The “Pink Slip” Blues
The Six Things You Should Know
According to the Bureau of Labor Statistics, the number of unemployed in July was 9.4%. Since the start of the recession in December of 2007, the number of unemployed people has skyrocketed to 6.7 million. Most economists believe that the recession is coming to an end. Despite this good news, economists believe that the unemployment rate will climb through the first half of 2010. Only then will the employment picture start to improve.
What should you do if you or someone you know is worried about receiving a pink slip? If you have time, start by paying off high interest consumer debt (credit cards) and avoid future debt. Do not make any unnecessary purchases. Hoard your cash. Make sure your emergency fund equals six months of your expenses. Focus on upgrading your skills. Make yourself a more valuable asset to your employer or future employers.
What should you do if you receive that dreaded pink slip?
First – understand that feeling a sense of shock, fear, and even anger are normal human reactions. But, you must not let that hold you back. The best weapon against fear is to take action.
Second – review your severance package. Request a copy of your company’s severance policy before you meet with your boss or the HR Director. Be prepared to negotiate for the best possible package. The best time to negotiate a severance package is at the start of your employment. Live and learn!
Third – file for unemployment benefits. It will take some time to process your claim so file as soon as possible. If you were fired with cause or quit, you will not be entitled to unemployment benefits.
Fourth – review your financial situation. Use a money coach or financial advisor. They can help you evaluate where you are, and whether you should liquidate some of your assets. They will also be able to help you prioritize which assets should be liquidated first, while keeping an eye on the tax ramifications. Your retirement account should be reviewed to determine if you should rollover your 401k assets into your own IRA.
Fifth – continue to develop your skills. Take classes at the local community college and sign up for your industry’s advanced certifications. Consider changing your career path to something more akin to your likes and desires. Consider going it alone. More businesses are created during difficult economic times than in boom times.
Sixth – review your insurance coverage. Go over all your options with your money coach or financial advisor. Look at all types of insurance coverage. Take a hard look at your health insurance. You may be able to bargain for the continuation of employer-paid health insurance for a period of time. A Federal law called COBRA requires that group health plans with 20 or more employees must allow a terminated employee to continue that coverage for 18 months. You may be able to purchase your own policy at a lower rate, so choose carefully. Your children may qualify for the State Children’s Health Insurance Program (SCHIP) which provides health insurance to children whose families earn too much for Medicare. Check your state’s requirements.