There are a lot of financial issues to consider once you’ve been laid off, and not just the fact that you aren’t pulling in a paycheck anymore. Financial advisor Dan Moore says there are four things that everyone needs to plan for.
1: Unemployment benefits
“The sooner you get your application in, the sooner you will start receiving benefits,” he says. “A quick online search on how to collect insurance benefits will give you a good general overview of who qualifies and who doesn’t.”
2: Assess your finances and reduce expenses.
“Regardless of your employment status you need to know where you stand financially from a cash flow perspective. In other words make a list identifying all of your monthly expenses. Once you have a handle on your monthly income and expenses you can calculate your net cash flow, which is net income minus expenses. If the result is a positive number, then consider yourself lucky.” Next, says Moore, separate your expenses into “wants” and “needs.” “If you are cash flow negative,” he says, “then the responsible thing to do is to cut most or all of the ‘wants.’”
Don’t leave it with your old employer, says Moore. “They actually own the plan and it is better to roll it into your own traditional IRA where you can have more control.” This shouldn’t be in an issue unless you’re dipping into the fund. “I strongly recommend against this,” he says “due to high taxes and penalties.”
4: Health insurance
“If you can’t enroll in a spouse’s coverage, then you should find a broker who will shop the market for you,” says Moore. “Most health insurance brokers focus on groups and not individuals, so as a last resort you may have to go to the carriers directly.”