Friday, September 25, 2009

How to Survive a Layoff

I saw this great article from Stacy Olivares-Howard that I would like to share:

Proceed with caution!

Each step you take after being laid off can influence your ability to support yourself (and your family). Whether you left on your own terms, or the terms were handed to you, know that your money is your own. You bear the risks and losses, rewards and returns.

Ask yourself 4 questions
  1. How do you feel about your company’s future?
  2. Who cares more about your savings, you or your ex-firm?
  3. How did your 401(k) perform last year?
  4. What would you do differently with your 401(k)?

Take these 6 steps
1. Study your severance. Read the fine print of your severance package and compare these with your company’s benefits package. It’s reasonable to ask for time to review the documents before you sign. Better yet, try to negotiate better terms for yourself.
-Tip: Know and care for your severance documents as you would a winning lottery ticket!

2. Figure out your cash flow. Time to re-do your budget, tap all potential income sources and add up your daily, short- and long-term expenses. Will re-financing your home at a lower rate save you extra cash? Can you defer loan payments? Do you have enough insurance?
-Tip: Cash flows can be complex. Check out my website for tools or email me.

3. Stake your claim. Do you pay for car insurance? If a city bus hit you and wrecked your car, would you file a claim with your insurance company? You and your employer paid for unemployment insurance in the event that you had to leave involuntarily. File your claim for unemployment now!
-Tip: Worked in California? Check out

4. Get rolling. Think about taking your 401(k) with you by rolling it over into an IRA under your control. If you left your 401(k) behind, would you have the same access and options?  Don’t even think about cashing out your 401(k) without first consulting your financial advisor…getting audited by the IRS and owing Uncle Sam can be worse than being unemployed.
-Tip: Your 401(k) is fragile. Roll it over with care.

5. Cover up. Don’t leave yourself exposed. Cover yourself with insurance. How long you are you covered by your employer?Compare the price of insurance under COBRA with what you can buy on your own.
-Tip: Shop insurance life, health and other insurance plans to get the best rates.

6. Learn from Aesop’s fables. As we learned in the Tortoise and the Hare, slow and steady wins the race. Did your stock options leap from $10 to $100 per share, or tank in the other direction? Either way, after leaving your job you still need to know which options are vested/unvested, when these are exercisable or expire, how to access your options online and about restrictions.
-Tip: Manage your expectations and your pace. Get my help to sort out your options.

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