Laid Off? Take These Steps to Get Help
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Losing your job is stressful enough on its own. Meanwhile, you still need to put food on the table, keep a roof over your head and manage other financial obligations.
While it may feel like everything is out of your control, there are steps you can take to manage your finances and resources you can use to help cope.
Laid off vs. fired
There is a difference between being laid off and being fired, and your situation will likely determine how you proceed. Being laid off means the situation was out of your control. Maybe your employer is downsizing or making other changes that would eliminate your role. Being fired, on the other hand, is losing your job because of misconduct on your part. Showing up late to work, poor performance or failing to adhere to company policies are some examples.
This distinction matters because it could determine your short-term financial situation. Take severance pay, for example. This lump sum compensation package, which can include money and an extension of certain benefits, is typically paid out to employees who are laid off, whereas employees who are fired for misconduct are likely ineligible. Employees fired for misconduct might also not qualify for unemployment benefits.
While there are always exceptions, it’s a good idea to check with your former employer and your state’s labor office website to see what you’re eligible for.
What to do if you’ve been laid off from work
Step 1: Apply for unemployment benefits
File a claim with the state you worked in as soon as possible. In most cases, you can file online, but contact your state’s unemployment office if you need help applying for benefits.
State unemployment offices may be overwhelmed during periods with a dramatic rise in claims. It may take several attempts to file your claim by phone or online, and benefits could be delayed as state agencies try to keep up with demand.
Your state unemployment office’s Facebook and X accounts can also be great resources for updates and guidance.
If your unemployment insurance claim is approved, pay close attention to the benefit details and next steps. Generally, you’ll need to certify that you still meet your state’s eligibility requirements every week or two in order to keep receiving payments.
Step 2: Contact your banks and lenders
“Contact any company you pay regularly and see if they can waive or reduce fees for a while,” says Tara Unverzagt, senior financial planner and president of South Bay Financial Partners in California.
For example, your credit card issuers and utility companies may extend your payment due dates or offer hardship programs if you're proactive and ask for help.
If you're concerned about paying your mortgage, it's best to reach out to your lender or servicer — even though yes, that feels pretty scary. But you (and your credit score) are usually much better off if you're proactive rather than waiting until you've missed a payment. Depending on your situation, your lender may offer you mortgage forbearance or a mortgage loan modification.
Student loan debt often comes with options to pause payments during a layoff that credit cards, auto loans and other debts do not. You’ll want to reach out to your servicer or lender to learn about relief options and their implications.
If you have federal student loans, an income-driven repayment plan like SAVE is often the best option when you’re out of work as it caps monthly bills at a certain percentage of your discretionary income — which can be as low as $0 per month. Private student loans have fewer protections for unemployed borrowers, though some lenders offer hardship forbearances.
Suspending payments can help free up cash for the things you can’t delay, like food and possibly rent.
Step 3: Triage your finances
Cut out any nonessential spending for the time being. That may mean canceling or suspending gym memberships and subscription services, and even paring down your cable package. You can explore many other ways to live frugally during this period of unemployment.
Remember that these cuts are temporary. The goal here is to free up as much room in your budget as possible for the things that can’t be paused.
Step 4: Tap into community resources
Communities offer an abundance of resources for those who’ve fallen on hard times. Now is the time to take advantage of those resources.
For instance, individuals or families in need of food can call the USDA’s National Hunger Hotline to find emergency food assistance in their area, such as community kitchens and food pantries. For a comprehensive list of social services and other sources of help, visit 211.org or call 211.
You can also use online platforms like Nextdoor and Craigslist to search locally for free items such as clothing, furniture and books.
Step 5: Be strategic with your money
If you find yourself unable to cover all your expenses, be aware of how to pay bills strategically to limit damage to your finances.
Tap your emergency fund if you have one — that's what it's for — and you may need to relax your rules about using credit cards. You can work on rebuilding your emergency fund and paying down debt after you find your next job.
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Step 6: Explore ways to make or borrow money
You may need extra funds to help cover the gap between the time you're laid off and when unemployment checks come in or you return to work. If you’re looking to get cash fast, there are several options to consider.
For example, you can try selling things online, pet sitting or picking up another side gig to make money. You can also seek loans from family or friends, banks, credit unions and other lenders. Make sure you understand the terms and borrow only what you can afford to repay. Learn more about different hardship loan options and which ones to avoid.
Step 7: Examine your health care options
Health insurance coverage through your employer often continues until the end of the month, or longer, after a layoff. But that may not bridge the gap until your next gig.
Job loss is considered a “qualifying life event,” meaning you can get health insurance outside of the annual open enrollment period. Explore these options:
Your parents’ plan, if you’re under age 26.
Your partner's employer-sponsored plan.
The health insurance marketplace (HealthCare.gov). The website also can help you understand if you and your family qualify for Medicaid or the Children’s Health Insurance Program.
Continuing coverage through your former employer via COBRA insurance.
What to do if you're worried about a potential layoff
A layoff can come from nowhere but sometimes you can prepare, especially if you’re tuning into the news and notice industry-specific trends that might make you vulnerable. If you suspect a layoff might be in your future, take some steps to soften the blow:
Build up your emergency fund. Pull out your budget and locate spending that can be redirected toward your emergency fund. Putting away a little extra each week or month can help you be more prepared.
Make a list of items in your budget you can do without, if needed. Noting what’s expendable beforehand will save you time and energy if you find yourself out of work and needing to act quickly to readjust your budget. Highlight memberships, subscriptions and other “extras.”
Update your resume and online job profile. Now’s a good time to make sure your information is current. If a layoff occurs, you can hit the ground running with new applications without the stress of redoing your entire resume.
