3 Ways to Prepare for a Layoff

Afraid you may be the next person at your job to receive a pink slip? Take steps now to shore up your finances in case you do get laid off. Use the following suggestions to get started.

1. Consider converting home equity to cash with a home equity loan while you still qualify. Or if you lose your job you may take out a reverse loan. If you are 62 or older you can apply for a reverse home mortgage despite your employment status. You don’t have to take the proceeds from a reverse mortgage as a lump sum although that option is available. You can set up the loan as a line of credit that is available to draw on when you need it. Reverse mortgage lenders don’t require a credit check.
2. Fine tune your budget. You may need to cut back on luxuries until you know for sure whether you are being laid off. Budget for the necessities and rank them in order of importance. Review your discretionary expenses to see where you can improve your spending. Review plans for cellphones and cable, club memberships, etc. to see if you can find a better deal elsewhere or can do away with these expenses altogether. Divert money you normally spend on entertainment or travel to pay off credit card debt or auto loans.
3. Sock away money in your emergency savings account. If you don’t have an emergency savings then you need to make this a priority. Although you may receive a severance package if you are laid off, it’s important to have as much money in savings as possible to cover necessities like shelter, food, medicine, and utilities. Also remember that when you receive severance pay, you owe taxes on it so you won’t take home the entire amount.

Being laid off can be financially devastating. Take steps now to prepare yourself financially if you truly believe that a layoff is in your future.

This entry was posted on Tuesday, March 30th, 2010 at 4:15 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.