So you were just laid off. That sucks.
You’re probably wishing you saved more, wondering about health insurance, and feeling down. Don’t take it personally, layoffs can happen to anyone.
I’ve written this article to help you think your next steps as a newly unemployed person.
Urgent!!! Do Immediately!
Check your Cashflow
You need to figure out your budget. Key questions like how much cash you have in cash. How much you have in a taxable brokerage account. Do you have any maintenance fund for car/house/medical/etc that might be compromised?
Ideally you would have at least 3 months saved. If not you should really look into cutting expenses. Instead of Netflix maybe you go to the library for movie rentals. Focus on free and less expensive dates. Be creative.
The last part of the equation is income.
- Say you’ve always liked making drinks, you could get a part-time job as a bartender for the time being.
- You also could look into freelancing, a much more resilient career. It’s hard to get laid off by all your clients at the same time!
- Start the business you always wanted
- Apply for jobs
While do all this you should keep a keen eye on your “burn rate” to calculate your “runway”. How long your money will last you. For example, it could be 3 months with no part-time work or 5 months with one. If you do a “ramen” budget that maybe that increases to 8 months.
And be serious about your progress. Most businesses do fail.
Look into your Health Insurance Options
Maybe you can be added to your spouses health insurance. If not, your two biggest options are COBRA and the Marketplace.
COBRA is expensive and will continue your employer based plan. This could make sense if you have expensive medical needs. Otherwise, a Marketplace plan may make more sense. For me personally, I don’t use health insurance much and love taking advantage of Health Saving Account (HSA) eligible plans. They have a high deductible, but it is a triple tax-advantaged investment account and arguably the best retirement account. Essential services like checkups and certain prescriptions can be covered. For my family, my wife and I, we pay ~$586/month through a HSA eligible marketplace plan.
Learn more about them here. They may not be your best option depending on how you manage your money and your health insurance needs.
Regardless, you absolutely should get a quote from HealthCare.gov. They also have brokers you can speak to for free to answer any of your questions about plans.
Beyond this you can also reach out to insurance companies or health networks directly.
File for Unemployment
Look up your state website and see if you are eligible.
Review your Employment Contract and any Severance Benefits
Make sure you understand how much, if any, your company is paying you. Reach out to HR if you have any questions.
Retirement and Investment Account Planning
Review your company retirement plan. Rolling your 401(k) over to a IRA could give you better investment options. But don’t forget 401(k)’s also can contain attractive loan and other features not possible in an IRA.
If you have a large emergency fund you may benefit from the loss of income by taking advantage of your lower marginal ordinary income tax bracket by converting your non-Roth assets to a Roth IRA.
Tax-Gain Harvesting
Similar to the Roth conversion strategy you can take advantage of less income through a taxable brokerage account. Your long-term capital gains (LTCG) rate might be at 0% and you have an opportunity for tax-gain harvesting. See the “Schedule D Tax Worksheet” in the 1040 Schedule D instructions for how it works.
Less Urgent but Necessary
In the first couple weeks you should reflect on your career. Being laid off could be a blessing in disguise. Give yourself a chance to think about what you want to do and where you want to spend your time. Do you want to live in a different state, country, planet?? OK planet may still be tough as Mars expeditions are happening slower than anticipated but still. You have a wonderful opportunity to reimagine your life.
Dust off the Resume
Apply to jobs. Glassdoor and levels.fyi is a great tool.
Looking for jobs is tough. I remember my last job I applied for. Even with multiple internships and a prestigious fellowship it took hundreds of applications to get a call back.
Stay humble but have strength in your process. Apply to a bunch of jobs. if you don’t get call backs from 3%, look for feedback. Reddit is a great resource to get your resume reviewed. Also look into posts from hiring managers for things to focus on.
Here’s one for data scientists.
As a freelancer it took me a while to figure out how to write better proposals. Learning what my niche was, avoiding the maybe I could fit jobs, and applying to less things actually worked in my favor. Grow a big filter. And if you don’t have job-ready skills, learn them! A public portfolio can go a long way.
Closing Thoughts
Good luck on your next step! Try and enjoy the free time.
