Business Not So Good?
How to Protect Yourself Against Job Loss
I am sure I don’t have to tell you that we have had unemployment around 10% in this country for the first time in a
generation.
What does this mean to you? As Harry Truman once said, “It's a recession when your neighbor loses his job; it's a
depression when you lose yours.” So, are you ready for a depression?
Even if times seem okay with your employer, take some time to plan for when they aren’t:
Build that emergency fund: If you don’t have 3-6 months worth of living expenses already saved in an interest-
bearing account for emergencies, start socking it away. Try to find an account with an automatic deposit feature so
you never have to worry about missing a week of savings. And make this account separate from any other savings or
investment account. Wondering where you’ll find that extra money? Start tracking your spending and you may
readily notice areas where you can economize.
Slash your high-interest debt: Cut your spending so you can eliminate credit card, auto and home equity debt –
these are the kinds of debt that are particularly punishing if you’re out of work. The sooner you can learn to manage
debt and use it only for reasonable purposes, the sooner you’ll be on your way to a savings and investment cushion
that will protect you in good times and bad.
Keep networking: It’s always a good idea to get to know your peers in the city or town where you work. It’s
particularly wise to make the time to network while you’re still employed because you might get the lead on your
next job well in advance of the time when you may need it. The money you spend on membership in a group or
association key to your industry may be the best money you’ve ever spent. Plus, it may be tax-deductible.
Get a line of credit while you’re still working: If you own a home, consider taking out a home equity line of
credit and vow never to touch it unless you run into a serious cash flow problem if you lose your job. If you don’t
touch it, it won’t cost you anything. Make sure you apply for the line while you’re still working – lenders want to see
that steady salary.
Use your company’s education dollars: Sharpen your skills on the company dime. Take classes that will improve
your skills at this company or other employers down the line. You might get a promotion with those added smarts,
and that could make you more invaluable to your employer.
Apply for disability coverage while you’re still working: Personal disability coverage is increasingly important as
companies continue to pare benefits. Group disability coverage can be threadbare if you have a lengthy illness or
disability. Plus, it makes sense to buy personal disability coverage based on your current income. You won’t be able
to buy as much if your income goes down.
Apply for your child’s college financial aid while you’re working: If you have a child in college or ready to go
to college, make sure you have filled out the FAFSA – the Free Application for Student Financial Aid – on time.
Even if you don’t need the money now, there are hardship forms that can be filled out later in case your child needs
the aid and you’re without a job. Even if you’re in relatively good shape now with your child’s tuition now, consider
this college insurance for your kid.
Understand your benefits: If you are laid off, you will qualify for a continuation of your employer’s health insurance
benefits through COBRA. The federal Consolidated Omnibus Budget Reconciliation Act allows an individual to buy
coverage from his former company for 18 months (or more in certain situations) due to employment termination or
reduction of hours of work. You’ll end up paying the amount of your total premium since the boss doesn’t have to
pay his share anymore, but at least your coverage won’t change. If you’re married, see if you can switch to your
spouse’s health coverage – it might save more money than going COBRA. Also, check out what your
unemployment benefit will be ahead of time so you can budget.
Stay away from your 401(k): The possibility of losing your job is an excellent reason never to take out a 401 (k)
loan. You’ll need to pay it back before your last day at work. And don’t even think about tapping retirement savings
if things get tough. Find another way to shore up your cash flow – take on a part-time job if necessary until you find
your next full-time position. It’s not uncommon for a part-time or temporary position to lead to a rewarding full-time
job.
©2006-2011 Yardley Wealth Management, LLC. All rights reserved.
How to Protect Yourself Against Job Loss
I am sure I don’t have to tell you that we have had unemployment around 10% in this country for the first time in a
generation.
What does this mean to you? As Harry Truman once said, “It's a recession when your neighbor loses his job; it's a
depression when you lose yours.” So, are you ready for a depression?
Even if times seem okay with your employer, take some time to plan for when they aren’t:
Build that emergency fund: If you don’t have 3-6 months worth of living expenses already saved in an interest-
bearing account for emergencies, start socking it away. Try to find an account with an automatic deposit feature so
you never have to worry about missing a week of savings. And make this account separate from any other savings or
investment account. Wondering where you’ll find that extra money? Start tracking your spending and you may
readily notice areas where you can economize.
Slash your high-interest debt: Cut your spending so you can eliminate credit card, auto and home equity debt –
these are the kinds of debt that are particularly punishing if you’re out of work. The sooner you can learn to manage
debt and use it only for reasonable purposes, the sooner you’ll be on your way to a savings and investment cushion
that will protect you in good times and bad.
Keep networking: It’s always a good idea to get to know your peers in the city or town where you work. It’s
particularly wise to make the time to network while you’re still employed because you might get the lead on your
next job well in advance of the time when you may need it. The money you spend on membership in a group or
association key to your industry may be the best money you’ve ever spent. Plus, it may be tax-deductible.
Get a line of credit while you’re still working: If you own a home, consider taking out a home equity line of
credit and vow never to touch it unless you run into a serious cash flow problem if you lose your job. If you don’t
touch it, it won’t cost you anything. Make sure you apply for the line while you’re still working – lenders want to see
that steady salary.
Use your company’s education dollars: Sharpen your skills on the company dime. Take classes that will improve
your skills at this company or other employers down the line. You might get a promotion with those added smarts,
and that could make you more invaluable to your employer.
Apply for disability coverage while you’re still working: Personal disability coverage is increasingly important as
companies continue to pare benefits. Group disability coverage can be threadbare if you have a lengthy illness or
disability. Plus, it makes sense to buy personal disability coverage based on your current income. You won’t be able
to buy as much if your income goes down.
Apply for your child’s college financial aid while you’re working: If you have a child in college or ready to go
to college, make sure you have filled out the FAFSA – the Free Application for Student Financial Aid – on time.
Even if you don’t need the money now, there are hardship forms that can be filled out later in case your child needs
the aid and you’re without a job. Even if you’re in relatively good shape now with your child’s tuition now, consider
this college insurance for your kid.
Understand your benefits: If you are laid off, you will qualify for a continuation of your employer’s health insurance
benefits through COBRA. The federal Consolidated Omnibus Budget Reconciliation Act allows an individual to buy
coverage from his former company for 18 months (or more in certain situations) due to employment termination or
reduction of hours of work. You’ll end up paying the amount of your total premium since the boss doesn’t have to
pay his share anymore, but at least your coverage won’t change. If you’re married, see if you can switch to your
spouse’s health coverage – it might save more money than going COBRA. Also, check out what your
unemployment benefit will be ahead of time so you can budget.
Stay away from your 401(k): The possibility of losing your job is an excellent reason never to take out a 401 (k)
loan. You’ll need to pay it back before your last day at work. And don’t even think about tapping retirement savings
if things get tough. Find another way to shore up your cash flow – take on a part-time job if necessary until you find
your next full-time position. It’s not uncommon for a part-time or temporary position to lead to a rewarding full-time
job.
©2006-2011 Yardley Wealth Management, LLC. All rights reserved.
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Michael J. Garry, CFP®, JD/MBA, owner of Yardley Wealth Management, LLC,
is an independent Financial Advisor who provides Fee-Only financial planning
services and investment management in Newtown, PA.
is an independent Financial Advisor who provides Fee-Only financial planning
services and investment management in Newtown, PA.
| Address: 41 University Drive Suite 400, Newtown, PA 18940 Phone: 267-573-1019 Toll free: 877-251-4393 Fax: 267-604-9164 mgarry@yardleywealth.net |