FREE NEWSLETTER
Go to main Forum page »
A couple weeks ago, the team I was part of was eliminated. My boss- and his boss-were also laid off, along with about 10 of us. The industry is facing significant headwinds, and our organization was no exception.
This is the first time in my life I’ve been laid off, and I never imagined finding myself in this situation. I’ve always believed in strong work ethic in creating and delivering value to both the organization and the customer.
Life happens, of course. I’m a big believer in the idea that when life gives you lemons, you make lemonade. I have no doubt I’ll land on my feet again – sooner rathern than later – and I’ve been actively looking for a new opportunity in the Greater Philadelphia area.
From a personal finance perspective, I’ve shifted into the cash-conservation mode, while aiming to minimize the disruption to my family. I’ve paused contributions to our two kids’ 529 plans, extra principal payment our mortage, and Roth IRA contributions for both my wife and myself.
I’d welcome your input: what other financial moves you think might be helpful for those of us navigating a layoff? Thank you.
I think you may be looking at this all a little backwards as the time to prepare for unemployment is when you’re employed, as the day you become unemployed with the exception of the items you mentioned there are few levers that can be pulled that will result in immediate financial relief.
Now that you are employed again you might want to hold off on making 529 or Roth contributions or extra principle payments, in order to build up your emergency fund to a little more than it was before. You might also want to look at all your other spending to eliminate the unnecessary and prune the necessary.
To stoke the imagination: I recently just cancelled my Collision & Comprehensive and before that switched internet providers.
Really good news. Congratulations on your new job.
A couple of random thoughts regarding taxes and benefits.
If you can contribute to a 2025 401(k) at your new employer be sure that the elective combined contributions at your old employer and your new employer do not exceed the 2025 maximum.
Ditto for HSA contributions. Watch out for employer HSA contributions from two employers plus your voluntary contributions exceeding the 2025 annual maximum.
If you have a need for life insurance your starting at a new employer may allow you to buy additional group term upon hire even if your health would otherwise subject you to pass medical underwriting.
Be sure to get your beneficiary designations on new retirement plans and group life insurance as you intend. You want to be sure to have the demographic information for all beneficiaries to be able to do so as soon as possible.
Best wishes for a happy landing.
Bill
If you have an HSA at your old company, you can transfer it to Fidelity. Fidelity doesn’t charge any administration fees.
Your new company is lucky to have you! Stay in touch.
Thank you, Bill!
Hi everyone. A quick update here: I am excited to start a new job in Philadelphia next Monday. Hopefully I will never experience another layoff in my life, as it was certainly a difficult event. I am grateful for many support I receive, including here at HD.com community. Thank you!
Congrats!!
Good luck with the new job!
Congratulations and best wishes.
SCao. Congratulations on your new job. Glad for you. Chris
Thanks for giving us an update and congratulations on the new job!
If you don’t already, now is a great time to start tracking your expenses. Every. single. one. If the goal for right now is to conserve cash, make sure everyone in the family is on board with that objective, and communicate that if you’re reducing discretionary spending as a family, this is likely a short-term phenomenon. It’s a fun experiment to figure out how frugal you can be without incurring major discomfort.
I’m late with this response, but best of luck with the employment search. I was unemployed 3 times in my 43-year career as an engineer. I was fortunate to find work fairly quickly, never being out of work for more than six months. I did not always move into the next ideal job. Luckily, my final job search resulted in a 20-year career that allowed me to retire on my own terms.
I hope your job search is productive and fruitful. I know that job search protocol is much different today than it once was, so I’m not sure my advice is relevant any longer, but I always approached a job search as my primary job. I read the ads, I contacted professional organizations and former coworkers. I kept up with filing for unemployment compensation. I took a few freelance/contract jobs. But everything I did was focused on finding the next fulltime, benefits-providing job. I considered myself “open” to relocation, but it was not my preference. Luckily, everything worked in my favor in the end.
Looks like you are preparing well to make your next move. First, have confidence that although this is an unfortunate circumstance, it is also a major opportunity to do something different that will work out well for you and your family. Now is the time to expand your horizons and think outside the box. Use all your skills and time, to land your next opportunity. You are wise to look for assistance from Humble Dollar, which is a wealth of experience. The best to you in the future, and you will make it Bright.
I admire you’re the “glass is half full” attitude. Somehow in my career of 36 years in big pharmaceutical industry I avoided this situation. Nothing I did….just lucky on my part. Based on your comments you were prepared and you continue to manage this bump in your career path. Prayers that all works out and you end up in a new and better direction.
Not a money comment. But don’t let this shake your confidence in yourself, and your abilities. These things can happen, as you know, with no correlation to one’s performance. Unless you have a ‘fatal flaw’ in some area of your performance, you should focus on finding positions that let you exploit your strengths as much as possible.
Thank you for sharing this article. I’m impressed by what you’ve accomplished so far and your perspective. Your emphasis on a strong work ethic and delivering value will make a positive impression in an interview.
I got laid off (with two months’ notice) when my company filed for bankruptcy. My first task was to schedule doctor, dental, and vision appointments while I was still on the company policy and, of course, decide on a healthcare plan. FYI, if you have an HSA, you can reimburse yourself for past out-of-pocket medical expenses as long as the expenses were incurred after your HSA was established.
I’m trying to think of additional financial moves…we increased our home deductible, which saves us $400/year. And we went on the budget plan for electric, which smooths out the payments over the summer months when A/C costs are high.
I signed up for a resume class offered by the unemployment office and was impressed by how helpful it was. The instructor even offered to review and critique my resume. I used AI to give me ideas to improve my resume. Just type in “give me bullet points for this job description” and then copy in the job description. I also used it to help refine my cover letter. The unemployment office also offered classes on interview techniques.
From a support standpoint, it was helpful for me to call or meet with co-workers (who were also laid off) for coffee. In addition to a few much needed laughs, we exchanged ideas and networking tips. In fact, I got a job through a tip from a co-worker at a previous company.
I agree, you’ll get a job sooner than later. All the best!
I’ve been between jobs a few times in the last 25 years. First, look at this as an opportunity! Networking will be how you get your next paycheck. Use any benefit for executive coaching or outplacement your former employer will provide. File for state unemployment benefits. Buff and polish your resume and LinkedIn presence. Stay in touch with your former coworkers and share leads. Attend professional and industry events for contacts. Consider self-employment opportunities. I’ve been self employed for 7 years after I helped my last employer sell the business.
What industry/position scope would you be interested in, I’m in your region.
Hi Mike. I’m primarily exploring opportunties in the heathcare industry, with a focus on continuous improvement, as well as program and project management. I’m also open to roles in the manufacturing sector, given that I spent the majority of my career with a Fortune 500 company in that space. Thanks!
Ouch! I wish you well. It seems you are taking positive steps about managing cash flow and debt. You didn’t mention credit card debt, if you have any. Some cards allow altered (improved) payment terms under extenuating circumstances.
I’m glad you are taking positive steps to minimize disruption to family. These circumstances can be trying.
I’ve read the other comments. I’d add looking into the possibility of adjusting your insurance coverage.
Thank you, Norman. We thanksfully have always paid off our credit cards balance every month as a financial habit for many years.
My best wishes to you in landing your next position, and soon. I’ve been through this a few times. Plenty of very good suggestions here on dealing with your current situation.
Looking ahead, one point I’d like to offer is that once you’ve secured your new job, use the financial lessons and adjustments learned during this period to help keep more of your new income stream in your asset pile. Money is (or can be) just too easy to spend and old spending habits die hard. Even little things add up quickly. As mentioned elsewhere here, we learned a lot about our cash flow during those times that still help us today in several ways. It’s a bit like sorting through needs vs. wants with an improved process before you make “that purchase”.
In the meantime, as the old saying goes, “When going thru hell, keep moving forward with your head held high and act like you own the place.”
Thank you, G W. I appreciate you for shairng your wisdom. I agree those moments in life can be very clarifying and help us keep learning and moving forward, and never wastes a crisis. :). I like the quote you have. Thanks!
All of the recommendations below should be your first tranche of moves, ie to limit expenses. For a second line of defense, in the future, if you have significant equity in your home I recommend you apply for a home equity line of credit (HELOC).This is what I did when I knew I was losing my job in a few months as our contract at the time was heading towards termination. Luckily since our expenses were low we were able to live off of just my wife’s salary for about six months before I could secure new employment.
A HELOC should always be the second line of defense as it is always better to first cut back on expenses than to potentially take on more debt. The benefit of a HELOC is you only have to pay interest on the loan for a specified time, but at some point in the future you would be required to start paying off the principal. Be aware though that the interest rate is variable, and is usually set for X percent above the prime rate (ours was actually 1/2% below as we arranged for automatic monthly payments).
This is the route I plan on taking in a few years when we add a three season porch after we both claim Social Security benefits at 70. We will pay the balance off within about five years. We are paying for the addition this way in order to limit our taxes to the 12% tax bracket, and to avoid IRMAA payments by not paying for the entire project from our retirement accounts in the year it is built.
PS The recent federal legislation will allow us to pay off the loan earlier due to the additional 12K deduction we can claim just for being old (65 or older).
That is a very interesting idea about tapping your HELOC to pay for your home improvement instead of pulling money out of the retirement account. I probably would have just assumed “less debt is better,” but in this case, it sounds like you have a plan to pay it off, and that you’ll come out ahead paying interest on the HELOC rather than taxes on a withdrawal.
We lined up a HELOC last fall, knowing my retirement date was on the horizon. No real plans to use it at this point, but it’s in place now.
Thanks for sharing, David.
I’m surprised no one so far has mentioned the six month of expenses emergency fund. Can we assume you have such a fund to help you through this period?
Seems like if you were making extra mortgage payments and Roth contributions they would be after building up the emergency fund.
Great question, Mr. Quinn. I do have access to Roth IRA, however I will try to avoid touching it if all possible. I like Charlie Munger’s quote about “The first rule of compounding: Never interrupt it unnecessarily.”
One learning related to personal finance I have through this life experience is: I should build a bigger emergency fund and have it in my Ally Bank saving account.
I hope everything is going well for you, Mr. Quinn. I enjoy your writings over the years here at HD. You are a cornerstone of our community here! Thank you.
Yes, I was wondering about this, too, and agree with Dick that an emergency fund should take priority over mortgage prepayments. Job loss (or illness/disability that prevents working) is the biggest reason why an emergency fund is so important.
I would encourage you to think about your 2025 taxes.
If you were a W-2 employee your 2025 federal and state tax withholding’s were likely based on your earnings being the same for all of 2025 and thus if your second half of 2025 earnings are substantially smaller than the first half of the year then your 2025 taxes may be overpaid. An analysis of where you are on your 2025 taxes should help you make informed decisions about related tax matters for the rest of 2025. When you are conserving cash you do not want to be making a interest free loan to government if you can avoid doing so.
If you were participating in a 401(k) or similar plan at your former employer you may want to consider rolling the balance to a IRA in a direct trustee to trustee transfer if your former plan has unwelcome administrative charges and expensive investment options. Depending on the duration of unemployment and the timing of your future employment you may want consider a Roth conversion in 2025 or a Roth contribution for 2025 if eligible if you can do so at a low (or no) tax cost and your finances permit you to do so. If your former 401(k) plan had really good provisions you may want to wait to decide to do any rollover/transfer until you see what plan is available at a future employer.
If you have chosen to provide your family health insurance needs though COBRA you may want to determine if that is the best option or if coverage through an ACA plan is more affordable if available to you.
If you have child tax credits or other non refundable credits you want to assure yourself that you have sufficient tax liability in 2025 so that none or little of any available credits are unused and lost.
Flexibility in your decisions is important in my opinion with the resolution of your future employment uncertainties key to your decisions.
Your children’s future decisions will likely be impacted by how you approach this rough period in your work life as I expect they are keenly watching and learning. I expect in the years to come you will see in their actions and decisions the example you set. I think it is likely you will hear “Thanks Dad” down the road.
Great points, William. I appreciate your thoughts about taxes and health insurance. Thanksfully my wife is still employed, so we will all switch over to her insurance in another few months if I am not yet employed by then. I agree with you on our kids are always watching. I have mentioned to them that we will focus on what we can control in our life, and always do the best we can. So far, both kids have been enjoying the summer break as usual. My wife and I have been very intentional in minimizing the disruption to our family life, while we conserve cash. Thank you!
You make some excellent choices suggestions. Usually I would agree with you regarding COBRA, but given he expects to have a new job quite soon, it may not be worth the disruption.
I agree. As I am certain you know, the terminated employee typically has 60 days from the event causing eligibility for COBRA to elect such coverage. With the availability to switch to his wife’s group policy that likely will be the best path to follow, of course there are always exceptions. Reading between the lines SCao may have some extended health coverage as part of his severance package. I am not knowledgeable about how continuing health coverage impacts the 60 day window.
For him and others who have to make COBRA decisions I recommend becoming knowledgeable about COBRA provisions. I would start such learning at the CMS site-
https://www.cms.gov/cciio/programs-and-initiatives/other-insurance-protections/cobra_qna
Perhaps you have a learning source recommendation for anyone facing the COBRA coverage.
Thank you for your faith, Mr. Quinn.
The first time I got laid off, I took a hard look at our investments, sold some high expense funds, and consolidated everything at Vanguard. We’re probably better off now that I was laid off than if I’d kept my job, even though I was out of work for 14 months. Cutting dining out and takeout saved a bunch as well.
Thank you for sharing, Randy.
I was in the IT industry. An unfortunate aspect of that was layoffs … about once every 4 years or so.
All the ideas listed on conserving cash are excellent.
It might take a while but if you search diligently you WILL find a new job.
Best of luck!
Thank you, Winston! I agree being diligent is super important and the job placement service through my severance package has also been very helpful as I navigate through this.
Sorry to hear about your layoff. I admire the clarity and courage you’re showing in facing this challenge and seeking wise counsel. Your openness about learning from past investment setbacks highlights real strengths—family-centered priorities, financial resilience, and a commitment to continuous learning. These qualities will serve you well as you navigate this period.
Losing a job is never easy, but difficult times can sometimes spark creativity and lead to new opportunities. While I can’t offer specific financial advice without knowing your situation, I wish you and your family strength and support as you move forward.
Thank you for your kind words, quan!
I was laid off and out of work for about six months, many years ago. I immediately cut back on all unnecessary expenses and made sure to get up early, submit resumes every day, and meet with headhunters. I eventually decided to switch industries, where my skillset was compatible. Ended up being a better career path.
Awesome. Thank you for sharing your experiences, Andrew. I definitely agree on being diligent on the job searching. I have kept up a daily schedule and an Excel table to keep track of applications, etc. Thanks again!
I posed this query to Copilot AI: “X has suddenly and unexpectedly been laid off. What are a dozen money-saving steps for X to take in his family finances in order to conserve cash?”
Among the responses were these:
Wishing you all the best!
Thank you. Chat GPT has been quite helpful as well. In another week or so, I may start doing Uber Eat, as the daily job searching does not take 8 hours for me and I do not like to be bored. I appreciate your kindness, 1PF!