Something’s in the air and it isn’t good. It appears that many tech companies have decided a round of layoffs is just the ticket. This is terrible for workers considering inflation continues its downward trend, the Fed is slowing rate hikes, earnings are for the most part good, and unemployment is historically low. Companies built up a lot of goodwill during the Pandemic and we even envisioned a new future for work that freed many from the office. Now, it seems that tide has turned and companies are looking for ways to strengthen their bottom line and reward shareholders. If you are in an industry and sense rumblings, their a few steps you should take should the inevitable happen. These tips are also good for your personal bottom line even if you don’t get laid off.
First, be conscious that it could be you that will be let go. It’s not something to fixate on, but it is something you should seriously consider. Put together your own personal layoff game plan in advance and try to be mentally prepared.
Start by assessing your emergency fund. Have you dipped into the cash side of your financial plan during the past few years? If so, now is the time while you are still working, to start replenishing your emergency fund. Remember, if you are married, aim for a three-to-six-month emergency fund. If you are single, consider a six-to-nine-month fund. Skew to the higher end during economic uncertainty and for ultimate comfort.
After assessing and building your cash, take a look at your spending. The beginning of the year is always a good time to review your expenses and budget. My clients get a monthly Money Do List to remind them of this. Pending layoffs make it even more relevant. Anything you’ve forgotten to cancel or expenses you were planning on scaling back on should be cut.
Since we’re on cash flow, savings, and spending, that brings us to debt. It seems counterintuitive but you can stash cash and slash debt simultaneously. After all, you’re still drawing a paycheck. Survey your debt and try to knock-out or pay down as much as you can with your existing debt. Most importantly, stop accruing new debt. Now is not the time. If you are “hamster wheeling” where you top up each monthly debt payment, stop that! Put all the extra payments toward either the highest interest rate debt payment, or the smallest debt you owe. You need to choose avalanche (saves more money), or snowball (knocks out small debts faster). Read What’s the Fastest Way to Pay Off Debt?
Take advantage of unused workplace benefits. If you have been delaying that dental procedure, or other medical treatment, do it now – while you are still covered. If indeed the HR reaper does come for your job, your benefits will end. Be sure you are taking full advantage of those benefits if you suspect something is awry at your company.
Decide what to do about your health insurance coverage. You may, depending on years of service and employer plan, be able to continue. Most likely you will not be able to. This option is usually available to long-term employees who are eligible for retirement. You will most likely need to decide between COBRA coverage or buying private insurance in the marketplace. If your spouse works, consider joining their insurance plan.
A more controversial action, is to secure a HELOC, and/or request credit line increases prior to losing your position. This is in no way to encourage immediate use and to increase your debt load, but to plan ahead for emergency use. The requested increase is strictly a preemptive move to have available to you in the event of an emergency. Serious consideration should be given to this tactic.
It's not pleasant to be laid off but you can take actions to mitigate the income disruption if you do get laid off. If you sense a layoff is pending, put these tips into play before. If you escape being laid off, you’ve improved your financial situation. As an independent Certified Financial Planner™, I can help you make a plan. Contact me and let’s get started! #talktometuesday #education #Hireaplanner #stressfree #layoff #gameplan