Everyday Cheapskate: Overcoming the job loss blues

Losing a job can be as traumatic as losing someone you love. In fact, studies show the loss of a job is one of life’s five most stressful events. But as devastating as it is to be suddenly unemployed, many survivors say it was a gift in disguise. As with most of life’s challenges, losing a job can be a blessing or a curse. It all depends on your approach.

1. Deal with the loss. Managing the raw emotion is the first step to getting through the loss. Anger, grief, anxiety and fear are emotional defenses and normal reactions to upsetting situations. Don’t try to suppress or deny your feelings, but don’t let them get the upper hand, either. Use your emotions to help you get back on your feet so you’re ready to discover what’s next. And if you can’t, get help.

2. Depersonalize the situation. Taking a layoff personally is a natural reaction, but inappropriate. You lost your job because of a business decision. Mergers, downsizing and outsourcing are so common; losing a job is just what happens. There’s no such thing as a permanent job anymore. Some experts say you should expect to have five different careers and 15 different jobs in your lifetime. Your layoff is not a reflection on you personally. You lost your job, not your identity. You still have all the qualifications, experience and personal worth that landed you the job in the first place. No one can take away your greatest resource: you!

3. Collect your benefits. You may have unemployment benefits, a lump-sum payout from your ex-employer, a severance package and options regarding health insurance. Find out exactly what you qualify for and the limitations and rules regarding each benefit. The U.S. Department of Labor website has a handy list of all unemployment offices in each state (dol.gov/dol/location.htm). Some states now allow you to apply online or over the telephone. Generally, it takes two to three weeks from the time you file your claim to receive your first benefit check.

4. Negotiate. Don’t be too quick to pack your things and leave. Ask for help with finding a new job. Can you set up shop in a spare office for the next few weeks while you job-hunt? This gives you the use of phones, computers and other equipment. Be sure to ask for a letter of recommendation, too.

5. Hoard the cash. You may be tempted to pay off debt with your severance check or savings. Don’t do it. While you’re unemployed, pay only the minimum payments required. If you’ve been prepaying your mortgage principal, pull back to only what’s required.

6. Put the brakes on spending. If it’s not essential, forget it. Tell your family how and why things will be changing for a while, and outline ways everyone can participate in this time of transition.

7. Figure out health insurance. Once you leave your job for any reason, you basically have five choices:

Continue on your current group plan and pay the premiums yourself.
Enroll in your spouse’s plan.
Buy individual insurance.
Use a state-sponsored plan. Or -- the worst of all worlds:
Go without.

Many people take advantage of their employer’s COBRA plan. (You have 60 days from termination to decide whether or not to accept the benefit.) If you accept it within those 60 days, you cannot be denied health insurance. If the COBRA plan is too expensive, at least consider catastrophic-only coverage, which you can research on the internet. This will only cover the big, expensive stuff, but the premium is fairly low. Every state also has a low-cost health insurance plan for children. If you have kids under 18, find out if you’re eligible: Insure Kids Now has a toll-free national number, 877-KIDS-NOW, which connects you with the program in your state.

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Mary invites you to visit her at EverydayCheapskate.com, where this column is archived complete with links and resources for all recommended products and services. Mary invites questions and comments at “Ask Mary.” This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of EverydayCheapskate.com, a frugal living blog, and the author of the book “Debt-Proof Living.”