What Would You Do If You Lost Your Job?
May 31, 2009
Losing your job is a big financial setback for multiple reasons. Not only do you lose a source of income but often times multiple benefits as well. For example, I have disability insurance, health insurance, dental insurance, and life insurance through my employer’s plan that I’d have to re-evaluate if I was let go. There are laws that help you stay insured even if you lose your job but the cost of insurance goes up considerably so you’re hit with much higher costs in addition to losing your income.
We’ve written here before about how to financially prepare for a layoff but I wanted to get some other opinions as well. As you’ve read over the past few days, Liz Pulliam Weston has been sharing some insights as a follow up to the FNBO Direct Pay Yourself First challenge. Here was my question for her on preparing for losing a job.
Financial contingency plans are a good idea, especially during a recession. In addition to having an emergency fund it’s smart to think about what lifestyle changes you’d make to get by financially if you lost your job. Have you gone through that exercise yourself? If so, what are some of the things you would change to make ends meet?
That’s a great question. I’m a big believer in financial flexibility—having a big pile of cash as well as access to plenty of credit. We have both, but I’d only access the credit in an extreme emergency.
What I’d do first is cut the luxuries. We’re fortunate to have a lot of them, but I spent many years living the frugal life, so I’m not afraid to go back there. (I don’t think I’m quite as good at stretching a buck as MSN’s Donna Freedman, but I could come close.) So there would be more car camping trips and fewer plane trips, for example; more do-it-yourselfing and fewer handyman calls; fewer dinners out and more meals at home.
All posts by Ben Edwards