What should I do to prepare to be unemployed?
October 19, 2011 10:08 AM   Subscribe

It seems increasingly likely that my company is about to go belly up, probably in the next 2-4 months. What should I be doing to prepare for this eventuality?

I've felt like this has been coming for a while. Cash has been tight for years but things are really starting to look dire. I have no specific knowledge of when the doors might shut, but we're a small company so the signs can't be hidden very well. I'd like to prepare as much as possible for this but I've never had it happen before so I don't know what I should be thinking about or doing. Help me make a checklist for impending unemployment.

I have only about $500 in consumer debt, which will be paid off this month. However, I have very little (less than $1000) in savings. There are a few things I feel I should be spending money on, like getting the brakes done in my car (the car is >10 years old but runs great except for the brakes squealing for the last month). Maybe I should also be stocking up on medications, or trying to get a new pair of glasses (I'm very dependent on them and my prescription is such that new lenses need to be very customized and cost upwards of $500)? I should probably see my doctor before the health insurance goes away, right?

I've updated my resume and have started to apply for some jobs, but I work in a pretty "who you know" kind of field. Re-engaging my network is right on top of my list. I also have a very small side business, so I'm trying to work on getting more clients for that - when I don't have a day job it might be easier, but I'm also wary of making it too big because it couldn't sustain me outright and I need it to work with a regular day job in the future.

Because of my previously profligate spending habits, I am set for things like clothes for interviews, etc. for a looooong time. I have no dependents, save a cat, but also no one else who pays my bills. My family lives in another country and while they would be willing to help me, moving back there is out of the question. I've cut down my cable TV already, have started to turn down social invitations that I know will cost money (except if I think I can use them to network somehow), etc. I am really really terrible with saving money and I know it's going to bite me now, but I've maintained a stellar credit rating and have never had to ask anyone for any help. My regular bills are not outrageous, I just have a history of taking off to Europe for a couple of weeks when I feel like it. Obviously that has stopped!

What am I not thinking of? What do you wish you still had done while you still had the job? I have quite a lot of time on my hands during my days since business is so slow so anything I can do sitting at my desk would be great because it would help me feel better about being here where it's just super depressing every day.

(Anonymous because I post under my regular first name and I'd rather not have this tied to that)
posted by anonymous to Work & Money (12 answers total) 8 users marked this as a favorite
I'm in the same boat and, yes, it does suck. I would definitely get any medical stuff done ASAP in case they can't pay the insurance bill and it gets cut off suddenly. Get glasses, get your teeth cleaned, etc. Insurance generally won't let you renew meds too far ahead of time, but you might see if you can switch to generics or get samples from your doc.

I set up an online savings account and it has really helped me to build up my savings. It seems dumb, but transferring money from easily-accessible checking to less-accessible savings has helped me spend less and I feel great every time I do a transfer. It really helps put my mind at ease.
posted by WorkingMyWayHome at 10:18 AM on October 19, 2011 [1 favorite]

Prioritize! These are the urgent things:

1. Update resume
2. Connect with people in your field
3. Apply for jobs

With remaining free time at work:

4. Learn or do something that you can add to your resume

As in, if you've got nothing to do, ask around and find something, or spend your days working through an on-line course or lecture or developing a new skill. Because what you've got, at the moment, is excellent. It's called "paid on the job training." If you're actually out of work, the pressure of no cash coming in makes it hard to stop and learn something. So do that now.
posted by zippy at 10:19 AM on October 19, 2011 [2 favorites]

Can you get a roommate?

Use any medical or dental insurance if you have any problems they can be used for. In other words, if you need medicine, getting the glasses, etc.

Think about taking any vacation time. Not because you need it now, but because it's conceivable that if the company goes belly up, you won't get paid for it then.
posted by maurreen at 10:29 AM on October 19, 2011

You don't mention exactly what you do - but getting an account on somewhere like LinkedIn would be a good start. Invite current and ex colleagues as well as contacts from your own business. Upload your resume and consider some of the many sources of advice on specifics. It is easier to do all of this while you are still employed.

If your employer's business goes to pieces then consider what the value of those pieces to you might be. I don't mean walking off with office supplies - but I do mean taking the chance to talk to clients who might find themselves without a service- or pairing up with talented colleagues who are out of work. Might there be any opportunities you could follow up in these circumstances?

But otherwise it sounds like you have been doing some wise planning. Good luck!
posted by rongorongo at 10:29 AM on October 19, 2011

Definitely refill any prescriptions as soon as your insurance will allow you, and continue to do that each month until the job disappears -- if it's going to be a few months, this isn't a one-time project. If your insurance allows you to get 90-day refills, I would hold out on doing it until things look really dire at work, because you'll have less flexibility on when you can get your next refill. (E.g. if you get 90 day refill now and company goes out of business in just under 3 months, you'll only have a week's worth of meds and maybe not be able to refill before the insurance disappears.)

If your company goes under, there is no COBRA insurance, which is what people usually use to get by when they're laid off or fired or quit. You should start investigating your individual (that is, not company-sponsored) health insurance options now. It might even be worth applying for coverage if you find something that sounds decent. It's a lot harder to get coverage if you're sick, and god forbid you would put off applying for insurance and then tork your knee or get diagnosed with high blood pressure or something in the meantime.
posted by vytae at 11:03 AM on October 19, 2011

A minor note, perhaps, but I've gone to work only to find the doors locked: make sure that any personal property you don't want to lose isn't in there..... quietly start removing things like photos and mementos (especially the stuff out of sight, like in drawers and suchlike). Don't leave your passport or checkbook in your desk, for instance; make sure your phone charger is at home, etc. etc.
posted by easily confused at 11:46 AM on October 19, 2011 [2 favorites]

You'll want to save money any way you can while you've got it. Do what you can to reduce expenses - cancel your cable or TV subscriptions, see if you can reduce your cell phone to a lower rate plan. Try to squeeze your food/grocery budget as much as reasonably possible.

Assuming you end up losing your job and you don't have another one yet, you'll want to be prepared to hold out as long as you can until you do. You say you have $500 in debt that will be paid off soon. Under normal circumstances, paying off debt as fast as possible is always in your long-term financial interest. However, you might need some liquidity in the short term, so in your particular circumstances it might be better to let your debt ride on minimum payments until your situation is more stable. You'll take a small hit on interest in the long-term, but your spending power will be greater in the short-term.

Look around your house for anything you might be able to sell. Old electronics, china, jewelry, anything else of moderate value that you could stand to part with. Hopefully it won't come to that, but it helps to be prepared.
posted by Vorteks at 12:02 PM on October 19, 2011

watch out for payroll being late - I've seen it happen to friends that the company they work for will ask if it's ok to pay them a bit late. they kept working taking it on good faith that they would get paid eventually, and then the company closed owing them a lot of back wages.
posted by 5_13_23_42_69_666 at 12:52 PM on October 19, 2011

If I were in your shoes I would call my credit card company while I was still employed and get my credit limit raised. And if I only had one card, I'd get a backup card too.
posted by mullacc at 1:00 PM on October 19, 2011

As stated earlier:

When a company goes bankrupt, there is no COBRA.

Look into health insurance now (you may qualify for a HIPAA plan if you can't get an individual plan). Get a letter of creditable coverage from your current insurance company now.

Also, make sure you collect on any expense reports. Use up all the health/dental/vision you can. But keep in mind that, depending on how your company has set up its payments, their bankruptcy may cause your plan to get retroactively cancelled to the beginning of the month they go bankrupt -- leaving you on the hook for expenses incurred during that month.

It also wouldn't hurt to get your coworkers to write recommendations on LinkedIn. They may have time now, but they probably won't when they're scrambling to look for jobs.
posted by hammurderer at 1:14 PM on October 19, 2011 [1 favorite]

I've been through this twice and here is what I would recommend. First, know that you will come out of this fine. The first time I freaked out, the second time I was much calmer. Probably easier said than done.

Take care of any doctor visits now. If you have dental and eye care plans, do those too. If your company has a person or company that handles insurance, get his or her name and number. I used the same person our company used to acquire personal insurance at a good rate.

If you have outstanding expense reports, make sure they are turned in as quickly as possible.

Discreetly start making a list of co-workers and vendors along with their contact information. In my experience people scattered with the wind and it’s nice to be able to get hold of people for networking purposes later. Both my layoffs were before social networking got big so that may not be that applicable anymore.

Start taking home any personal paperwork as well as files from your computer. We never had a chance to go back and clean off the computer. Don’t make it obvious, but start gradually moving things home.

You should receive unemployment and it sounds like you live conservatively so it may be enough to cover everything. I’m not sure about the rules on unemployment and freelance work, but someone here may know more. Try to stay on top of freelance invoices. You may not be able to send invoices without it affecting your unemployment.

It sounds like you’re doing a good job, but start thinking like an unemployed person. Do all the job search things they tell you and anything you can get worked out in advance will relieve some stress.
posted by iscavenger at 3:23 PM on October 19, 2011

Proactively to getting laid off, keep a close eye on whether benefits *are* actually being taken care of. I worked at a place that handed out stubs every week showing deductions for things like 401K and health insurance; however, at one point no money had gone into my 401K for two months, nor had our insurance premiums been paid. I only found out because I got a letter direct from the insurance saying that premiums were nearly 60 days past due (it's a mystery to me why I was not notified sooner than this -- the insurance company had no satisfactory answer)....
posted by Tandem Affinity at 8:04 PM on October 20, 2011

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