What to Do If You Lose Your Job

(Psst: The FTC wants me to remind you that this website contains affiliate links. That means if you make a purchase from a link you click on, I might receive a small commission. This does not increase the price you’ll pay for that item nor does it decrease the awesomeness of the item. ~ Daisy)

Many people have lost their jobs due to the shutdown of the economy and our current high levels of inflation. Unless you live in a neighborhood of rainbows and unicorns, it’s a good bet that either your family or someone you know has lost their job.

It’s important to know what to do when the ax falls, whether it’s expected or not. Even when you’re expecting it, you will be reeling in shock.

Well, I’ve got some tough love for you here: Get ahold of yourself!  The first steps you take can help you to survive until you get a new source of income.

Here are the steps to minimizing the damage to your personal finances when a sudden job loss occurs.

1) Don’t sign anything right away.

As much loyalty as you may have had to your company, they clearly don’t feel the same sense of loyalty towards you. They’re trying to survive right now too. Many companies will try to get you to sign paperwork right away to “settle the details.”  Trust me when I say, these details will be skewed in their favor, and not yours.

You do NOT have to sign anything while sitting there, stunned at your sudden change in circumstances.  It’s vital that you take the time to read over everything carefully. Your severance package, your 401K, any accrued pension, and unemployment benefits will be at risk.  In some cases, you can negotiate this, even though you are not sitting in the power seat.

Don’t commit to any type of agreement while you’re in shock, particularly if they try to coerce you into signing immediately. Regardless of what you may be told, any delay in your unemployment benefits or severance will be minimal.

2) Begin a total spending freeze for a couple of days.

One of the biggest mistakes people make when faced with a shocking job loss is to go on spending as though they still have an income. Perhaps they go and buy something to try and make themselves feel better. Maybe they just continue spending like they always did, with hundreds of dollars going out for kids’ activities, dinners out, and shopping trips.

Just stop.

You need a few days to re-assess your budget and see where you’re at.  You don’t want to regret the expenditures you make right after a job loss. Put yourself on a complete spending freeze for the next few days while you assess the change in your financial situation.

3) Apply for unemployment benefits.

Unemployment is not welfare. It is something that you have been paying into the entire time you were employed. Please don’t feel guilty about taking the money that is rightfully yours.

Keep in mind that it can take up to two months for your benefits to start, and that money from your severance package can delay the onset of benefits.  Unemployment is only a portion of what you made when you were employed, so a revamp of the budget is a must.

Make your application immediately so that you know where you stand and when you can expect the money to start coming in. Hopefully, you will have found another job by then, but jobs aren’t always easy to come by these days.

4) Create a budget for necessities.

It’s absolutely vital that you drop your expenditures to the bare minimum until you are able to get another stream of income.  You need to take a look at where your money goes and base your new budget on the necessities. Although having a vehicle in each stall of the garage and an iPhone in the hand of every family member is nice, these are not necessary to sustaining life.

  • Water
  • Food (and the ability to cook it)
  • Medicine and medical supplies
  • Basic hygiene supplies
  • Shelter (including sanitation, lights, heat)
  • Simple tools
  • Seeds
  • Defense Items

Absolutely everything above those basic necessities is a luxury.

So, by this definition, what luxuries do you have?

5) Slash luxury spending.

Reduce your monthly payments by cutting frivolous expenses. Look at every single monthly payment that comes out of your bank account and slash relentlessly.  Consider cutting the following:

  • Cable
  • Cell phones
  • Home phones
  • Gym memberships
  • Restaurant meals
  • Unnecessary driving
  • Entertainment such as trips to the movies, the skating rink, or the mall

This isn’t forever. It’s just until you have a reliable source of income again.

6.) Start looking for new streams of income.

You know those people who tell you that it’s easy to find a new job if you wouldn’t be such a snob? Ignore them. The job market of today is not the job market of a decade ago. Jobs are few and far between, and good jobs are as elusive as unicorns in Central Park.

You may need to look at creating your own streams of income, like:

  • Create an online business
  • Using your expertise from your former job to work as a consultant
  • Doing various small jobs
  • Create a home-based business with a low start-up cost (Now’s not the time to make a large investment)
  • Use creative skills to make things to sell
  • Provide a service.  Maybe you can cook, sew, repair things, or build things. Lots of people can’t and will be willing to pay someone who can

When I coach people who want to start a blog, the first thing we talk about when it gets to monetization is that you must have multiple streams of income. Really, it is the same for everyone. If you lose one stream of income, it’s best to have other streams to fall back on. Diversifying your income is one of the best financial preps you can make.

7) Sell stuff.

All that stuff you’ve been meaning to go through in the basement just might be the key to keeping a roof over your head.  It’s time to start an eBay account, have a yard sale, or get on Craigslist and start selling things that have just been sitting there for a while.

Your trash might be another person’s treasure.  Instead of regifting those things in your attic, sell them so they can become someone else’s clutter.  You’d be surprised how much money you can make while decluttering your home.

8) Look for the silver lining.

Although job loss can be terrifying, it can also be the start of something wonderful.

When I lost my job in the automotive industry, I was devastated. As a single mom, how was I going to continue taking care of my two girls with no income?  Instead of being a bad thing, it turned out to be the best thing that ever happened to me and many other people say the same thing.

I was able to take the writing I’d been dabbling in for years from a hobby to a full-time job.  I made a conscious decision NOT to search for another job, but to follow my dream of being a writer and editor.  Maybe I succeeded because it was do-or-die time.  There was no option but to make it work. I began writing for other websites, started my own site, and began outlining books.

As it turned out, that shocking, unceremonious discussion in the manager’s office was the moment my life changed for the better. I’ve read many success stories that began the same way.

When you’re boxing up all the things on your desk and people are staring, it’s a horrible feeling. When you do that final walk of shame out the door, it’s humiliating. But those moments aside, this might be the push you need to make your life better.

Sometimes what seems like an ending can actually be a new beginning.

What has been your experience?

Have you ever lost your job? How long did it take to find a new one? Did it turn out to be a positive thing, or did it cause financial problems from which you could not easily recover? Share your experiences and advice in the comments below.


What to Do If You Lose Your Job
Picture of Daisy Luther

Daisy Luther

Daisy Luther is an author and blogger. She's the single mom of two daughters and credits extreme frugality and a good sense of humor for her debt-free lifestyle. She is the author of numerous books, the editor of TheOrganicPrepper.com, and is the founder of a small digital publishing company in the emergency preparedness niche.

13 thoughts on “What to Do If You Lose Your Job”

  1. For those who are currently employed, I encourage you to keep your resume updated annually. It’s much easier to have all the details in place while you don’t have a career crisis.

  2. I have been laid off twice. There is no sugarcoating: it sucks while you are going through it. But you will get through it. Make finding a job or creating your new business your full time job. Get up each day as if you are going to work. Get dressed. Hit the computer and start creating, searching, and networking. Ask recruiters to critique your resume. Don’t be afraid to ask for favors. You will pay it forward when you can. I had to dip into retirement funds, and it took the better part of a decade to recover. Daisy’s suggestions are spot on.

  3. Yup, I was made redundant in the GFC, best thing ever. I was she’ll shocked, there was a few of us, all went the pub together (don’t do it) I worked on my resume in the pub and applied for three jobs before getting drunk with my other co workers.i ended up having to get home with all my work stuff intoxicated. My old neighbour picked me up. Hell of a hangover. I ended up getting three jobs and got to pick. I stayed there until after I had my daughter. The job paid better and had better working conditions best move ever.
    Companies definitely have no loyalty.

  4. Got laid off, my wife needed major surgery, we had three children all under the age of 5. Moved in with my parents so my wife could recover and I could find a job. Took about four months but I found one on the other side of the country. While it was painful the worst was my company. They gave me some cock and bull story about finding me a truck driving job elsewhere but no guarantees I wouldn’t get laid off from that. When I said I would find something on my own they tried to put down I quit so they wouldn’t have to pay unemployment or give me my vested portion of my retirement. Straightened that out before I left that day. Won’t mention names but, at one time, they were run by Dick Cheney.

  5. Good point, John, about being geographically flexible. Some parts of our country have better employment opportunities. Being able to relocate to these areas can increase the chances of getting a job. Also, many jobs today are able to be done at home on a laptop. With good computer skills, one can search the whole country for jobs and still remain at home.

  6. I was “Let Go” from my job a month ago. I’m okay. I filed for the first time in my life (embarrassing). I was let go, because my boss accused me to giving him Corona, even after I had a test done weeks before, showing I was “Negative”. Did another test after the fact as well, “Negative”. He actually didn’t have the sack to do it in person, a text. I was employed by him for 2 years, with always being told what a great job I was doing. Either way, I’m okay with it. He obviously has alcohol on the brain, and is very confused with himself, blaming others. The real kicker, his wife sent a text to my girlfriend stating a week before, “We can’t do a bbq this weekend. My co-worker has been out a week with covid”. HAHA!!!!!! This just proved my point, he couldn’t have gotten sick because of me. Some people are just too stupid to figure it out. Being a drunk doesn’t help much either. I wish them both lots of luck.

    1. These fuktards are idiots. Sorry for cussing. I’m mad for you. Don’t be embarrassed about filing for unemployment. It’s YOUR money
      Make sure you save EVERY communication from that libtard sissy boy boss of yours so you have proof. Good luck brother

  7. How funny you would mention losing a job today. I just got fired. I was a trade broker and have been with this company for over 2 years. I got fired because of my background check, 2 years later. Long story, had a felony in my past from over 30 years ago, disclosed this at initial interview, did background check, got job. Worked for over 2 years. I worked with millions of dollars on a daily basis. Anyways, long story short, markets crashing Anyways and these companies are looking for anything possible to NOT pay a severance package etc. 1st thing I did after cussing a bunch, was file for unemployment, take stock of money available, pulled Roth Ira and 401k which were basically worthless, cut off all subscriptions to everything, paid utilities up for 2 months, paid my car off and lowered insurance. I’m now going to Vegas next week because I won a free trip via a timeshare presentation and I’m going to enjoy myself. I also got another job which I negotiated contract and start next month. I’ve also got backup jobs in case these folks wanna be asshats too.

  8. Excellent timely article!!!
    Your advice is right on point n well said.
    I certainly hope that those who need it take it to heart n dont delay.
    Well done!!!!

  9. While I believe the IRS has cracked down on employers calling severance supplemental pay (hence no social security/medicare is withheld), you *might* be forced into applying for unemployment in order to get your severance. Just an FYI. Make sure you note the number of dependents you are financially responsible for – spouse, kids, and perhaps elderly parent/relative (aka you claim them on your taxes).
    And do remember, the BS line that you waive your right as well as anyone else’s right to sue is not true. You cannot waive another person’s right to sue. This is usually boiler plate in the “separation” document.
    Some states likely provide you more support than others so do make sure the document is not skewed. At this juncture, you likely qualify for some type of legal aid (I hope in your state) – pro bono.
    I’ve been through four “separations” over my career of which three were of the document type (I knew they were coming, the other was my own option). I had another contract to fulfill my duties to the end date. So make sure the details of the contract to stay match the separation contract (read: incentive from stay contract). Also look to see if after x weeks of severance, another 4 weeks or so are available IF you have not found another job.
    Another thing to watch is verbiage to see if you are eligible for re-hire or not.

  10. A subject I know something about. Between 1985 – 2001, my husband was laid off 6 times. Plant closures, cut-backs, hostile takeovers, etc. We survived but we never actually recovered financially to where we would’ve been if it hadn’t happened; we don’t live in a site-built house, we do live on land that’s ours free and clear. Sometimes the unemployment was as short as 3 months. Once it was over 2 years (bridging the gap with construction clean-up, washing windows, substitute teaching, temp work and me babysitting and cleaning).

    We could’ve been better prepared, but no amount of prepping on low income will insulate a family of four to go for 2 years on almost no income.

    1. Stop spending money. You can’t live like you have been. Accept that. That being said, put a little money aside for special treats. I still remember how guilty I felt buying ice cream cones.

    2. Swallow your pride as much as you’re able. Take jobs (like cleaning and babysitting) that will put food on your table – ESPECIALLY if you have children.

    3. Don’t wait for the perfect job or one in your field. You just can’t do that if you have dependents or are asking family/friends for handouts.

    4. Stop hanging out with people who don’t know how to have fun without spending money. It will only make you miserable.

    5. Read all you can about thrift. There are more thrift-related websites and videos than one person can ever take advantage of.

    6. Learn to fix things yourselves. My husband didn’t know how to work on the car when we got married. Pre-internet, he learned how to rebuild a VW engine, install brakes, etc. I learned how to do holidays on almost no money.

    7. Accept it when there are things you really want to do, but simply can’t. This is a hard one.

    8. Go to a good, supportive church. If you’re in one that isn’t, get out and find one. A church that functions like the New Testament model is wonderful and encouraging. Ones that aren’t can really bring you down.

  11. The “consider cutting” list is a MANDATORY cutting list in my opinion except for one phone line/cell phone. If you are stuck in contract with a major carrier you can call and ask them if there are any discount rates, or what the absolute minimum is. The results may surprise you.

    Another thing you can do is shop around for any insurance you absolutely have to have, and go over your coverage amounts. Maybe you have extras you don’t need. Maybe another carrier is cheaper. You can always call them and say “I’m thinking of leaving for another carrier, is there anything you can do to keep my business?” The same is true for phones.

    Internet services is one thing that arguably could be needed if you are doing an intensive job search, but you may be able to get a cheaper rate by calling your ISP and asking the same thing. Or use the library. I’ve been in this situation more than once and the most important thing you can do right away is remember to breathe, and keep trying things, never give up.

  12. While I firmly agree with most of Daisy’s suggestions there’s one exception worth mentioning for some people. Today with the cost of everything rising outrageously there are more and more people being forced to live in their vehicles. Some live that way while working a steady job while others are forced to live that way because of job loss. Either way a gym membership is a reliable way to regularly shower and keep clean if one has to give up traditional housing.

    There are a number of people teaching how to live in their vehicles on YouTube — whether cars, trucks, SUVs, converted school busses, converted ambulances, etc. CheapRVliving from Bob Wells is just one of several useful channels there. He even wrote a book back in 2013 titled “How to Live in a Car, Van or RV.” A divorce and its court-ordered payments forced him into that lifestyle when it became impossible to maintain two different households.

    I firmly believe that it’s a lot easier (and less scary) to learn how to live that lifestyle well in advance of any possible need to live that way. That also suggests an additional criteria for buying one’s vehicle — that being “could I ever live in this if I had to — or convert it into something liveable?” Alternatively that might be a criteria for buying (or leasing) an extra vehicle even if it’s not ideal for being a daily driver.

    In California it has become very common for employed people to live in their vehicles because the cost of housing is too outrageous. In an odd way they are simply a modern example of the ancient gypsy lifestyle that began in southern Asia many centuries ago. When those people had to flee to Europe they spent considerable time in Egypt which caused Europeans to label them as “gypsies”. That label stuck even to the present day.

    In case there’s a need today to downsize from a lifetime collection of household artifacts … there are faster ways than going the Ebay/DIY route. Often there are local estate sale companies and local auction houses that regularly sell such items and spare you the work and time that might be better spent on seeking new employment or other earning opportunities. There’s also the possibility of using a self-storage facility for things you simply don’t want to part with long term. Possibly some combination of auction sales and self-storage might work for some people.

    Finally there is a good argument to have a second income backup plan determined if possible while times are good before bad times cause a panic search.


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