Ask the Readers: Help! I’ve Been Laid Off!

I was laid off in January this year. Lucky for me I knew it was coming as my company had been downsizing staff every quarter for almost 2 years every. I had stashed nearly 2 years worth of living expenses, in addition to having an online business that generates enough to cover some of my expenses per month.
I am going to graduate school in the Fall to pursue a higher degree. There’s a lot of scholarships for students which could cover housing, tuition, books and there might even be money left. You could work up to 40 hrs/week at some job just to get some income. It would be best if you could work at your school in the library/computer lab or another job which would allow you to study a little at work..

I would look for some immediate work to help cover your bills in the short term. In the long term, I would consider finishing the degree, he didn’t say how long that would take.

I am an engineer and I know it is hard for people without a degree to get a job doing engineering work no matter how talented they are. Finishing the degree will certainly help job prospects in the long term.

Since Allen already has experience at Best Buy perhaps that would be a place to start when looking for some immediate income. Also he could possibly continue nights/weekends if he does go back to school.

As far as lenders go, call & ask what they can do. When I was laid off the holder of my car loan suspended 2 months payments (adding them to the end of the loan) to give me some wiggle room. It was not reported, and did not affect my credit.

Allen, I would take JDs advice and attempt to find something with some income, even if significantly less than what you did make. I would caution against starting school again until you at least have a job in place. When some stability has returned to your life, then look to build your career.

I dropped out of college, and then returned at 26 to finish my degree after the birth of my kids. I worked full time, and attended a local university for three hours, four nights a week. It was both the most difficult, and the most rewarding, thing I’ve ever done. I wish you the best, and hope this opportunity leads to bigger and brighter things in your future!

I was laid of Oct 31, 2008 and am still without a J.O.B. to this day. The unemployment checks do help but only barely.

So, my fiance stepped up and took on a paper route with our local news paper that now brings in an additional $700-800 per month. I’ve stepped up my efforts to offer more consulting services at lower prices than competitors as side income (this is allowed within certain limits) while I look for a job.

We cut back on all expenses that are not necessary. We STILL save 10%, invest 10%, and tithe 10% of all money coming in even though there is much less of it.

As for your 401k? I’ve been laid off 3 times in the last 5 years and have had to roll over my 401k each time.

What I did was open up a Traditional IRA with Scottrade (http://www.Scottrade.com – please note: If you decide to do the same, which I HIGHLY recommend as they are a great company with excellent rates, please send me your first/last name and email address. I’ll send you a referral and we both get 3 free trades!). With that done you then ask for the transfer form from your current 401k administrator. Tell them you want to roll 100% of the amount DIRECTLY to Scottrade so as to avoid taxes.

Now, this next part depends on your balance. If you don’t have all that much in your 401k ($5k or less) then what you’ll want to do is open a ROTH IRA account with Scottrade. Once you have that done roll the entire amount from your newly minted Traditional IRA into your Roth IRA. You can elect to have Scottrade withold some of the money to pay the earned income tax (I go off of what my last years effective tax rate was and what I think the upcoming one will be and give them that %). You can elect to NOT have them withhold some of the money and at the end of the year you’ll just have to pay the tax when you receive the 1098.

If you would like to hear more let me know but this will get you on a good path for dealing with your 401k and easing the stress of being laid off. Good luck!

Don’t let the fear overwhelm you. In the end, it’s only money. Your life is about so much more than your job and your income. If you never worked again and absolutely had to live off of friends and family, you could still live a full and rewarding life. Men have an especially hard time with unemployment and are a high suicide risk. It’s just money.

Everyone you know should be aware that you’re looking for work. Even people that aren’t in your field probably know people that are. That’s your best chance of getting a job. Sadly, many people don’t want people to know that they’re out of work.

Be realistic about the time it will take to find a job. I read somewhere recently that a rule of thumb is that it will take 1 month per $10k of salary to find a replacement position. So it could take 6 months to replace a $60k job. It won’t happen next week, no matter how many resumes you blast out. The hiring process takes time.

What are you going to do with that time? I’ve told plenty of laid-off friends to go take a cheap vacation. Visit your distant family. Go sit at the beach. Volunteer somewhere. Get involved at church. Hang out in bookstores and libraries, getting a free / cheap education. Go to networking events. Hang out with self-employed friends. Have lunch with old friends you haven’t seen in a while. Start a blog.

I’ve never been laid off but I was unemployed for a almost a year after finishing school. One of my regrets was not using that time more wisely since I was more or less sitting around waiting for that “perfect job” to somehow appear.

I think this post is brilliant in terms of how to spend at least some of your time while laid off:

http://blog.penelopetrunk.com/2009/03/06/5-things-to-do-when-youre-unemployed-hint-its-not-job-hunting/

First, file for unemployment benefits immediately. Make sure you understand how COBRA works for your health insurance. Since the premiums are steep, you might want to wait til closer to the end of the filing period (I think it’s 45 days) before signing up. If you did incur a medical bill before signing up, your coverage would be retroactive and you’d get reimbursed as long as you were still within the sign up period.

Think carefully about taking a quickie job – you want one that pays substantially more than unemployment. Once you are off unemployment, you lose easy access to your state’s job training and resume help services. I believe in most states you can temp or do a freelance project and just reduce your benefits temporarily in weeks you have other income.

For pure triage, make a list of your monthly bills and immediately cut anything like Netflix (you can get dvds from the library) or cable TV. I’d keep internet service for now for job searching and research, but maybe you could downgrade to a slower speed or something (or dump it and use free wifi spots if you have a laptop or a public library). If you gave us a better idea of your budget, people would probably give you concrete suggestions. If you aren’t familiar with cooking at home and planning grocery lists in advance, get familiar.

Calling the lenders is easy. Call the customer service line and say you’ve just lost your job, and you’re interested in forbearance or hardship options. Most places will give you up to 3 months without a payment, which will then be tacked on to the end of your loan term with interest. If you have a mortgage, I’d continue to pay that with your cash on hand as long as possible.

As far as contacting people, sign up for a networking service like LinkedIn and search for old colleagues. Once you are connected, which typically provides you with some means of contact as well, then you can send a quick email saying something along the lines of “Hey, it’s been a while, great to see you. I’d love to get together for lunch and catch up. I’ve recently been laid off, and I’m interested in getting advice on next steps as I grow in this field.” People love being asked for opinions and advice. If you have a specific request, like “can you put me in touch with X at your company for an informational interview?” go ahead and throw it in there, but it’s probably worth some chit chat or a personal meeting if the request is something like “I need a 3 page personal reference written by x date.”

Speaking of informational interviews – now is a great time to request these at companies that interest you. You get to make a personal connection and let that person know that you would be interested in working for that company once you complete your degree. Then you can periodically follow up with that person in reasonable quantities.

I think completing your degree is a great idea if you can figure out how to swing it. Don’t slack off on the networking stuff while you’re in school, and take advantage of every resource on careers that the school offers.

I’ve been laid off twice in high tech since the late 90s, and after the 2nd time, I just said the hell with it and started a consulting business. No idea if this is an option in your field, but it’s something to consider.

If you have a certain amount in your 401(k), you may be eligible to leave it in your current plan. Just whatever you do, if you rollover the money, make sure it’s a direct rollover to avoid tax penalties.

Good luck!

One alternative that is a good choice for some people is to look at the military (either active duty or as a reservist). If you have concerns about recurring deployments to war zones, don’t forget about the Coast Guard. This is an opportunity for immediate income, and there are some wonderful programs for getting your education through tuition assistance and the montgomery GI bill. The military has paid for my undergraduate degree, my MBA and professional certifications. The retirement benefits are pretty appealing as well.

In 2001 I was laid off from my “dream job” as a network engineer at Cisco Systems. I was given a very generous severance package and figured that even though I did not have a degree, I had nine years of progressively move advanced job positions in information tech. I figured it would be simple to get a job in my field even if I had to take a few steps back from my recent position.

What I did not account for was the dot-com bust. In my field, in my city, unemployment went from 2% to 6% in a matter of months. The most telling experience I had was when I visited a temp agency and handed them my resume: Without even looking at it, the gentleman filed it and wished me good luck. I sent out literally hundreds of resumes and letters without a single call back. As months went on, my severance package ran out. My savings ran out. My friends didn’t understand what I was going through, they were convinced that I wasn’t really trying. On two separate occasions I was told the “When my father was laid off…” story from different friends.

This went on for a year and a half. I was forced to move out of state. I moved in with a friend who very generously offered me a room, with rent as I could pay. I was still unable to find full time work even close to the level I had been at. Eventually, I managed to get a part time job at a non-profit, the pay was a fraction of what I had been making, but it was something.

I went back to school, because I had been out of school so long, I had to start part time on a type of “probation” for the first couple of semesters.

During this time, I decided I was ready for a career change. I didn’t want to spend years clawing my back to where I had been. I switched schools, moved out of state and went back to school full time, in an accelerated program: Bachelors of Business in 2 years.

My school schedule made it nearly impossible to keep a job, so I borrowed money from the government and from Sallie Mae to fund my schooling and living expenses. I figured, with a degree and 10 years of professional experience at a variety of companies, I would not have an issue getting back into the workplace.

I graduated at the top of my class and started making plans, only to find I had another problem. My degree put me nearly $80k in debt. (The program was expedited, but tuition was the same). The job placement center at school only had “entry level” positions at $7-$10 an hour, not nearly enough to live off of and make my student loan payments.

I kept looking for work that would make the money I needed, over the course of two months I put my self several thousand dollars in consumer debt (living off credit cards).

I moved in with family and eventually found a temp job, where my degree had no impact on the decision employee me. Eventually (9 months later) the temp job turned into a full time position, once again, the decision to hire me had nothing to do with my experience or my degree.

My debt was (is) staggering. $12k in consumer debt, and, with compounded interest from deferred payments, nearly $100k in student loans. Oh, and student loans are “priority” debt, you can’t clear them through bankruptcy. The interest payments on my student loans are 24% of my *gross* income. I am facing a very real possibility of being an indentured servant to Sallie Mae for the rest of my life (I’m 38).

(Thanks to the tips on this site, my consumer debt is nearing an end, and I hope to snowball it into my student loans.)

Now we get to the end of my parable. Be *very* careful of student loans, and take a very hard look at what you expect your education to provide you with after you get your degree. I think college is a wonderful thing, but what they used to say about student loans being “good” debt holds as much water as a sub prime mortgage.

I recently went through this situation, and was lucky to get something after only 3 months of being laid off.

Some things I learned:

* get out of the house, every day, even if it’s just to do your job hunting at the library
* get on unemployment if you’re in the US, seriously. Even if you never cash a single check, they have retraining and placement services. For some careers even grants for school. You’ve been paying for them with every paycheck ever, so use them. I failed here and regret it.
* surround yourself with positive people. you’ll need the cheering, and will be extra susceptible to the “woe is me” crowd.
* your emotions are real and valid. let them run the course, acknowledge them, but don’t let them run your life.
* even if you don’t go back to school, keep learning and keep your brain engaged. Use free college course videos from Youtube or whatever. In your field if possible, so you don’t get rusty on your skills.

Sorry it’s so long. Good luck to you, and everyone else in that boat right now. Sounds like you’re in the right mindframe, so I imagine you’ll bounce back ok.

when my husband was laid off in december, we were in a situation like Allen’s- we have some debt, we had a tiny emergency fund (about £1,000) and that was it. Fortunately we still had my income which covered about 75% of our monthly expenses, and we used our savings to cover the other 25%. My husband does have a degree and was thankfully able to find another job three months later, but honestly, we live very frugally and there wasn’t that much fat to trim out of our budget. Had his unemployment lasted longer, we would have been completely screwed, that’s the long and short of it (we didn’t qualify for any sort of unemployment benefit, by the way.)

In our case, the only way to sort out the layoff fallout was by increasing income ASAP. Which means getting any job possible (I would have been thrilled had my husband gotten a job at McDonalds, for instance- career progression hardly matters when you need to eat.) We were pretty lucky that he managed to get a job in his field. He also picked up some minor freelance work, which helped as well.

@Jason Unger

I’m confused by your comments. Do you really think the advice of “make something happen and you’ll get results” is helpful? Clearly Allen isn’t wallowing in self pity, he’s asking for specific guidance/advice in how to actively take a next step after finding himself in an unfamiliar situation.

Same goes for “Spend less time worrying and more time doing.” – he was laid off yesterday – he’s already written an intelligent, well thought out letter to seek information from a community of people who likely have the knowledge to point him in the right direction and offer support.

I’m all about action and going for it – I just think that it’s also prudent to take a moment–a breath–to take stock of your situation in order to potentially avoid what could be costly mistakes.

Following is advice given to me by a very savvy businessman of my acquaintance when I was laid off. I hope it helps. (Sorry if it repeats advice above; I did not read all the comments).

“You need to begin calling all of your decision making friends and business contacts that you had with prior company,(general contractors , vendors, insurance agents, subcontractors) tell them you want to meet with them and provide a resume (perhaps buy them lunch). At your meeting you are going to tell them of your job search and ask for five people they know of who could perhaps use or may know of somebody who could use an individual with your personality, work ethic and skill set. They probably won’t have five names off the top of their head but give them a week and extract a commitment. A week later, follow up; you need the names of five of their friends who are decision makers and could use a person like you.

“Now you are going to call the five names given to you, advise them that Mr. X referred me to you in my job search and I need an appointment with you. Realize that you have now been networked in, you are more than a faceless resume and you now have the opportunity to be in front of them and sell yourself… a big step ahead of sending a faceless resume to a P O box.

“Following this methodology you can see how five good initial contacts could potentially get you in front of 25 people who are friends of friends and would be willing to help you out.”

1. File for COBRA. Make sure you qualify to pay just 35% of the premium through the stimulus package.

2. Apply for unemployment benefits IMMEDIATELY.

3. Check out any other social services you might now qualify for, including food stamps, WIC, tuition assistance — even assistance at the YMCA or any other institutions you might be a part of.

4. Don’t be afraid to ask for help. From family, friends, the government–wherever you can get it. There’s no shame in being laid off.

5. Call every creditor you have and see what they’re willing to do for you. It can’t hurt to ask.

6. Call your old employer or old colleagues and see what they can do for you, too, in terms of letters/contacts.

7. Sign up for every social networking site you can think of. LinkedIn to Facebook–it all helps.

8.Stay organized with everything. Make notes of who you talked to in the unemployment office, which companies you’ve applied to, when you called that headhunter. Keep a separate file for all your unemployment- and job search-related issues.

9. Put money aside to pay taxes on your unemployment benefits. Don’t forget, or you won’t have the money to pay this at the end of the year!

10. Know that you’re not alone. Many, many people are in your situation. You will survive–and thrive!

I disagree with JD–school loans are worth it. They improve your earnings potential, and pay for themselves. He should go back now before he gets any older–it doesn’t sound like he has a wife or kids to worry about. He should suck it up for a couple of years, get the degree, and hopefully the economy will be back on its feet by the time he emerges with a brand-spankin’-new degree.

As for frugal living options: ramen, ramen, ramen.

I’d encourage you to get your degree any way you can — hopefully you have a few years under your belt already. Many HR departments will automatically filter out people without a four-year degree. It’s not fair, but it’s reality.

If you’re in Quality Assurance (in software I presume?) then I think you ought to be able to find a new job. At least around Boston there is ALWAYS a need for more QA engineers. I’ve worked at 4 companies in 10 years in Boston and every single one was always looking for more QA. I don’t know your situation, but you might consider going to the Boston area (if that’s something you could consider). Plus, with a huge number of universities around here, you could work on a degree part time (if you’re lucky, your company will help out with that, but only the really big companies do that these days). I think an education is well worth the investment. There are a ton of studies that show that education is your best ticket to a better life.

In addition to McKenna’s comments (excellent, BTW).

11. Join an unemployment support group.

12. Post your resumes on sites specific to your skill set, make sure someone reviews your resume.

13. Get some rest. You probably need it after all of the stress you have endured – from the thought of a lay-off

14. Become good friends with LinkedIN. I was laid off in February (I am in the IT field), but through linkedIN, was able to secure consulting work with a very large company. (hooray).

15. Once you get back to work….PLAN for your next layoff/RIF (I hope that doesn’t sound negative). Be realistic, don’t spend too much, save up a 6-12 month emergency fund, and eliminate your debt.

16. Look up the Workforce Investment Act in your state. The government will pay for job training in your area. I live in Texas, and they have training in HVAC, desktop publishing, truck driving, information technology, etc. – and you can go to school for FREE. This will halp you shore up skills, and build/rebuild your confidence when you go back into the job market.

Also, since you are in QA – start writing and publishing whitepapers on QA topics, it will make you look like the expert. Make sure you have a copy editor look at your work. Post it in various QA sites, and networking groups. Don’t worry about not having the degree ..keep working on completing an online one, and move forward. I think the most important thing you can do is to add continuing education training to your resume (short courses that are relevant to QA type work). I don’t have a degree as well (but am working on it), and have managed to stay marketable.

Good Luck!

My advise, is to start reading this:

http://www.asktheheadhunter.com

As a SW QA Engineer (thankfully employed), I’d have to advise carefully retooling your resume, while continuing to apply for new jobs. In the Seattle area, it is as much about experience as it is about education. As well, I would suggest taking free online classes to beef up the resume. By stressing your areas of expertise, and your 3+ years of experience (along with letters of recommendation), I would tend to think you will be able to find a new QA Engineering position, as they are always in demand. I do have a degree (BA in Communications), but it is a far cry from the BS in Computer Science that I would have thought I needed to get this far into my career (10 years in testing, 6 years at my current company). For a wealth of free online educational material, head to academicearth.org. I’d have to say the Stanford Computer Science I: Programming Methodology (Java) is top notch!

It was announced yesterday that I would be getting laid off next Friday. I have been preparing for the news for a while now by eliminating as much debt as possible so that I have reduced expenses while I am laid off.

A former employee of my company summed up his feelings about life after being laid off pretty well which I posted on my website, Hundred Goals, in an article titled Life After a Layoff. His words are encouraging, especially knowing he is coming from the same company as I am from.

I’m a QA Engineer, and been laid off.

General tips:
1. Treat every day like your job right now is to find another job. Get up early, spend your time job hunting and networking. Find the local ASQ or other professional networks in your area and start attending meetings. Apply to every job you can.

(HINT: Personal contacts you renew or make will probably work better than blindly submitting your resume. I got the job that got me out of a layoff because I mentioned to somebody I used to work with that I’d been laid off. The next day she called me and told me to contact somebody at X company who was looking to hire. Turns out, the only reason I got past the horrid HR intake was because I called the manager directly, and the manager told HR he wanted my resume to make it into the stack they gave him to review.)

2. Immediately — audit your current expenses. Drop everything that isn’t essential — drop eating out, everything — now is the time to switch to super-frugal mode. You’ll also find that places like cable and phone may be willing to offer you a short-term substantial drop in payment. Contact them, tell them you’ve been laid off and want to move to their cheapest service or you may need to cancel service altogether.

3. If you’re a renter, consider taking a roommate, or consider moving in with relatives where you can live rent-free for a short time. Or move someplace cheaper if possible. If you own a house, now is the time to look at renting out a room to somebody if possible. Aim to slash your housing expense. (HINT: If I’m laid off again, in the first month I’m mobilizing to sell my unessential furniture and move home with my parents. I didn’t the last time, and it was a mistake.)

4. What others said re getting on unemployment right away.

5. I cashed out my 401(k) because I needed the money to live on (not enough savings, no severance). DON’T DO THAT — contact Vanguard and tell them you want to do a Rollover, they should have somebody who can walk you through it. Do it soonest.

FINALLY, RE SCHOOL —
Do you love QA? Do you want to go further in software/IT? Be honest!!! If you say yes, then put together a plan for the sort of training you need. I’d stay away from loans to go back to school for now, and start with an industry certification. Self-study for an ASQ cert and pay a few hundred bucks to take the test. Or look at a Microsoft cert.

If you don’t love the IT world, DO NOT DO NOT go back to school thinking it will help you be more employable and right now you need to be more employable, even though you don’t love it (it probably would). You don’t want the debt burden if you don’t love it. You won’t love it more after the degree, and the future outlook for the field is changing. (This is cold experience talking.) If you want to be employable in IT for the long term, look at analysis or project management. Developers/testers are turning into a commodity.

If you would study something different, make sure it will actually lead to a job worth the money you’d pay.

But I wouldn’t advise school for now. (unless you can get somebody else to pay for it) Focus right now should be to get another job.

First thing I would suggest would be not to make any sudden moves. If you just got laid off yesterday, I think the best advice is to wait a couple of days at least before making any swift moves, especially when it comes to retirement savings and such. It’s important to make the right decisions with a lot of the things that are being discussed, and I think that the emotion of the layoff can often cloud or affect those decisions.

About four years ago I was let go unexpectedly, and within an hour of getting back home, I had sent out all these e-mails asking for help and recommendations. I didn’t get a lot of great responses, and these were from people I knew. Had I waited, I probably would have approached it more personally and with less panic.

Going back to school would be a good idea, if he wasn’t already so bogged down in existing debt.

Unfortunately, QA is an unstable career path. You have to have a higher emergency fund than most people, and lower debts. It is almost always the first to be cut from the budget. I agree with #45. I’m a SDET, which is basically a programmer in QA. If you don’t love IT, then don’t rack up more debt in it. If you do love IT, going for a full degree course will be very expensive and time consuming. If you do it when you are bogged down with debt and no financial means to support it, you’re putting yourself in a high risk category for catastrophe. I recommend certification courses, which are cheaper and can be completed more quickly. You will really have to stand out against your degree peers, but it can be done.

It’s hard to get a job, even low level service jobs when you’ve been a white collar office worker. I don’t mean that as a pride issue. I mean that as a hiring issue. When I left my job during the tech bust, I didn’t think it would take me that long to find a new job. I thought it would be hard, but not as hard as it was. I found I couldn’t even get a job as a waitress – there were so many unemployed tech workers, they were asking for resumes and letters of reference for waitresses! I had zero restaurant experience. They also knew that I would be gone as soon as I got a better offer, so I never even got a chance.

I suggest starting by selling your stuff. Sell your books, iPods, old computer equipment, DVDs, music CDs – anything – to drum up money fast.

From the info, I’m not positive if he has a mortgage. If so, rent out a room in your house to someone. It will stretch your emergency fund and unemployment a bit further.

My story, incidently, is very similar to Kevin #20. Only I stopped accruing debt at $35,000. I did not go back to school because I couldn’t afford it. I took a less than ideal job paying 30% less than I was making before that I did not enjoy, and suffered through it for 5 years paying off that debt. I now have a better job, that I am facing a real possibility of losing again due to the economy, but at least this time I have no debts. I learned my lesson 8 years ago.

My opinion, going back to school when you are already broke and unemployed is not the ticket out.