In December, I shared a guest post that provided 10 essential steps to take before you’re laid off. But what if it’s too late? What if you’ve already lost your job? In this economy, more and more people are facing that situation, including long-time GRS reader Allen. He writes:

I was laid off yesterday. If it weren’t for Get Rich Slowly, I wouldn’t have any money set aside. As it is, I have a small emergency fund.

For the past 3-1/2 years, I’ve been a quality assurance engineer. Before that I worked at Best Buy. Before that, I dropped out of college. In this job market, I cannot easily find a job in my field; all of them require a college degree, regardless of experience. To this end, I’m thinking about finishing my degree. I’m 28. I haven’t been in school for half a decade. My study skills are rusty.

I’ve been trying to focus on the positives because the alternative isn’t helpful. I will get back on my feet, but I don’t know how I’m going to pay for my home and car in the short term. If I do go back to school, I might have to work full-time, too. I know people have done more with less, but that doesn’t make this any easier. I also have a lot of questions:

  • How do I contact ex-bosses (or ex-coworkers) for letters of recommendation?
  • How do I politely ask lenders if they might be willing to suspend loan payments without affecting my credit score?
  • How can I move from an already thrifty existence to something more meager?
  • I want to roll my 401k into an IRA. Which company should I use? Vanguard?

This is all new to me. I know people have been laid off before — even my father was laid off three times when I was a boy — but this is the first time it’s ever happened to me. What next?

I’m a fan of education, and I applaud Allen for considering this route. But I think he needs to be cautious of new debt while doing his best to manage the debt he currently has. If he’s already living a frugal lifestyle, there’s not going to be much room for him to cut further expenses. (Can he give up the car?) That means his top priority has to be generating additional cash.

For now, I believe Allen should do what he can to bring in some sort of income — any income. Pick up a short-term job, even if it seems like a dead-end, but don’t let it become permanent. Better yet, seek help through a temporary agency. (When I was working at the box factory, we often found great future employees through temp agencies.) But I’ve never faced this situation before, so this purely theoretical advice seems inadequate.

Have you been laid off? How did you handle it? Do you have general advice for Allen’s situation, and for others who might have lost their jobs? What about his specific questions? How do you cope with a layoff when you already live frugally, and when you still have debts to pay?

This article is about Ask the Readers, Career  Friday, 17th April 2009 (by J.D. Roth)