts to save money and cut expenses. Thankfully, that dedication is paying off now that I’m unemployed.
If there is one thing this pandemic has taught me, it is that life happens, and it happens quickly. Sure, we saved our money for an incident like today, but who knows how long that will last? How do we go forward? If you are like me and you find yourself unemployed here are three immediate steps you can take to stay afloat.
Take a deep breath and audit your finances
Here’s the harsh truth friend: You just lost your job…
Take a moment to mourn the loss. COVID-19 is affecting so many people in so many ways, but it is ok to recognize how it is affecting you. There are real economic setbacks many people are experiencing, and it is ok to acknowledge this, even if your health is intact.
After you have given yourself permission to mourn your loss, it is time to act. Like anything in life, the path forward is found in our acceptance of the present.
Find out how to move forward financially by first assessing your present reality. Do you have any savings? What are your expenses? These are examples of some of the questions I asked myself and encourage you to do the same. You may be unhappy with what you discover and that is ok. The goal in this step is to simply paint an accurate picture of where you currently stand financially.
I looked over all my accounts, statements, and even my financial goals to get a clearer picture of what I needed to do going forward. When you do this, try to resist the urge to write out your finances by memory. I always tell people, “There’s the story we tell ourselves about our finances and there’s the story our bank statements tell. Most of the time, the bank statement tells the truth!” Look at your statements and really find out where your money is going.
Find out your survival number and make cuts where applicable
After grieving the loss of my job and looking over my accounts and statements, I then determined what my survival number was. Everyone has a survival number. This number is the sum of all your necessary monthly expenses. What are the expenses you need to survive? This usually does not include subscription services like Netflix, even though it certainly feels like it to me! Usually, your survival number includes the following expenses: housing, food, utilities (including phone bill and internet), transportation, and hygiene (i.e. toilet paper, soap, etc.)
Once you have discovered this number, start looking for ways to lower it. In the words of Ron Swanson: Slash it! Slash it! Slash it! You would be surprised at how little you can survive on when you begin making cuts to your budget. Usually, the easiest thing to cut is your food budget followed by your utilities. The other areas might require more creativity like looking for a roommate or riding a bike or public transportation. The goal here is to negotiate the amount you are expected to pay in monthly expenses. Sometimes that means negotiating with your phone or internet provider, and sometimes that means negotiating with yourself on what you are willing to live without.
Embrace the season of hibernation
Each new season brings the need for adaptive behavior. When it is winter, you put away your summer attire in exchange for suitable snow gear. We do this to prepare ourselves for the impending change in weather. The same is true when it comes to finances. If you find yourself in the same position I am in, then you have officially transitioned into what I like to call the season of hibernation. The strategy in this season is to hunker down and maintain the status quo. Instead of a growth season where the focus is on building wealth, your focus in hibernation should be geared around cutting expenses and staying afloat. If you have lofty financial goals, this season might be hard to embrace; but remember, like the seasons in nature, nothing lasts forever.
If you are like me and many other American millennials, you might be putting a large chunk of your income towards repaying your student loans. With the loss of income however, you might not be able to continue making large payments, and if you have no cushion to fall back on or a spouse to cover some of your expenses, you might need to stop making payments altogether. Regardless of which camp you fall in, the Coronavirus Aid, Relief, and Economic Security ACT (CARES) mandated student loan providers to waive interest and extend penalty-free forbearance up until September 2020. This applies only to federal loans. You can learn more about your options here.
These steps are immediate actions you can take today to improve your financial picture. In my next post, I will provide two additional steps you can take to set yourself up for the near future.