Tuesday, October 6, 2009

Surviving the Recession for Twenty-Somethings (Revisited)

About 11 months ago I made a post about surviving the recession.

Since that time the number of unemployed and underemployeed has skyrocketed - with some people putting the combined un and underemployed rate approaching 20%.

One of the things I touched on briefly was having a re-employement plan. This is a strategy of contacting personal friends, business associates, previous customers and others to let them know you're in the market for a new job.

However, what I'd like to write about now is having a de-employment plan. Here's a checklist of things you'll want to do if you are de-employed not on your terms.

1. Don't sign anything. When you are de-employed, you're under considerable distress. Do not sign any piece of paper explaining reason for your severance and termination unless you understand every single word. You need to be thinking clearly and may be signing away your rights if you're being terminated illegally. You do not need to sign anything the day you're let go.

... except a clause about expense reports. Make sure that your employers agrees to pay the balance of your company related expenses, and get this in writing. It should state, "I will provide my company related expenses within 5 business days and will be reimbursed by (employer) in full. I estimate these expenses to be roughly XXX dollars."

2. File for unemployment. You do this through your state. For some people, they view collecting unemployment as a sign of failure or laziness. THIS IS NOT TRUE. DO NOT BELIEVE THE LIE. These economic times are unprecedented in our generation. Now is not the time to be idealistic or prideful. In Illinois you would visit the Illinois Department of Employment Security. Benefits for people that earn above $42,536 are $385 per week. For earners below that, the amount is 47% of your income. Married people with a dependent spouse earn $459 (58%). One or more children raises the amount to $534 (63.2%).

3a. Know your options with health insurance. If you lose your job, you still have the opportunity to keep your company's existing health insurance - however, you'll need to pay the premiums. Most employeers with good health insurance have costs that are roughly $700-$1,000 a month. Fortunately, the ARRA offers significant support for these payments.
The American Recovery and Reinvestment Act of 2009 (ARRA) provides for premium reductions and additional election opportunities for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to nine months for those eligible for COBRA during the period beginning September 1, 2008 and ending December 31, 2009 due to an involuntary termination of employment that occurred during that period.
3b. Get a physical. When you realize the costs of premiums, especially if you're young and healthy, you may wish to forgo health insurance, depending on how much money you have saved and your cash flow situation. Having a physical that says you're healthy will help get you the lowest prices if you need to purchase individual insurance.

Suspend unnecessary expenses. This includes extended cable TV packages, cell phone data / texting packages, tithing, any automatic saving payments. Stop all automatic payments outside of utilities. This is not the time to calculate how long you can last "without changing your lifestyle". You've lost your job - your lifestyle should change. Your expense priorities are now shelter, food (not dining!) and transportation.

5. Don't take a vacation. This is basically a specific version of #4. I've heard of many people who think since they have "time off" it means "I deserve a vacation." You're unemployed! That is not an option.

6. Sharpen your resume. I wrote on this before.