I Lost My Job – Now What?

In a time of increasing unemployment and job loss, I thought it might be helpful to write this post. It is my hope that it is a help to those who have experienced a job loss.

A couple reviewing their bills after job loss

Step One – Prioritize. Prioritize. Prioritize.

When you lose your job and paycheck, all expenses must immediately be prioritized. Some expenses might need to be reduced, and others need to be eliminated.Stack of bills

The best way to start is by eliminating expenses that are “wants” rather than “needs.” Let me be state some items that are “WANTS”. Cable/satellite TV, internet (YES! If you’re not using it for work or school it isn’t a necessity), home phone, dining out or take out, entertainment (the type that costs money), subscriptions, and clothes.

Let me be clear, I have met hundreds of people who have “tried to hold on” to items that were WANTS not NEEDS.

Here is my general order of priority for expenses:

  1. Food & Medicine (groceries – off brand/generics)
  2. Housing/Utilities (loan, insurance, taxes, utilities)
  3. Transportation (loan, insurance, taxes, gasoline)
  4. Secured debts (boat, motorcycle, four wheeler, furniture, etc.)
  5. Unsecured debts (credit cards, student loans, etc.)

Take some time to put together a written spending plan. Once all of the expenses are itemized, prioritize them based on what type of expense they are.

Step Two – Understand and Fill The Gap

I have met a lot of people who are so overwhelmed with making their financial ends meet that they have given up hope. They have let their emotions convince them there is no hope of making it work at all.

This is not the case! It CAN work. It CAN be dealt with! It’s NOT hopeless! However, you must understand the gap and fill it.

What is the gap? The gap is the amount of additional money needed to make the budget balance. While the US Government might print more money to “fix” the situation, we cannot do that (although it does come with free room and board if you do print your own money).

Prepare a written spending plan using the priorities discussed in Step One. This will allow you to understand the gap.

Example of a budget that is not balanced. Outgo is more than income.

How do you fill the gap? Well, using our equation, INCOME – OUTGO = EXACTLY ZERO, there are two ways – reduce OUTGO or increase INCOME.

Reduce OUTGO

  • Eliminate unnecessary expenses (cable, subscriptions or memberships, home phone, cell phone)
  • Re-quote homeowners (or renter’s) and auto insurance
  • Modify entertainment to no-cost and low-cost options (movies from library, hiking, swimming at the lake, fishing, Hulu.com)
  • Eliminate health club membership (run outside)
  • Sell the car and purchase a paid-for beater
  • Buy off-brand groceries, use coupon services, shop at Aldi, prepare more food at home
  • Carpool to work
  • Work from home

Increase INCOME

  • A motorcycle for sale by owner to help create income during a season of job lossApply for jobs like crazy – Monster.com, Zip Recruiter, Career Builder
  • Get a job – any job will do for the short term – contract/temporary positions, deliver pizza, clean houses, fast food, grocery store clerk, work for a family member, commercial cleaning, deliver newspapers
  • Sell stuff – yard sale, Ebay, Craigslist, Facebook Marketplace – that big ticket item you’re holding onto could be the key to getting you through this season


What other ways would you or have you increased INCOME or decreased OUTGO?

Step Three – Stay Away From The Doubters, The Naysayers, and the No-sayers

I have seen it countless times. A person is in a financial pickle and is pursuing income, and they allow others to shoot down their ideas for generating additional income or reducing outgo.

Here are some examples:

  • “You don’t need to get a second job. Think about how hard that would be.”  Oh, so this is supposed to be easy?
  • “You can’t possibly get employed there. They only hire such-and-such type of people. Not you.” If you don’t apply, you DEFINITELY will not get the job!
  • “Why would you sell your motorcycle? I will go broke before I sell mine.” Always check the financial advice against the financial condition of the advice-giver.
  • “Why would you go to a financial counselor? That is just admitting that you are in a bad financial situation, and they will yell at you for it!” Look, the fact is that it is a tough financial situation. As a financial counselor, it does no good to yell at someone about past financial mismanagement or a tough financial situation. A good financial counselor is focused on preparing a plan to walk out of the current crisis and prevent future ones.
  • “Your grandparents struggled with money. Your parents struggled with money. You will struggle with money.” Wrong. Just plain old wrong.

Remove the negative people from your life. Focus on using this job loss as an opportunity to go do something you have always dreamed of doing or as a stepping stone to get toward your calling.

I wonder what other negative statements you have heard (or are hearing) as you went through a job loss?

Step Four – Never Give an Employer Such Power Again

If you have been laid off and are panicking about what to do, let me ask you a question.

If you had $20,000 in the bank, would you be as panicked as you are right now?

I suspect the answer would be, “Not nearly so much as I am right now,” or “Not at all.”

When you build a HUGE emergency fund of at least six months’ worth of expenses, you build a hedge of protection around you. It protects you from being horribly impacted by your employer’s decision to cease your employment.

Do not get me wrong. A pile of money does not address all of life’s issues, nor is it a worthwhile item to place one’s trust in, but it is excellent stewardship to hold financial reserves. It just makes sense!

Taking Control of Your Financial Stability

So … If you have not experienced a job loss, resolve today to build up an awesome emergency fund to protect yourself in the future.

If you have lost your job, resolve to do what you can to help your financial situation.

You CAN do this! Saving up a ton of money and denying yourself of some wants might not be fun in the short term, but it is SO WORTH IT!

Taking action can help you minimize the negative financial effects of a job loss.  Remember these steps, and don’t be afraid to get started TODAY.

Meeting with a financial counselor to help plan during a season of job loss

First, prioritize your expenses so you know what they are and which are the most important to pay.  Second, understand and fill the gap.  During a season of unexpected job loss reducing your expenses and looking for creative ways to create new income can help you bridge the gap until you find steady employment again.  Third, don’t listen to people telling you your situation is hopeless.  Surround yourself with people who will encourage to make tough decisions that will help you in the long run. Selling that motorcycle or taking the part time job may not be your first choice, but it can help you win in the long run.  Finally, resolve to build up a large emergency fund so in the future an unexpected job loss doesn’t have the power to derail your finances.

If your job or income has been affected by COVID-19 we have free resources to help you on our website.

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