If you find yourself out of a job ... get to work

More than half a million people lost their jobs in November, and the layoff announcements keep coming from companies in almost every industry.

If you're one of the unlucky many who recently learned you'll be out of work — or you fear a pink slip soon — there are things you can do to put yourself in the best financial position through the layoff.

The first step comes as soon as you learn the news. You'll want to talk with your human resources department about any severance package and your benefits. This includes asking about pay for unused vacation days and sick time.

Eleta Jones, associate director for the Center for Professional Development at the University of Hartford in Connecticut, said workers should be prepared to negotiate. For instance you may be able to get access to additional services such as job search assistance.

But it's a particularly important time to discuss benefits such as health care coverage. You may need to look into the cost of extending your current plan through COBRA, or check into what's available through your spouse's job.

Next, it's time to plan for life without a paycheck.

  • Reduce withholding taxes. If you've got any time left at work, reduce the amount of taxes taken from your remaining paychecks to maximize your take-home pay. If your spouse works and you file a joint tax return, have his or her withholding reduced as well.
  • Defer payment. If you're job is ending this year, and you will receive severance pay in a lump sum, try to get it deferred until after Jan. 1 to minimize 2008 taxes. Far better is to get severance paid over time like a paycheck. If it's paid in a lump sum, it's "almost a sure thing" that you will have too much withheld, said Jonathan T. Guyton, a certified financial planner and principal at Cornerstone Wealth Advisors.
  • Manage severance wisely. If you receive a lump sum, deposit the funds into a separate savings account and make weekly transfers to a checking account. Mimicking a paycheck will reduce the temptation to overspend.
  • Act promptly. Apply for unemployment insurance right away. Each state administers unemployment benefits separately. The federal Department of Labor Web site at www.dol.gov can lead you to your state's program.
  • Slash expenses. Take a hard look at your household budget and trim wherever possible — and don't wait until cash is running low to do it. "You should get serious about reducing your expenses, particularly the 'nice to haves' as opposed to the 'need to haves,' right away," said Guyton. Among his suggestions: pare down your Internet and cell phone plans to basic services, giving up things like wireless access.
  • Control insurance costs. Consider increasing deductibles on car or homeowners' insurance to reduce premiums, but only if you have savings that could cover the higher deductible if something happens. Keep up payments on private disability insurance and life insurance, especially if accounts provided by your company are no longer in place, Guyton said.

Of course there are key steps you'll want to take to start your job search:

Use the Web. Post resumes on job boards, but let that be your first move, not your last.

"So many people get stuck just looking at the computer," Jones said, but just 2 to 3 percent of people get jobs through such services. A better move is to apply for openings directly on company Web sites, successful for 16 percent of job hunters.

  • Start networking. Some 65 percent of people get jobs through personal contacts, said Jones. This doesn't mean asking people for work, but involves finding out who in your circle knows others, and what sort of help those contacts might offer.
  • Develop new contacts. Online networking, through sites like LinkedIn.com and Facebook.com, can help you make new connections in your industry. And don't forget traditional professional organizations, social and service groups.


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