Preparing for the worst
Clark Howard, WSB-TV consumer adviser
Read Part I: What to do when you are laid off
September 11th is a hard day to forget.
Within hours of the attacks on the World Trade Center, Don Barnett was laid off. As a Leer jet pilot based out of Athens-Clarke County airport, the attacks plus an already sluggish economy equaled unemployment.
“We had some reserves built up in anticipation of this,” said Barnett. “However, with the slowdown in the economy, we had to dip in to our reserves, and we really hadn’t learned how to curtail our spending quite as much as we should have.”
With his wife on leave raising their 10-month-old daughter, and his paycheck now gone, it was time to cut costs.
“We just cut to the bone,” he said.
Financial planner Kay Shirley says the time to downsize your spending is before you’re laid off.
“If you’re in a position where you think you are going to get laid off, the best thing you can do is make sure you get rid of your credit card debt,” said Shirley. “Another thing you can do is make sure you don’t have a car payment. If it means downsizing your home, do it now while you have a job.”
You have to get control of your finances now! And believe me, it’s easier than waiting until the paycheck goes away. Also, start saving now for that proverbial “rainy day.”
Another idea I love is whether you’re worried about layoffs, or thinking about having a stay-at- home parent, try living off only one income.
“Save the person’s income now that you might lose and see what kind of adjustments you might be making,” said Shirley. “And the money that you save will give you some emergency money to tide you over should you be laid off.”
“The reserve was probably the best thing we had done — just keeping some rainy day money,” said Barnett.
Marla Mack, a victim of a layoff, agrees.
“One thing my mom told me a long time ago, is luck follows those who are prepared,” said Mack. “So, do as much preparation as you can so you are not sweating at the 11th hour.”
“I’d say always be ready for it,” Barnett advises.
There’s good news to report about Don.
Two weeks ago, he got his old job back! His rainy day money got them through the layoff, and it could help you do the same. I can’t stress this enough — get your finances in shape now.