4 Money Tips for When You Get Laid Off
Getting laid off can send you into panic mode fast, but the worst thing you can do is react emotionally.
“This is what I’d call a financial triage,” Don Grant, a CFP at Sabre Wealth, tells CNBC Select. The goal, he suggests, isn’t to scramble but rather to get organized, and if you have some advance notice, you actually have an opportunity to prepare.
Here are money moves to make amid a layoff, along with financial products that could help.
Money moves to make amid a layoff
File for unemployment
It may be obvious, but your first move after a layoff is filing for unemployment benefits. This is considered “safe” income as it doesn’t require you to pay the money back and there’s no interest. Rely on unemployment before turning to your savings or any credit card.
Use a budgeting app to figure out your survival number
Next step: Grant suggests calculating exactly what it costs to survive each month. Pull your bank and credit card statements and add up only the necessities.
“Necessities are simple…food, shelter, health care and transportation,” Grant says. “That’s your baseline. Everything else is negotiable.”
Rocket Money
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Cost
The basic plan is free. Rocket Money Premium is $7 to $14 a month with a 7-day free trial. Bill negotiation services cost 35% to 60% of the first-year savings, if the negotiation is successful.
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Standout features
Easily cancel unwanted subscriptions, track your spending and credit score, automate savings and get help lowering bills. Rocket Money Premium includes additional services like net-worth tracking, credit reports and a subscription cancellation concierge service
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Security
Rocket Money accesses transaction data via an encrypted token, uses Plaid API so user credentials are never stored, provides bank-level 256-bit encryption and hosts servers on Amazon Web Services
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Availability
Offered online and on both the App Store (for iOS) and on Google Play (for Android)
Pros
- Allows you to easily view and cancel unwanted subscriptions
- Offers a free version
- A+ from Better Business Bureau
Cons
- Nonrefundable bill negotiation fee can be up to 60% of savings
- Premium pricing varies
Use a high-yield savings account to park your cash
If you aren’t already keeping your savings in a high-yield account, now’s the time to switch over. You’ll keep earning interest even while withdrawing. These accounts earn above-average rates and have the same accessibility as traditional savings accounts from big banks.
Compare the top HYSAs
CNBC Select tip
If you’ve been contributing to a Roth IRA, you can withdraw your contributions (not your earnings) anytime without taxes or penalties. This is basically a hidden emergency fund.
Keep in mind your benefits window
Once the focus on cash flow is squared away, Grant says benefits deserve close attention and quickly, because some of these decisions are time sensitive. Severance is the obvious starting point if your employer offers it after a layoff, since it can help bridge several months of expenses on its own.
Health insurance tends to be the biggest financial shock after a layoff. You’ll want to understand what COBRA will cost, compare it against marketplace plans and check whether coverage through a spouse or partner is an option. The cost difference between these can be significant, so it’s worth running the numbers before defaulting to COBRA.
Life and disability insurance are also worth reviewing. Those usually don’t follow you when employment ends, and a gap in coverage during an already unstable period is a risk you don’t want to take.
If you need to find a new life insurance policy, Amica lets you get quotes and apply entirely online. And if you meet the health requirements, you can skip the medical exam altogether. Guardian is another solid option, especially if your income or household situation might change, since it lets you convert a term policy into whole life within the first five years at no extra cost.
Amica Life Insurance
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Policies
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Policy highlights
Amica offers a level term life insurance and whole life insurance policies payable for 20 years or until age 65 or 100, both with a free terminal illness rider.
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Availability
Amica issues life insurance in all U.S. states except for Hawaii
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Online quote for term policy
Pros
- Can get term life quote and apply online
- 10% bundling discount with auto insurance
- Terminal illness rider included
Cons
- Not all policies and features available in all states
- No universal or variable life insurance
- Few riders available
Guardian Life Insurance
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Policies
Term, whole and universal
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Policy highlights
Term life can be converted into whole or universal life policies. While dividends are not guaranteed, Guardian has paid dividends to eligible policyholders annually since 1868.
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Age limits
75 for 10-year term policies, 55 for 30-year term policies, no upper age limit for whole life
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Coverage limits
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Availability
Guardian Life is available in all 50 U.S. states and Washington, D.C.
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Online quote for term policy
Pros
- Has paid dividends since 1868
- Whole life insurance policies up to age 90
- No-medical-exam policies up to $3 million
- Available in all 50 states
Cons
- Can’t get rate quotes or apply online
- Customer service not available 24/7
- Doesn’t offer auto or home insurance
For disability insurance specifically, Breeze makes it easy to compare rates from multiple top insurers by filling out a single online form and getting quotes within 24 hours.
Breeze Disability Insurance
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Policy highlights
Online policy broker Breeze allows you to compare rates for short- and long-term disability from Guardian, Mutual of Omaha, Assurity, Ameritas, Principal, MassMutual and other top providers.
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Age
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Benefits period
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Maximum monthly benefits
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Elimination period
Pros
- Allows you to compare policies from top companies
- Can get approval completely online
Cons
- Not available in New York state
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