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Updated: Mar 14, 2024

What to Do When You Get Laid Off: 10 Ways to Bounce Back

Losing your job can be devastating. Protect your finances with this 10-point financial recovery plan that shows you what to do when you get laid off.
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So, if you got laid off yesterday, last week or last month, you’re in good company.

The question is, what do you need to do today, so you can protect yourself and your family from losing everything you’ve worked for?

1. Breathe

There’s no question losing a job can be like taking a punch to the gut.

You’ve been just told in so many words that your company with whom you’ve invested so much of your time and talents can get along fine without you.

It happens, as just noted about 300,000 times a week, so take a deep breath and steady yourself.

Wobble a bit, stagger if you must, but stay on your feet. Don’t beat yourself up on whether you could have done more.  

Second guessing won’t get you your job back. Besides, maybe you and your prior company weren’t a good fit. Maybe your company was struggling financially.

Whatever you do, don’t let rejection get under your skin.

Be so bold to have fun with your dismissal and use it to find newer, better opportunities.

“You have to learn to take rejection not as an indication of personal failing but as a wrong address,” said author Ray Bradbury.

2. File for unemployment

Filing for unemployment has gotten easier over the years.

Gone are the long lines of glum, forlorn people snaking around a building shuffling off to what looked like their own execution.

Typically, you file for benefits online through your state’s employment development department after which you should be contacted by a representative who will interview you to determine your eligibility and job benefits.

Benefits are funded by state and federal taxes that employers pay. Also, ask your employer for a form or document stating that you were laid off.

3. Secure your health coverage

The 1986 Consolidated Omnibus Budget Reconciliation Act or COBRA was passed to ensure that if you lose your job, you also won’t lose your employer-sponsored health insurance.

Your employee coverage will last up to 18 months.

That said, you alone now have to pay the cost of your coverage.

While you were still working, your employer, on average, subsidized about 70 percent of your health care expenses.

Without that subsidy, you could easily see your monthly out-of-pocket health care expenses triple.

You may only want to keep this coverage until you find a cheaper alternative, which the Affordable Care Act could provide, based on your sharply reduced income.

Since you’re now out of work, you could qualify for subsidies in the form of lower monthly premiums that replace the employer subsidy you lost.

Go to to find out if you qualify for subsidies and how to contact your state’s exchange marketplace.

4. Determine how much you need to live on

If you’ve never done a budget because the money always seemed to be rolling in, your job layoff will be a wake-up call.

Until you replace your lost income -- especially if you don’t have an emergency fund in place -- you need to go into bunker mode, totaling the exact amount of money you need each month to pay your rent or mortgage, keep the lights and water turned on and the refrigerator stocked with the basics.

Your goal is to downsize your lifestyle every way you can until you can find a suitable replacement income.

In your assessment, determine exactly how long you can go without a paycheck. A day? A month? Three months?

5. Check your cash reserves

Every penny in your checking and savings accounts becomes the equivalent of oxygen.

With each withdrawal, your financial health becomes more fragile.

So that you don’t become cash poor, you might have to contact every creditor who debits your checking account through automatic bill payment to avoid overdraft charges or other penalties.

When the money was rolling in, you could treat all of your creditors the same.

Now that you’ve lost your job, you might have to pick and choose who gets paid first.

6. Let creditors know where they stand

If you can’t pay certain creditors or can only pay a partial amount, inform them about your situation.

If, for example, you have student loans, you will qualify for a six-month forbearance.

That’s one less creditor breathing down your back while you to right the ship. Interest, however, will continue to accrue.

Many utilities also offer what are known as level-payment plans.

This is not a discount program; you don’t receive any rate reductions, but if your utilities spike during a certain period of the year, and your layoff occurs simultaneously, a level payment might help smooth out the ups and downs of your bill by averaging your consumption and costs over a 12-month period.

So instead of paying a $300 electricity bill for July when the air-conditioning was going non-stop, you might only pay $150 for that month.

The plan could buy you time while you look for work.

With other creditors, you might be able to negotiate lower interest rates.

If you have been making your payments on time, your request will likely be considered.

If not, play your “I’m-taking-my-business-elsewhere” card. Make sure you’re speaking with a supervisor who has the authority to lower your rate.

7. Line up emergency loan sources

Without a job, you will find it difficult to get a loan from a financial institution.

More than likely, you’ll have to rely on family and friends to tide you over.

Let them know right off the bat that you lost your job.

Prepare them for the possibility that you might need to borrow some money until you’re working again.

If you should have to ask, you’ll quickly learn who the people are who will stand in your corner when things get tough.

8. Decide what to do with your 401(k)

If your 401(k) has been performing well for you, you probably should keep it where it is.

If the returns have been mediocre, then roll it over to a bank or brokerage company.

Try to refrain from cashing it out to live on the money.

Withdrawals are taxed as ordinary income and may be subject to a 10 percent penalty if taken prior to age 59 ½.

You may be able to avoid this penalty, however, if you separate from your employer in or after the year in which you turned 55.

But if you’re younger, you’ll likely take the double taxation hit.

9. Ramp up your job referral network

About 80 percent of all all jobs are attained through referrals.

Therefore, start beefing up your LinkedIn and Facebook accounts as well as the use of online job aggregators such as Monster and Indeed, where you can post your resume.

Don’t be afraid or embarrassed of broadcasting to the world that you’re out of work because, remember, 80 percent of your network got their jobs through a similar cry for help.

10. Start cleaning house (and your garage)

Being out of work gives you that urgent push to tackle the shores you’ve put off for far too long, like cleaning out the garage or unclogging your driveway by selling an old car whose registration you continue to pay, though you never drive it.

Uncluttering your house might unearth a few treasures that you can sell at a garage sale or post on Craigslist or eBay.

Cleaning house also might give you the mental mojo you need to come up some fresh money-making ideas.

You might find out that you’re pretty good at turning a profit on eBay, which could turn your hobby into a full-time paying enterprise.

Your opportunity is now

Losing a job is never fun. Faster than you can say “I lost my job,” it can disrupt every aspect of your life.

In the snap of a few words, it can disconnect you from your friends, colleagues and the daily rhythms of life that help define who you are and give you a sense of place.

But instead of being a turtle that wants to go back in its shell, you’ve got to keep sticking your head out there, telling yourself, “Slow and steady, slow and steady wins the race.”

Turn your situation into a rare opportunity to lift yourself past where you’ve ever gone before.

Like a team that finishes last in its league, you’ve just been handed the first lottery pick. You get to choose the next turn and direction in your life.

Let this rare moment in your life inspire you to develop a higher self-image and sense of purpose, a higher commitment to change and growth, a higher level of goal-setting, a higher degree of discipline that will allow to achieve your goals, and a higher sense of wonder.

When you aim higher, people will hire you!