Layoff Lessons

By Tara Weiss
September 9, 2008 7:00 p.m.;

Words you never want to hear from the boss: "We're downsizing, and I'm sorry to say you're part of it."

The U.S. Department of Labor reported there were 85,000 jobs lost last month. But if yours was one of them, there's little comfort in knowing you weren't alone. Being laid off is traumatic and life-changing, especially if you've been working at the same company for a long time.

After having a regimented daily schedule, it's unsettling to have to suddenly have to figure out how to fill your time. But there are some practical steps you need to take right away, and it's important to quickly re-establish a new routine and take the free time you now have to learn new skills and polish up your résumé.

Your first priority is making sure you get continued health care coverage. Don't automatically choose COBRA--it's expensive, and there are usually more cost-effective options. If you're married, find out if you can get on your spouse's plan. Losing your job may be a qualifying event that enables you to join the plan even if it's not an open-enrollment period.

If that's not an option, call your current health insurer to find out the cost of paying out-of-pocket. It won't be cheap, but it will likely be less expensive than COBRA. "I've seen COBRA payments as high as $4,000 a month for a family," says Cynthia Shapiro, a career strategist and author of What Does Somebody Have to Do to Get a Job Around Here? "That's not the best option at a time when don't have that money to throw around."

You have some bargaining power here. Many employers will give you severance in exchange for signing a separation agreement saying that you won't sue. There's no risk to saying that you'll sign the document if they pay for your health insurance for the next few months or even for outplacement services. "The worst thing they can do is say no," says Shapiro. "Besides, what are they going to do, fire you?"

Next, take the check your employer gave you from your 401(k) and reinvest it in an IRA. Having that money lying around during a time when finances might be tight is dangerous. If you use it, you'll get slammed with a 10% penalty on top of regular income taxes. Plus, this is your retirement money. If the worst happens and you have to declare bankruptcy, that money is safe.

There's one more logistical task to attend to: File for unemployment as soon as you learn you're being laid off, even though you technically might be on the payroll for a few more weeks. Why? It takes about six to eight weeks for the paperwork to be processed, and it will be nice to start getting unemployment payments as soon as possible

Treat your job hunt as a job in itself. Don't sleep until noon and spend the day padding around the house in bunny slippers and sweatpants. Set your alarm clock for the usual time, get dressed and get to work.

"It puts you in a different mindset," says Marc Cenedella, founder and CEO of TheLadders.com, a job site that only posts positions with salaries of $100,000 and higher.

It's normal to feel grief--and anger. So write (but don't send) a letter to your boss explaining exactly how you feel. Put in a drawer, and then shred it in a week.

"Writing it down is a release," says Cenedella. "But sending that letter is never a good idea."

Don't avoid parties, the gym, your kids' soccer games or other social gatherings. Go--and take cards with your contact information to hand out to people.

Work up an "elevator pitch" in case someone asks you what you do. For instance, don't say you're an accountant who's just been laid off. Say you're a numbers guru who saves companies millions of dollars a year, and you're looking for a new opportunity. Make people interested in you.

Make your free time productive. Join a trade association and become active on a committee. That'll keep you in front of people who know about open jobs. Figure out what skills you need to enhance, and take courses.

"Prospective employers will ask what you've been doing with your time," says Shapiro. "The longer you've been out of work, the more they'll ask. It's much better to say 'I took a class' than to say 'I've been looking for a job the whole time.' It should be something that forwards your career. It makes you look like a real go-getter."