Categorized | Career

6 Ways to Bounce Back From Unemployment

This post is the first “staff” post from Roger of The Amateur Financier. He is going to start contributing some posts on a more regular basis to the tune of a few a month or more. I hope you enjoy this post as it is very timely, and give Roger a nice welcome!

It can happen to the best of us. One day, you’re going along like normal, working steadily at a job you tolerate, if not love; the next, you’re out of a job.

You are not alone; even as most economists are calling this latest recession over and are starting to talk about the recovery, unemployment is still over ten percent in the United States. (Even that figure doesn’t account for people who have given up looking for a job or who are working part-time when they want a full-time position.)

unemployment

Landing On Your Feet

If you find yourself unemployed, whether you were downsized, fired, or had your employer go bankrupt, there are several steps you should take to get your financial life back in order:

1) Don’t Panic

Take a page from the Hitchhiker’s Guide to the Galaxy and put this phrase prominently in your mind as soon as you get the news about losing your job. At best, panicking will distract you from more productive uses of your time; at worst, it can lead you to make mistakes that will have a negative impact on your employment and finances for years to come. To paraphrase the Nike commercials, just don’t do it!

2) Learn Why You Were Let Go

The fact that you lost a job should be a learning experience. If you were fired with cause, be sure to find out why so you can avoid making the same mistake in the future. If your company was downsizing and eliminated you but not some of your coworkers, you should figure out what they did to make themselves more valuable to the company and attempt to emulate those behaviors at your next place of work. Finally, if your company went under, you can use that experience as a guide to what sort of companies to avoid in the future, or perhaps even reconsider the industry in which you’re working altogether.

3) File for Unemployment

Unless you’ve already got another job waiting, one of the first actions you should take after losing your job is to file for unemployment benefits. Each state has their own rules about how much you can receive in benefits and how long those benefits will last, making it hard to generalize about what you can expect to receive; but every dollar you receive is one less dollar you need to provide from your own pocket. Links to the individual unemployment offices can be found here for each US state and territory.

4) Take Care of Your Health Insurance

One problem with a health care system so heavily dependent on employer provided health care is that when you lose your job, you lose your health insurance coverage, as well. You should look into COBRA coverage to continue with your employer provided plan (although you’ll be picking up the entire bill now, making it significantly more expensive). You could also opt for getting health insurance on your own, which might be the less expensive option if you are young and reasonably healthy. Either way, making sure you are covered and don’t have to worry about a potential health crisis on top of your job loss should be a top priority.

5) Review Your Finances

If you don’t already have a good handle on your finances, doing so now is not a good idea, it’s a great one. Look over your assets, from your retirement investments to any property you own, so you know what resources you have available. Review all the sources of income you have, including your spouse’s job (assuming he or she isn’t in the same boat as you), your unemployment, income from rental property, and investment dividends, so you know how much you have available each month. Also go through your expenses, from mortgage/rent, utilities, and food to insurance (don’t forget your new health care costs). Then, try to cut your expenses as much as possible; at the very least, you need to be sure that your new, likely lower income will be enough to cover your basic needs for the foreseeable future.

6) Decide What to Do Next

These first five steps have been pretty universal; everyone who loses their job (or retires, for that matter) will have to handle these issues at one point or another. Where to go from here depends on what your life situation looks like; here are a few suggestions regarding how to start the next chapter of your life:

Early Retirement: Before you get too excited, this is generally only possible for those who are near retirement age anyway or who have been very aggressive savers. Still, it’s worthwhile to take a look at your financial situation and see if you have enough in assets to sustain your lifestyle. Be very, very, VERY conservative in your estimates if you follow this route; it will be much harder to get back into the work force years from now if your money runs out than to jump back in while you are still relatively young and your skills are up to date.

Find Another Job: The option most of us will have to take, finding another position to keep bringing in money. There’s enough advice on finding jobs to fill several blogs, let alone a single blog entry, so here’s the best thing to keep in mind: networking works. Stay in touch with friends from your last job (especially those who are still working in your industry), reach out to any organizations in your field, and ask friends, family, neighbors, and people at your local house of worship for any help or suggestions they can offer; you never know who could have a lead on a job you would love. Here are some common methods of networking.

Reinvent Yourself: For many people, a job loss is the opportunity to attempt something new and very different from their previous occupation. If you weren’t happy in your last job, why not try something different? There are many options, from going back to school for a new degree (either an advanced degree in your field or something from a different field entirely) to attempting to start your own business. If you’re willing to take a bit of risk, there are plenty of options available.

Good Luck!

There; some tips to help you get through a job loss with as few problems and difficulties as possible. Hopefully, you’ll never have the need to put them into practice.

Does anyone have any other tips to share for someone going through this situation?

Get to know the author!

Roger is the author of The Amateur Financier. He is in his mid twenties, does tutoring work for side income, and just got engaged!


has written 4 posts on MyLifeROI.com.


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16 Comments For This Post

  1. Adam Says:

    I think the most important step in this plan is #6. If you become unemployed, I feel that your first goal should be to aggressively look for another job. It should become your new full-time job and consume your days until you find another one. No sitting on the couch and watching TV!

    Great first article! I look forward to many more Roger.

    [Reply]

  2. kosmo @ The Casual Observer Says:

    I sometimes wonder if the extension of unemployment benefits is itself causing the rate to remain high? With the additional safety net, someone might bypass applying for a less-than-optimal opportunity and be more selective, know that there will still be a check each week. I’m not suggesting that people are necessarily doing this intentionally, but simply that a certain amount of urgency has been removed from the process.

    Just a thought, though. I’m sure most people are quite anxious to get off unemployment.
    .-= kosmo @ The Casual Observer´s last blog ..Losing the War =-.

    [Reply]

  3. David/Yourfinances101 Says:

    Wow.

    Most of the time when I read posts I can usually come up with something like “And don’t forget about this” or “You forgot to mention that…”. Not here.

    This hits the nail on the head.

    All great advie, and all are must-dos if you ever find yourself in this situation.
    .-= David/Yourfinances101´s last blog ..17 Ways to Save Money on Insurance =-.

    [Reply]

  4. Craig Says:

    It’s easy to panic at first but step back for a few days and recalculate things. Get your contacts together, resume set and go out and be proactive because its not the end of the world.

    [Reply]

  5. Financial Samurai Says:

    Hey Rog – Thanks for sharing your steps. I think about unmployment probably unconsciously everday, and consciously once a week. One never knows.

    Good luck in your hunt!

    [Reply]

  6. Health Insurance Providers Says:

    Great job mentioning the importance of keeping your health insurance coverage continuous because even canceling your health insurance and going without coverage for just one month can really do damage down the road as far as eligibility for HIPAA or getting ones pre-existing conditions covered right away with a new plan.

    [Reply]

  7. Lovely One Says:

    This is a great article. I was laid-off about 2 months ago, and like your article states, I had to re-invent myself. I decided to take time off for school and get an internship. I am doing so well in my internship, that I have an interview on Monday to get hired in(My internship is actually not paid so this new job will be very helpful). I can not wait to interview and show my possible new boss what I am all about. I am going to spend this entire weekend brushing up my interview skills.
    When you get unemployed really take a step back and figure out what the next step will be. Like the article states…Dont Panic

    [Reply]

  8. Roger Says:

    Wow, what a good reception for this article. I’ll have to be sure to contribute more articles here soon.

    @ Adam: Don’t get me wrong, finding a new job is important, but as I said in point 6, the first five are things that need to be done regardless of whether you’re planning to retire, go back to school or get another job. So, I still stand by the order shown here, although that doesn’t necessarily indicate their relative importance.

    @kosmo: I can’t claim to know for certain how unemployment coverage affects unemployment stats, but I doubt it causes them to increase. Here in Pennsylvania at least, you can continue to collect unemployment even if you get a part time job (provided you meet certain income requirements) and are thus no longer ‘unemployed’ for statistical purposes. As a result, you have the incentive to work part time in order to maximize your income. Add in the fact that unemployment only pays a fraction of your previous income, and most people will tend to seek a new job just as eagerly as if they weren’t getting unemployment benefits.

    @David, Craig and Financial Samurai: Thanks for the compliments; I tried to be as complete and thorough as possible.

    @Health Insurance Providers: I remember that dealing with health insurance was one of the more time consuming parts of handling being uninsured, so I made sure to include it as one big thing to handle.

    @Lovely One: I’m glad you liked the article; I imagine more than a few people are in the unemployment boat with us at the moment, so hopefully this article will help them handle their situation. You’ll have to let us know how your interview goes; hopefully, you’ll have good news to share!
    .-= Roger´s last blog ..So You Want to Invest: Getting More Active =-.

    [Reply]

  9. Finavigation Says:

    The Reinvent yourself suggestion is excellent and is the key to your long-term success. Getting laid off is an opportunity to go back to the drawing board, take a good hard look at yourself, and determine where exactly you want the rest of your life to go.

    Were you really happy doing what you were doing? If so, great. Go out there and find yourself another job like the one you had. If not, figure out what you would love to do and pursue opportunities that get you closer to that. If you lay out a good career strategy for yourself, you’ll end up doing something you love and you’ll view this unemployment situation as a wake-up call that got you started on the path to living your dreams.

    Your career is the biggest investment you’ll ever make… why not make it a good one?
    .-= Finavigation´s last blog ..The Basics of Building Wealth =-.

    [Reply]

  10. Credit Card Compare Says:

    All good advice Roger. The economy in the United States has taken a beating compared to here in Australia. However, your tips are all worth taking on board no matter where you are.

    My advice, start networking online on places like LinkedIn.com where recruiters are constantly prowling around looking to recruit (and/or poach) good talent. I can definitely vouch for the power of networking.

    Beginning the search for a new job (in most industries) can be a real long struggle so prepare yourself and try to maintain confidence in your own skills.

    [Reply]

  11. kenyantykoon Says:

    Or you can use the lemons that life has given you to make lemonade(sounds clichéd). What i mean is that if you have a lot of experience from the previous job, you can use it to start a business and give a hand at being your own boss. While this will require getting out of your comfortzone, i have a feeling that in the grand scheme of things all will play out to your advantage

    [Reply]

  12. Michael Sorensen Says:

    Personally, I believe that the unemployment rate is going to remain at around 9.5 percent throught out 2010 and the Republicans are going to take back a LOT of seats.  What do you guys think, agree?

    [Reply]

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  1. Acer Aspire One AOD250-1165: My Holiday Gift Says:

    [...] 6 Ways to Bounce Back From Unemployment [...]

  2. The Katana: Don't Count Out The US Consumer! Week In Review 11/30 | Financial Samurai Says:

    [...] * “Six Ways To Bounce Back from Unemployment” is a guest post on MLROI written by regular, Roger of Amateur Financier. Roger provides some clarity in a situation that might razzle the best of us.  Best of luck Rog! [...]

  3. Rich Life Equals Better Life Says:

    Rich Life Carnival #39…

    Welcome to the December 28, 2009 edition of rich life carnival. Healthy Living Andrea Jackson presents gift basket for girl posted at BestGiftBasketsForMen. Personal Finance My Life ROI presents 6 Ways to Bounce Back From Unemployment posted at My Life…

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