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Shock, confusion, and panic are normal reactions when you find out you’ve been laid off. As difficult as it is, try to keep a calm and rational perspective during this transition period. Taking certain financial steps quickly can help reduce anxiety about your future financial situation. Here are some important financial moves to make immediately after being laid off.

Steps to take after being laid off

File for unemployment benefits

This should be your very first step. Unemployment benefits provide temporary payments while you are out of work and actively seeking new employment. The amount and duration vary by state. Apply as soon as possible after job loss so your payments can kick in sooner.

Assess your budget and cut unnecessary spending

With less income coming in, you’ll need to be extra frugal. Review all your current expenses and try to identify ways to reduce your expenses. Looking into online budgeting tools, the “envelope method,” and conducting a monthly personal finance meeting can all be a good start. Consider a temporary essentials-only budget until you have a plan in place.

Contact creditors and service providers to negotiate payments

For any outstanding debts you have like personal loans, auto loans and mortgages, contact the creditors to explain your job loss situation. See if they can offer reduced or suspended payments for a short time. Also reach out to utility companies, phone/internet providers, insurance companies, etc. and request billing leniency or adjusted payment plans. The reason this hack can work? Service representatives are often authorized to make adjustments to retain you as a customer. Anything for customer loyalty, right?

Apply for COBRA if you had employer-sponsored health insurance

One of the worst problems of losing your job is having to deal with finding healthcare coverage. Even with employment, figuring out health insurance is a shitty hellscape.

Fortunately, you have some options—although there are trade-offs with quality and price. Under COBRA, you can continue your same health insurance for 18 months but you will have to pay the full premiums. Weigh the costs carefully. Check if getting on a spouse’s employer plan or applying for a marketplace plan make more financial sense.

Withdraw contributions from your flexible savings account (FSA)

If you have money leftover in your employer’s FSA account, withdraw this before losing access to those funds. This money can help cover medical and dependent care costs during unemployment.

Resist the urge to cash out retirement funds early

When you’re stuck dealing with the present, it’s easy to think of retirement as a far-off dream. While tempting, withdrawing these funds should be a last resort. You will face tax penalties and lose future tax-deferred growth. Try to leave retirement accounts intact no matter what.

Build up your emergency fund

If you receive any severance pay, unemployment benefits or have other savings, use this reserve to build up your emergency cash cushion which provides protection against unexpected expenses. Try to have 3-6 months’ worth of basic living expenses in savings.

While the emotional impact of losing your job is significant, it’s also important to focus on the financial implications and take certain steps right away to protect yourself financially. One place to start is with finding an American Job Center (or other state by state services, like JobsNYC), which help people search for jobs, find training, and answer other employment related questions. Moving forward, continue to cut back spending and stay disciplined and motivated in your job search.

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