8 Steps to Surviving a Job Loss

(Psst: The FTC wants me to remind you that this website contains affiliate links. That means if you make a purchase from a link you click on, I might receive a small commission. This does not increase the price you'll pay for that item nor does it decrease the awesomeness of the item. ~ Daisy)

Author of Be Ready for Anything and Bloom Where You’re Planted online course

A 2014 report on jobs showed some alarming statistics:  1 in 5 Americans have lost their jobs over the past five years and remained unemployed. Here’s another alarming statistic: 96 million Americans are unemployed. Everyone’s talking about a recession and you know it’ll be the middle class who takes the hit.

Unless you live in a neighborhood of rainbows and unicorns, it’s a good bet that either your family or someone you know has lost their job.  Sometimes the lay-off is expected, as you see your company’s profits dwindling. Other times, it is completely out of the blue when you get called into the manager’s office and handed your walking papers.

Either way, when the ax falls, you will be reeling in shock. Well, tough love, here: Get ahold of yourself!  The first steps you take can help you to survive until you get a new source of income.

This article is not about how to prep for a personal financial collapse. Hopefully, you’ve already begun creating a food stockpile, socking away an emergency fund, and working towards self-reliance.

I often write about the 3 steps for surviving any disaster, and job loss is no exception. You must ACCEPT that the event has occurred, you must make a PLAN, and you must ACT on that plan. Here are the steps to minimizing the damage to your personal finances when a sudden job loss occurs.

1) Don’t sign anything right away.

As much loyalty as you may have had to your company, they clearly don’t feel the same sense of loyalty towards you. Many companies will try to get you to sign paperwork right away to “settle the details.”  Trust me when I say, these details will be skewed in their favor, and not yours.

You do NOT have to sign anything while sitting there, stunned at your sudden change in circumstances.  It’s vital that you take the time to read over everything carefully. Your severance package, your 401K, any accrued pension, and unemployment benefits will be at risk.  In some cases, you can negotiate this, even though you are not sitting in the power seat.

Don’t commit to any type of agreement while you’re reeling, particularly if they try to coerce you into signing immediately. Regardless of what you may be told, any delay in your unemployment benefits or severance will be minimal.

2) Begin a total spending freeze for a couple of days.

One of the biggest mistakes people make when faced with a shocking job loss is to go on spending as though they still have an income. Perhaps they go and buy something to try and make themselves feel better. Maybe they just continue spending like they always did, with hundreds of dollars going out for kids’ activities, dinners out, and shopping trips.

Just stop.

You need a few days to re-assess your budget and see where you’re at.  You don’t want to regret the expenditures you make right after a job loss. Put yourself on a complete spending freeze for the next few days while you assess the change in your financial situation.

3) Apply for unemployment benefits.

Unemployment is not welfare. It is something that you have been paying into the entire time you were employed. Please don’t feel guilty about taking the money that is rightfully yours.

Keep in mind that it can take up to two months for your benefits to start, and that money from your severance package can delay the onset of benefits.  Unemployment is only a portion of what you made when you were employed, so a revamp of the budget is a must.

Make your application immediately so that you know where you stand and when you can expect the money to start coming in. Hopefully, you will have found another job by then, but jobs aren’t always easy to come by these days.

4) Create a budget for necessities.

It’s absolutely vital that you drop your expenditures to the bare minimum until you are able to get another stream of income.  You need to take a look at where your money goes and base your new budget on the necessities. Although having a vehicle in each stall of the garage and an iPhone in the hand of every family member is nice, these are not necessary to sustaining life.

  • Water
  • Food (and the ability to cook it)
  • Medicine and medical supplies
  • Basic hygiene supplies
  • Shelter (including sanitation, lights, heat)
  • Simple tools
  • Seeds
  • Defense Items

Absolutely everything above those basic necessities is a luxury.

So, by this definition, what luxuries do you have?

5) Slash luxury spending.

Reduce your monthly payments by cutting frivolous expenses. Look at every single monthly payment that comes out of your bank account and slash relentlessly.  Consider cutting the following:

  • Cable
  • Cell phones
  • Home phones
  • Gym memberships
  • Restaurant meals
  • Unnecessary driving
  • Entertainment such as trips to the movies, the skating rink, or the mall

This isn’t forever. It’s just until you have a reliable source of income again.

6.) Start looking for new streams of income.

You know those people who tell you that it’s easy to find a new job if you wouldn’t be such a snob? Ignore them. The job market of today is not the job market of a decade ago. Jobs are few and far between, and good jobs are as elusive as unicorns in Central Park.

You may need to look at creating your own streams of income, like:

When I coach people who want to start a blog, the first thing we talk about when it gets to monetization is that you must have multiple streams of income. Really, it is the same for everyone. If you lose one stream of income, it’s best to have other streams to fall back on. Diversifying your income is one of the best financial preps you can make.

Related: If You Don’t Have a Job, Make One Up

7) Sell stuff.

All that stuff you’ve been meaning to go through in the basement just might be the key to keeping a roof over your head.  It’s time to start an eBay account, have a yard sale (free at the time of publication), or get on Craigslist (free at the time of publication) and start selling things that have just been sitting there for a while.

Your trash might be another person’s treasure.  Instead of regifting those things in your attic, sell them so they can become someone else’s clutter.  You’d be surprised how much money you can make while decluttering your home.

8) Look for the silver lining.

Although job loss can be terrifying, it can also be the start of something wonderful.

When I lost my job in the automotive industry, I was devastated. As a single mom, how was I going to continue taking care of my two girls with no income?  Instead of being a bad thing, it turned out to be the best thing that ever happened to me and many other people say the same thing.

I was able to take the writing I’d been dabbling in for years from a hobby to a full-time job.  I made a conscious decision NOT to search for another job, but to follow my dream of being a writer and editor.  Maybe I succeeded because it was do-or-die time.  There was no option but to make it work. I began writing for other websites, started my own site, and began outlining books.

As it turned out, that shocking, unceremonious discussion in the manager’s office was the moment my life changed for the better. I’ve read many success stories that began the same way.

When you’re boxing up all the things on your desk and people are staring, it’s a horrible feeling. When you do that final walk of shame out the door, it’s humiliating. But those moments aside, this might be the push you need to make your life better.

Sometimes what seems like an ending can actually be a new beginning.

Related: How to Survive When You Can’t Pay Your Bills

What has been your experience?

Have you ever lost your job? How long did it take to find a new one? Did it turn out to be a positive thing, or did it cause financial problems from which you could not easily recover? Share your experiences and advice in the comments below.


Picture of Daisy Luther

Daisy Luther

Daisy Luther is a coffee-swigging, globe-trotting blogger. She is the founder and publisher of three websites.  1) The Organic Prepper, which is about current events, preparedness, self-reliance, and the pursuit of liberty on her website, 2)  The Frugalite, a website with thrifty tips and solutions to help people get a handle on their personal finances without feeling deprived, and 3) PreppersDailyNews.com, an aggregate site where you can find links to all the most important news for those who wish to be prepared. She is widely republished across alternative media and  Daisy is the best-selling author of 5 traditionally published books and runs a small digital publishing company with PDF guides, printables, and courses. You can find her on FacebookPinterest, Gab, MeWe, Parler, Instagram, and Twitter.

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  • I am one of the newly unemployed. Thank you for your article. Out of necessity i created a recipe for homemade deodorant that is very effective and economical. You can create enough for a month’s supply with three tablespoons of material. Any thought on how to promote this would be of great help. Thank you, Ray

    • I buy from my greenfills.com for laundry. They are a small company that started in a garage. They are also selling some essential oils. It is a Christian business. You could contact them and ask them for help or advice.

  • The unemployment tax (FUTA) is not something “you paid in to the entire time you were employed.” This tax is paid for by your employer. If you lose your job your employer then gets a tax increase for quite some time to cover the expense of your claims.

    • That’s why employers will try to contest UI claims, which can seriously delay the process of receiving benefits!

    • Yes you do pay into it – your wage would be higher if not for your employer paying into the pool. If the employer did not pay it, would that increase in wages a) be saved by the employee and b) saved amount enough to provide equal or greater than what one would collect in unemployment benefits? I doubt it.

      • No – employees do not pay into this fund and your wages would not be higher if the employer did not have to pay these taxes. Employers pay both a state unemployment tax (quarterly) and. Federal tax (yearly). It’s one of many taxes and fees levied against employers – for instance an employer must match your social security and Medicare tax. Businesses must pay property tax on any building and an additional “personal property tax” on all business assets like desks, computers, equipment, etc. every year. A sales tax on anything that the business uses that has not already been taxed like packaging materials or give aways. State and local “business licenses” are another tax. And yes, if someone collects unemployment the employer is assessed a higher rate until that amount disbursed is paid. Crippling tax debt is one of the main reasons why small businesses go out of business.

        • Winnie, both employers and employees pay into the unemployment fund. I run a payroll every two weeks. This aside, I completely agree with everything else. It costs me around $1500 for an employee to clear $1021. I always think about what people could do with that extra money.

          • Daisy, It may be different in your state. I’ve been doing payroll in WI since ’91 and employers have always had the sole responsibility in paying into the unemployment account here. (Excerpt from Unemployment Insurance Handbook for Employers – How is the UI Program Financed? “The program is financed solely through employer contributions (taxes).” )

            Well live and learn! I had no idea it was different other states.

            By the way, nice article -I always enjoy your work.

  • Been there countless times and on disability now. One time it forced a change of occupation into retail from awful secretary jobs… The luckiest thing. Amazingly I have had one part time job 25 years and only one other place I worked at is still in business. Whoa.

  • I was downsized by my company,after 25 years.I did receive severance package and took money from my IRA to pay for school to get a better job.I also worked part-time jobs,and live a frugal lifestyle still..thx for all you do

  • Over the years my job has ended due to: job move to a location that was not a realistic daily commute (not to mention a huge increase to my transportation budget) nor relocation friendly, outsourced, eliminated by a merger, and eliminated by a change in corporate system. I’ve always lived below my means – debt was basically my mortgage. Severance packages for the last 3 were pretty good so that helped. Easily found a new job after all but one. But I did find a job.

    We did cut some expenses (like eating out), made a bit of money selling and a yard sale (a great time to clean and organize!). One thing we also did was gather recycle material around the house. Did we get rich – heck no. But it did pay for a couple of trips to the grocery store. All gained us space which is now put to better use.

    So many of us think who we are in life is defined by our job – it is not. And remember, the document you sign stating you and/or your family won’t sue may not hold up in court. No one can sign away the right to sue for a person who is competent and of legal age.

  • I once worked at a huge corporate tower in NYC. Here’s how this Fortune 500 corporation handled employee dismissals (I observed this several times): Just before quitting time on Friday, an armed guard or two would show up at the victim’s office and inform him that he was terminated. Under the watchful eyes of the armed guards, the employee would gather his personal belongings. The employee was absolutely not allowed to touch his computer. The guards then escorted the employee to the lobby and confiscated his employee ID card before ushering him outside. I have no idea when or how employees contacted HR to discuss continuation of health insurance, etc.

    In order to keep the employee’s nose to the grindstone until the very last moment, the employee would not be given any obvious clues that he was about to be terminated. In my own case, I guessed from ambient clues that I was about to be fired. So I went job-hunting, landed a new job, took everything I wanted out of my office, including copying my files off my company computer, and then quit without giving notice. This experience taught me to never be loyal to an employer and to never turn my office space into a “home away from home” as so many other employees did, with the decorating and hanging of multiple personal photos, children’s drawings, awards, degrees, mementos, decor, etc. (and in some cases, bringing in personal furniture, exercise equipment, rugs and art!). After that experience, I always kept my work area stark and bare of personalization, so that, if fired, or if I wanted to quit, I could simply pick up my coat and purse and walk.

    I had one friend who took her scheduled annual two weeks’ vacation, and came back to find a stranger in possession of her job title occupying her desk. This was how she deduced she had been fired.

    I became so sick of the disrespect I observed and experienced in the private sector that I am glad I went into the public sector and stayed there.

  • I was ‘let go’ from a 7 year job with a major insurance company. It was ‘said’ it was due to ‘not meeting metrics’. I was devastated, to say the least. Immediately filed unemployment, expecting to have to fight for it. BUT it turned out that the woman who fired me was subsequently let go for, how do I put it delicately, ‘racial profiling’, I guess is the closest I could come. The company did NOT fight my unemployment benefits, which, having been ‘fired’ tells me a whole lot. Even tho I had a degree, and a license, as well as much experience, I found myself on the outside in my profession, and unable to find a job in my line of work. My degree wasn’t high enough, and I had been out of the ‘front lines’ for too long, not to mention aged/experienced out (cheapewr to hire new grads than pay me my end of the pay grade). It took me 3 years to finally land a job, in a new field (well, I had some prior experience, as a teen) making a 1/3 of what I previously made. It took some belt tightening, and we blew thru my retirement investments (just to pay the rent and utilities, we did NOT live lavish, we ‘cut the cord’ and all that) and thank God we had some preps put back.

    My advice, 1) don’t trust that your job won’t just ‘go away’; I still work in a corporate environment, but I know I am not ‘indispensable’; 2) prep the best you can (it’s not been easy, but we have slowly built back up, a little bit at a time); 3) Don’t be afraid to make use of help available to you (be it unemployment, ‘welfare’ if need be, food pantries when you can’t stretch the $ out–even if it isn’t necessarily the healthiest food, it will fill bellies, you can go back to ‘organic’ or whatever when you are in a better place); 4) and this has been a hard one for us, do your best to build an emergency fund–we put aside all of our ‘change’ (coins); I also put aside random ones and fives (periodically larger bills if I can), in an out of the way place so I almost forget about it, youd be surprised how this can add up, on top of using the ‘envelope’ method or whatever works for you.

    Only you can quantify what your ‘wants’ and ‘needs’ are, no one can dictate that for you. These days, having a cell phone is almost a must. BUT do you ‘need’ or ‘want’ a ‘smart phone’ with all the bells and whistles, or can you get by with just a plain old cell phone? Internet ‘could’ qualify as a ‘need’, especially when you are job searching. But could you get by with using the local library internet rather than paying that bill? (I did that for over a year, all while running a successful FB group and a part time job running a website) Maybe you prefer to feed your family only organic, but is right now the time to quibble over that? If there are food allergies and such involved, that may be a priority, but if it just a preference, then grow your own and give yourself a pass on the rest.

    I know I am likely preaching to the choir here, but if I can help one person, I’ve done what I had hoped to do.

    • GrammyPrepper,

      Your answer was helpful to me, thanks. I didn’t lose my job but had to quit to take care of my mother, who is 91 years old and a fall risk. But she recently went into a very good Skilled Care Nursing Home (no Covid-19 cases there, very kind staff) and I now am looking for work again. We shared a house for four years and I took care of her. Her Social Security is now going to pay for the Nursing Home and we shared expenses. I am 66 years old. It’s kinda scary looking for even a part time job, but I need to find one. I have been out of the job market for a little over a year. I worked only part time for three years before I had to quit due to my mom’s health.

      I cut down on my internet usage by dropping my mom’s phone from the bill, since she doesn’t need it. I do have some things I can sell. Your idea of putting aside bills and change is excellent-I’ll start doing that. My rent is paid for three months (stimulus payment) and I’m stocked up on food and prepping supplies and also planted a garden, but any paring back on expenses/finding ways to save is good. I appreciate your example of having courage and confidence in this trying time.

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