Overcoming a Job Loss
In these unprecedented times, nearly 40 million Americans have lost their jobs in a span of eight weeks. That is more job losses than the last recession saw over two years.
The loss of a job can be a nerve-racking experience, leaving a person with feelings of sadness, anger, and depression. Mourning a job loss is normal; for many it means the loss of their identity and lifestyle. Many professionals feel that other than the death of a close family member or going through a divorce, the loss of a job is probably the single most traumatic event of a lifetime.
After the loss of a job, many people feel anxious to find a new one right away. You do not have to start a job search the day after you lose your job. If you can afford to do so, try to give yourself a break for a couple of weeks. If you have a home project that you have been putting off, like cleaning out the garage or organizing your closet, this would be a great time. This short break will help you create a positive mental attitude, so when you do start the job search you are feeling refreshed and de-stressed. It is important to stay focused on things that you can control.
Here are some suggestions on maintaining both your financial and your mental health.
First, file for unemployment. Your financial survival depends on having a regular stream of income. One of the first things you want to do after losing your job is to find out if you are eligible for unemployment benefits. Individual states determine eligibility and filing deadlines. Filing for benefits has become a lot simpler now that you can file online. The standard unemployment benefit lasts for 26 weeks and is based on your previous income, while extended unemployment benefits could add an additional 13 weeks.
Since your income stream will be reduced in the near term, it is important to devise a budget to get your finances in line with your new income. After you have established what your monthly unemployment benefit will be, it is important to reduce your expenses to the essentials. Cutting back on eating out, subscription services (ex: Netflix, Hulu) and other discretionary expenses will ensure there is enough money to cover the basics. A non-discretionary expense that can be overlooked but needs to be in your budget is health insurance. An illness can wipe out savings and put you in debt very quickly if you do not have health insurance. If your former employer provided you with health insurance benefits and you are not covered under a spouse’s or a partner’s health insurance plan, consider continuing your group benefits through the Consolidated Omnibus Budget Reconciliation Act (COBRA).
This would also be a good time to be proactive and contact your creditors. For example, if you have a mortgage, a car loan, or are making rent payments to a landlord, it is important to let them know about your situation. In many cases creditors are willing to negotiate and work out a deal to temporarily stop or decrease your payments. In case of credit card debt, this might be one of the only times that making the minimum payment would be a good strategy, to preserve capital. During the current COVID-related recession, creditors are particularly willing to help while some are legally obligated to do so.
When developing your job search plan, make sure to set limits. Spending all day on a job search can be stressful and depressing, which could lead to frustration. Your search plan should have attainable goals and small manageable steps. Make sure you prioritize and structure your day and treat finding a job like a job. If you are not having any luck finding a full-time job, you may consider taking a temporary or a part-time job in the interim. People that are employed are more employable. Regardless of the position that you take, whether below your skill level or part time in your field of expertise, you will earn an income and relieve some of the pressure of job hunting.
Maintaining a daily routine during this ordeal is a great way to preserve both your mental and physical health. While it is tempting to plant yourself on the couch with the remote in one hand and a bag of chips in the other, studies show that a daily routine, can help regulate mood swings and ward off depression. It also keeps you from feeling stuck which could lead to eating poorly and consuming more alcohol. In addition to your job search, try to fit in at least 30 minutes of exercise per day. It is known to be a natural stress reliever and will help maintain a high energy level which is necessary for interviewing.
Finally, the most powerful suggestion I can make is to get out of the house and tap into your social network while surrounding yourself with positive people. According to experts, only 7% of all jobs are found on the internet; the vast majority are not advertised. Do not be afraid to ask people in your network for their support in making an introduction that could open opportunities. Never underestimate the power of your network. In addition to increasing your odds of finding your new job, staying socially active will help maintain your mental health.
If you recently lost your job or experienced any other life changing event, do not hesitate to contact us at Provident Investment Management. We will do our best to help you navigate this difficult circumstance and answer your questions the best we can.
Dan Krstevski, CFP®