Out-of Work Stress
Posted by John Draper | Filed under Money Management, When Ca-Ca Happens
I’ve been getting a lot of letters from people asking how to cope with job loss. HB wrote:
My husband was just downsized out of his job. I have a well paying job but it does not cover our costs. Daycare is our biggest expense right now, but even if he chose to stay home my income would not be enough. He will be receiving 6 months severance pay. We do not have any savings to speak of but have money available on a line of credit and do not owe on credit cards. We own our own home. I want to plan around the scenario that he may be out of work for a year. He is more optimistic. What strategies would you suggest? I don’t know where to start. Several industries have shut down here so many people are struggling. Thanks for your time.
Job loss comes with two big stressors. First, there is the financial stuff that you need to figure out. Second, there is the emotional misery that you must wade through. Either piles of poop can sink you so above all else it is very, very important that you keep a cool head.
When you lose your job, apply for Employment Insurance benefits right away. Since it can take several weeks before you see a penny, the faster you do this, the less amount of time you’ll be scrambling for cash. If you have received a severance, this will affect when you EI benefits will start coming. A delay in the start of the claim will result in an extension at the other end of the same number of weeks and your EI claim can be extended by up to one year. However if you receive a severance payout of two years or more, you won’t be entitled to EI. Severance or separation pay is paid out in a number of different forms and each is handled differently by the EI system. You need to speak to your HR department to get the lowdown on how you’ll be affected.
Speaking of what you may get from your employer, check how long your benefits will stay in place and if you’ve got any vacation/sick pay coming. And if you’re entitled to reimbursement for expenses, file an expense report right away. While your employer is feeling rotten at having to let you go, ask for a glowing letter of recommendation.
Now it’s time to sit down with your fam to discuss what’s going to be different. This should include your immediate family AND extended family. No point in pretending everything is A-OK. Brave and strong you might be, but accepting help when you need it the most from people who love you the most is exactly what family is supposed to be about.
Yes, you should tell the kids. You’ll have to tailor your communication to your children based on their ages. But they’ll overhear the adults talking, they’ll feel the stress and they’ll internalize it if you don’t address it directly. So tell ‘em. Just reassure them that while some things are going to have to change, you are going to do whatever it takes to make sure the family is safe.
Since you’ve been counting on the income just lost to make ends meet, you’ll need to look for ways to reduce your expenses so that you can live within your means until you find another job. This may mean making several budgets. The first may include your severance. Once that ends and you’re relying solely on EI, you’ll need a second budget. If you find work quickly – maybe not the bestest job, but one that keeps food flowing – then you may need yet another budget.
Find as many places as you can to trim back. Cut your clothing budget completely, except for kid essentials. Ditto your entertainment, gifts, and all other non-essential expenses. Trim back on food. Trim way back on communication (telephone, cell, internet, and cable or satellite).
Remember, a budget isn’t something you make and then try to squeeze yourself into. Nope, a budget is your plan for how you’re going to use the money you have. Now that you have less, you must get creative. Is daycare still an option with one partner out of work, or will you swing-shift to take care of the kids at home while upgrading skills and job-hunting? Or will you both take on part-time work to keep the kids in daycare so you don’t lose your spaces?
At this point, I bet you’re really glad you started that emergency fund. No emergency fund? Ooops. Are there things you can sell to make one? The motorcycle? The ATV? The second car? Well, your severance can pick up the slack. No severance? Ouch. I guess you’ll just have to get your butt out there and find a job, two jobs, three jobs… whatever it takes… to keep it all together. And, NO, a line of credit is NOT a good emergency fund, no matter what you’ve been told. If you think coping with unemployment is hard, try doing it while making debt repayments. Sure, sure, you’ll eventually get another job. But if you’ve dug yourself a hellovahole in the meantime, you’ll be waaay sorry. So it doesn’t matter what you have to do to keep a roof over your head, that’s a better alternative to using a line of credit.
The same goes for using your credit cards to fill the gap in your cash flow. Don’t do it. In fact, you should take your credit and debit cards out of your wallet and hide ‘em, freeze ‘em, bury ‘em so that you don’t have the wherewithal to buy things on impulse. There is no time when you’ll be more tempted to spend money on crap than when you’re feeling deprived. And don’t go to a payday loan company. With costs ranging from 300-900% annually when you include the set up fees, interest, services fees and loan repayment fees, this is a hole you’ll never climb out of. Don’t go there.
If you’re already walking around with a bunch of debt, time to call your creditors. Explain that you’re out of work and need a) and interest rate reduction, and b) a repayment plan that’ll work with your new budget. Take a trip to your bank and see if a consolidation loan will help ease your cash flow. Do whatever you can to reduce your costs and ease the pinch. This is no time to let pride get in the way of common sense.
Tell everyone you know and everyone you meet that you’re looking for a job. Since many jobs are found by word of mouth, telling people exactly what kind of work you’re looking for is a good way to start. While lots of people are tempted to stop their job search efforts at this point, resist the urge. You need to have an overall job search strategy that includes a daily job search schedule. Getting a job IS YOUR JOB right now, and you should do it with all the energy and enthusiasm you used to spend working. Schedule your day as if you were going to work, make sure you include some socializing time – unemployment can be horrendously isolating – and keep on truckin’.
Yes, it is hard. Yes, the rejection can be soul numbing. But you can’t just give up and hope something will come along. You have a family counting on you. YOU are counting on you. So get busy. Your next job isn’t going to find you!
There are federal, provincial and municipal services that may be able to help. Get out there and find out what they are. Use the internet to find opportunities for you to throw yourself at prospective employers. Update your resume. Post it everywhere. And tell everyone to tell everyone. You need a job!
If you hated your last job, then now is the time to start thinking about a career change. Can you use the time you’re not working to upgrade your skills or take some night courses to retrain for something new? Would this be a good time to turn that hobby into a business?
I am not recommending you remortgage your house and buy a business because you’re desperate. Hey, people do this. What I’m suggesting is that if there is something you’ve always wanted to do – be it landscaping, web design, freelance writing, or small engine repair – now may be just the time to start making some money doing what you love. If you can turn it into a viable full-time business, good for you. If it brings in extra money while things are tight, that’s good too. And if you find a full-time job and can keep doing your biz on the side, hey, that’s alright too, isn’t it?
December 26, 2008 at 2:56 pm
I quit my job back at my hometown about seven months ago, but I’m having some issues finding a job in my new town because much to my surprise — everyone’s bilingual! Any job I want that would be anywhere near the field I want to get into (social work) requires me to know French and I don’t. I really don’t know how to get around this problem because I’m very bad at languages and I’m sure it would take me at least a few years to even become good at even conversational French.
Whew. That’s been on my mind for awhile. I feel better now. At least my husband found a decent job up here that doesn’t require French.
December 26, 2008 at 4:06 pm
When my husband was laid off in May of 2007 we struggled immensley. Our daughter, 6 months at the time, was still new in our life. We moved in with my parents- I was on maternity leave and a student. We definitely made a lot of mistakes during that time to stay afloat. Including getting far into debt. Too far. So far infact that we still couldn’t catch up after he has been employed now since Feb 08. This past October we had to file for bankruptcy because of the mistakes we made because of the major layoff.
My question I guess, is how to have an emergency fund or even savings, when you have bare minimum bills, and a low income and still living pay cheque to pay cheque. Seems like the troubles just never end
December 26, 2008 at 9:40 pm
My husband was a new teacher and found out mid way through his second year teaching that he wasn’t gettning his contract renewed. This was a frustrating and stressing time for us. We found out on the monday that we were expecting our second child and were so excited, then mid way through the week we found out it was most likely his contract wasn’t getting renewed. Then our car broke down on the friday. It was a stressful week. Also we moved across the country for this job.
Anywho after my mini freak out i was ok for a while, he still was going to finish out the year and got paid until the end of the summer then the job search would begin. I wanted him to find a job at the beginning of the summer. He put in resumes around town multiple times, but it wasn’t until we came back from visiting family he found a job.
Here is where the fun starts. He got a call shortly after dropping off the resume at a car dealership. Started fairly quickly afterward.
Its funny because my husband isn’t really an outgoing social butterfly. He stands back and observes. I guess this job helped him get out of his shell a little.
He made just under what we needed to get by, but because of his pay from his previous job in the summer it helped us for a bit. We ultimately had to get our student loans put on interest relief and his mom and aunt were paying two of his student loans as a gift to us.
Anywho a month and a half he got a call for an interview for a different job at a mine that pays very well and better than he would make at the dealership.
after a couple months of various tests. he got the call that he was getting the job. Now my husband is an upfront guy and told his boss at the dealership that he would be starting a new job in two weeks. He was told to finish the day out and go home.
well we ended up going 3 weeks without a paycheck and had $12 in the bank by the time he got his first paycheck. We don’t have overdraft either so that wasn’t a temptation, but we do have credit cards.
I admit we lived off of them during those three weeks. I know we should probably kept it to the minimum and just getting food and esentials, but it is the month of Christmas, and we couldn’t and wouldn’t not get gifts for our kids.
A month after our son was born my husband started his new job, so i wasn’t up for starting a part time job besides my homebased buisness which was and still getting minimal attention right now. We plan on paying off what we spent this month on the credit cards with his triple time shift work this month. From now on, credit cards if used will be paid off right away for the amounts we use, so if there isn’t enough money in the bank to get what we want, we just won’t get it. What a relief that he has found a much better job.
I guess my advice is get out take a job to get started and it doesn’t mean you have to stop looking for a better job.
Starting in January im going to kick my home based buisness into high gear and get our debt paid off ASAP.
Merry Christmas all
December 27, 2008 at 3:48 am
Saddened by the above stories. I guess it just goes to show that you can rack up thousands and thousands in student loan debt for a specific career and find out you work all over the map, and not in that career. Now you have a heavy debt to repay while you work in a totally different field.
I can learn from this and see that one should work in that totally different field first to save for tuition and an EF, so you don’t have the student loan debt all for nothing in case no-one’s hiring you while it’s all said and done.
I’m proud of Angela for finding the strength during pregnancy and early family life to muster through this.
December 27, 2008 at 4:13 pm
Lisa:
Thanks, its been tough I won’t deny that. I guess it helps growing up in a family that never had much. I want better for my kids, but I also don’t want to just hand them everything. I think its important to earn what you want.
Were doing ok, tough times come but its important to work through them together when they do.
December 27, 2008 at 7:11 pm
…to Kim…You may be surprised at how easily you might learn French if you really had to to get the job you want. I took French Immersion through school, then didn’t take any courses my 1st year university, and lost a lot of my vocab, when I went back to my bilingual summer job I picked it up PRETTY quick…if you can find a way to immerse yourself in it, you can do it!!! Have some faith in yourself, I’ve come through some pretty tough situations, and it’s only because I gave myself a kick to take control and just do it…
December 27, 2008 at 7:40 pm
I often think that my life is a house of cards all balanced on my employment! How do you have a full backup for that? (I’m single.) I have an emergency fund that would last about a year. But that’s just a year!
It’s something I always worry about…
December 27, 2008 at 8:06 pm
With the first baby, I was laid off of work before the mat leave kicked in, and no matter what the laws are it’s very hard to find someone to hire you when you are really pregnant! The rules were different then, and mat leave was much shorter. So by the time my baby was only 3 months old the EI had run out!
We were young, but not entirely stupid. We had a house that was modestly mortgaged and our expenses were modest too. Hubby worked 2 jobs to keep us above water, but we still had to dip into the overdraft and credit cards to buy things like diapers and groceries (a nursing mom is a hungry mom).
I found a job through an EI program that paid okay, 4 days a week (with the fifth day for job hunting) and as a bonus, the program covered full time childcare and I found a great daycare minutes away from work so I was able to keep nursing!
Unfortunately it was not a happy time of my life. The stress of money and instability and the sleep deprevation and a high-needs baby and first time inexperience at parenting (with no support network) led to a nasty bout of depression that needed medical help to snap out of.
We did make it through and after getting back into a stable work environment we also pulled out of the debt and have been working to make sure we have savings in place to try to prevent that debt again.
TDDUP had a lot to do with our success.
December 27, 2008 at 8:34 pm
I’m a human resources director and prior to working for employers, I used to work with clients who were looking for work. I can’t emphasize enough the importance of 1) tailoring your resume to the job you’re applying, 2) using spell-check, 3) making sure your cover letter has the right company name and job title on it (duh), and 4) being enthusiastic. The biggest parts of a job search process are organizational skills and attitude. It really comes across when someone is enthusiastic about the job, and took the time to craft a solid cover letter and resume. If we’re struggling between two candidates- 99% of the time we go with the person that has enthusiasm.
I completely agree with Angela’s comment about getting a job- any job- and then searching for THE job. When it comes to putting food on the table and ensuring the lights stay on, it’s important to get a regular pay cheque, even if it means working in sales, at a call centre, etc. to get by. It’s not the time to be fussy or to let the negative attitude kick in.
Career resource centres/ employment centres/ job search centres have are a wealth of information and offer a lot of support- from how to write a cover letter and resume to where to look for work. Don’t just sit back and assume the job will come to you- reach out, ask for help, and make looking for work your full-time job until you get a job.
December 27, 2008 at 10:35 pm
I have been a rep for 10 years, the industry has changed, I just lost my job in the middle of Dec. No EI, as I was considered self employed, I made good money, but never seemed to manage to save any. We have a mortgage and all the trimmings in credit card debt and bills it seems. I worry about getting another job in a time that everyone seems to be losing their jobs and struggling too. My husband has a good job, but it doesn’t cover all the bills. It’s tough, tough, tough..
December 27, 2008 at 10:39 pm
Unfortunately, this is only the beginning. I suspect the economy will get from bad to worse right after the holidays are over. People are losing their jobs in every sector of the economy and it is only going to accelerate. The real estate market is plumetting and the TSX still has a long way down to go.
If there ever was a time to learn that being in debt is a bad thing, it is now. And it is already too late for a lot of people. They are never going to get out of debt because they are losing their jobs, or they get their hours cut or their benefits slashed.
For those who still have jobs, hold on to them even if it sucks. Don’t call in sick. Don’t get in late. Go the extra mile. Cut all discretionary expenses and save as much as you can. It is going to be virtually impossible to get any kind of job in the near future. We will soon see professionals applying to be taxi drivers or floor sweepers. A job offering as little as $10.00 an hour may get as many as 1,000 applicants.
If you’ve always been conservative with money and never spent more than what was coming in, you might have a chance of weathering this ugly storm. If you’re in debt, you’re in deep doodoo. Might as well file for bankruptcy right now before they change the law to make it harder.
December 27, 2008 at 11:43 pm
Layoffs, Unemployment, man I am there and moneys tight. There are ways to exist for a little bit longer on unemployment and give yourself extra time to find a job or get some money coming in. http://moneystight.blogtoolkit.com is new think tank of ideas for everybody in tough times and has many ways to help. Lets all stand together in these hard times and bailout each other!
December 27, 2008 at 11:48 pm
I think we all need to stay positive right now, during this time of economic trouble.Giving up just isn’t an option. My family has seen tough times, and although some industries jobs are being lost there are others out there. You just may have to step out of your comfort zone and work in areas that you may not of ever thought of.
My husband just began a new job this month at a coal mine. They are also going to be hiring more workers in the New year. This industry seems to be growing out here and pays well. It was a long hiring process but he got in and things are looking up.
For our family most of our debt is student loans and im getting close to paying one off.
Eventually I plan on getting a part time job working one or two days on my husbands off days, once my son is older and on solids or formula. That will be on top of my home based buisness.
We dug ourselves into this debt and we need to dig ourselves out of it. why should it be up to someone else to bail us out? Im sorry, I understand some people may need bankruptcy, but honestly it should be a last resort. Besides Bankruptcy doesn’t take care of student loans, so for those people who think it takes care of everything, make sure you know what your getting yourself into before you dive in head first.
December 28, 2008 at 9:15 am
I agree with Angela. A positive, practical attitude is essential…and a creative one too. My friend, a single mother of 2 kids without any support payments (long story) was laid off her job, and her husband suddenly dies from a heart attack. They were under insured. She then rented out all the spare rooms in her house, having her kids share a bedroom and took on tons of freelance work. Another friend got her name on various Focus groups to do testing/interviews for marketing firms.
Do what you can to get by. And yes, having a ‘can do’ attitude helps you get through it, and attracts other work opportunities to you too.
Hang in there – you are not alone.
December 28, 2008 at 9:31 am
Arma_Geddon I think that we should wait to see what comes down the pike before we tell people to go bankrupt don’t you? Things are hyped by the media and people are buying into the doom and gloom too much. Just keep plugging and we will see times get better in a year or so. Be optimistic…far better then living a life of fear.
December 28, 2008 at 9:52 am
Whoops! I have to make a correction with my posting above. I mistakenly wove 2 different scenarios together. I blame it on celebrating my wedding anniversary into the wee hours last night.
Friend # 1 was the single mother. Friend # 2 lost her husband & was under insured. Both friends lost their jobs – and both friends took in boarders. Sorry for the confusion.
December 28, 2008 at 11:52 am
After reading all the comments I am wondering why no one is suggesting to move where the jobs are? I moved to Regina, SK 15 years ago and would recommend the city to everyone. You might say you are away from family and friends but that is a weak excuse. With technology you can actually be closer than before…just not as much face-to-face. Food for thoughts.
December 28, 2008 at 2:56 pm
Andre: Thats actually what my brother did finally. He was in ontario and his ex and kids are there. He moved out to Alberta and works in construction and goes back to visit. He finally realized Living on wellfare was not the best for his family so he sacrificed his time witht the kids to provide better for his family.
My brother also took advantage of a program offered by the government that provides so much money to help you move if its because of a job and you can’t afford to move yourself.
Part of it is becoming knowedgeable about what is available. Some jobs even pay your moving expenses for you.
December 28, 2008 at 3:17 pm
Moving to another city may be very difficult for some people. People that bought a house won’t be able to sell. Nothing is selling anywhere and prices will soon start to drop. Some people are under water (owning on the house more than what it is worth). Impossible choices will have to be made, like lose the house, file for bankruptcy and relocate where there are jobs, or stay put and try to find any job. Times are extremely dire.
December 28, 2008 at 3:28 pm
Another option to ’selling’ one’s home is to rent it out. Where there’s a will there is a way. Times are tough and with a positive/practical attitude, you can be tougher.
December 28, 2008 at 8:10 pm
Hi Gail,
I have a few ideas some may help some may not.
Get a line of credit before you get laid off.
Review your auto insurance, many people have a low deductible which may not makes sense. Think about getting a higher deductible…it will save a lot of money.
If you have RRSPs and you have got a package put more into your RRSP (you have up to March 1, 2009, for 2008 tax year). The reason for this is, if you have to take money out…only if you have to! You may be in a lower tax bracket in 2009 vs. 2008.
If you have a whole life policy you should be able to take a policy loan and still keep the life insurance. (the money is tax free). Or take a break from paying it. Check-out the details first!
The other thing to remember, is you may be able to transfer your benefits (even though you are unemployed). If you become sick or injured and unemployed…look out! This may be some more out-of pocket money but it may be worth it! (can’t do that with term!)
The other thought is to rent the basement (if you can…and up to code in your area). I have a few clients who have done this and it makes a lot of sense! (and dollars!)
regards,
Brian
December 28, 2008 at 8:34 pm
well, for one thing, we’ve been there. Two years ago dh was laid off and I was a sahm with 4 kids, we had enough money for our bills but we had to pay with our cc for groceries and gas. Talk about depressing. But we got out of it, dh found a job and I opened my own home daycare. So I know how bad things can get, but our rule was, no matter how bad things got, dh and I would go without so our children still had activities that they enjoyed (not thier fault we had no money, poor planning)
But this is what bothers me the most. All we now hear is how bad it is, how people can’t afford their homes, or food or whatever. Grow up people, no one told you to go and live beyond your means. Every day you see an article in the paper saying how this person can’t afford their home, well, why the heck did you buy something that was beyond your means in the first place. And also, its not like one morning we woke up and the jobs starting dissappearing, its now in its 4th year (dh use to work for the big 3) and little by little it started to get bad. But what did people do, spend more and more money.
Its seems like this generation is a “I want and I will buy what I want” generation. Credit card use is insane, people are buying bigger homes, expensive cars. Leasing, consoladation, bankruptcy, how crazy is that.
My advice to anyone who is in this boat, Sit down and start thinking where the heck did all your money go. Down size your house, your car, get rid of your cable, your cell phone, your satellites. Get rid of your cc and start paying cash for everything. STAY OUT OF STORES NO MATTER WHAT KIND OF DEAL THEY HAV!!! remember I have 4 young kids and we were in this boat 2 yrs ago, so I know what its like to have no money. Keep a positive attitude.
December 28, 2008 at 8:43 pm
Unfortunately Arma_Geddon it’s these type of comments that drive the masses to run for cover and drive the economy further into depression. You may be correct that things will worsen but lets not all run to the cliff and jump before we see whats below.
December 28, 2008 at 9:17 pm
Save, save, save! If you have a dollar, save it. I totally agree with the uncertainty and now is the time to spend only on essentials/the bare basics. Anything left over that should be saved!! Put it in the savings account and start pretending it’s not there. Forget the richer than you think mantras even if you are.., start with the you’re poorer than you think and you’ll save it faster.
While Armageddon may or may not be too extreme, sometimes it takes a good scare to smarten up.
December 29, 2008 at 12:18 pm
Carrie, your words about finding a job are very inspiring! I am currently tailoring my resume to suit other types of jobs that aren’t neccessarily in my field. My goal is to get a part time job to supplement my currnent income because my hours were cut back in the fall!
I can’t find anything in my field close to home so I decided that something was better than nothing!
My training is very specific to one field so I need to emphesize the parts of my resume that are more versatile to many jobs I think! Any ideas?
December 29, 2008 at 1:18 pm
Job loss is one thing that scares the crap out of me. A little over a year ago hubby retired from the military with a ‘promised’ job. Of course, it was delayed for about eight months. Suddenly, we had just his teeny retirment income just in time for Christmas and us with three little kids. Hubby got a couple of holiday fill-in jobs, but they didn’t pay enough to cover the bills.
The food in the house lasted two months, thankfully. After about three months he found a wonderful job that pays more than he got in the military (not saying a lot) but now I’m constantly stressed that something will happen and we’ll have to live in our truck. We were so close before.
I am committed to using your advice to pay off as much as possible this year. Hubby’s still in dreamland about finances, but I’m going to have my very own spending hiatus, selling spree, and do the budget, post it where he’ll have to look at it and hope for the best.
Thanks for all the help!
December 29, 2008 at 1:47 pm
Goal0debt, there were enough warnings these last few years that we were going to go bust not to take it seriously. Governments, municipalities and citizens are in debt. Good paying jobs have been outsourced to the third world. Now what do you think will happen with all that money created out of thin air?
A lot of people are still in the denial stage. Just wait after the New Year. The TSX will take yet another dirty plunge and thousands of more jobs will be lost. Now is not the time to spend on anything but the bare essentials. Start stockipiling food and other non perishable essentials right away. That may keep you from starving down the road, or queuing at your nearest soup kitchen. You will be sorry you didn’t.
December 29, 2008 at 1:56 pm
My brother had the problem of going through an expensive degree program only to find they were no longer hiring. He went back to school for something else and then Whoops! he’s over-qualified for everything now. Even McDonald’s wouldn’t hire him when he had no income.
He eventually found a job as a security guard, but not for lack of trying in anything remotely related to the two fields of study he finished. When he started his first degree his field was expanding. But in the years it took to get the degree, it collapsed.
December 29, 2008 at 1:57 pm
I didn’t realize the situation in Canada was as bad as it is here in the US.
December 29, 2008 at 3:22 pm
There are jobs out there is a few fields that people can re-train for: nursing, LPN, paramedics, lab techs, RCMP, corrections ( both provincially and federally) to name a few. You may have to go back to school but if your smart about it, you can look at retraining options. And they pay well! I have no worries about being laid off, but even if I was I have my contingency plan in place… retraining as a nurse would be the direction I would go running to in a heart beat…
January 25, 2009 at 12:29 pm
Gail, the caca hit the fan this past week and my husband was let go from his job, along with over 40% of his coworkers. It has been an anguish-filled couple of days. One of our saving graces was that we started the Gail Jars at the end of December and have been doing very well so far. There is a great sense of accomplishment that we are able to stick to budget, have savings for the first time, and plan for the future. The layoff affects us, but the spreadsheet made it all the more easier to be able to see where we can further cut down our expenses and plan for a reduced income.
We are fortunate for a decent severance package; we intend to start living as though hubby is on EI as of next week, though. This will see us through.
Thank you again for your great site, tools and tips. We are both confident we will prevail.