So taking prudent financial steps immediately is essential, even if you'd rather just continue the way you are. Don't be an ostrich-instead, be realistic, as you review your situation.
- Apply for unemployment compensation immediately. Far too many older professionals fail to apply soon enough for this income source out of a misplaced sense of pride. They feel degraded by the process. This is especially true when they've heard horror stories of applicants being treated as nonpersons, beneath the notice of the personnel in the state unemployment office. Worse yet, they resent the time that is wasted on routine processes not applicable to managerial-level people. When these people finally do apply, they discover they cannot recover the funds that would have been available to them between the end of their employ ment and the time they did apply. If you didn't go because you had accrued vacation time, the unemployment divisions of the various states automatically take this into account in calculating when they will begin paying benefits. There is always a period of delay between filing and the first check. So run, not walk, to file your application. You shouldn't lose any of the funds to which you are legally entitled. These funds were paid by law by your employer and, in some cases, by you. Also, some states do have effective and beneficial programs for executive-level personnel.
- Go over your current budget. If you don't have one, check your actual expenditures for the last six months to determine your current spending levels.
List other expenditures for which you are obligated -car payments, loans, etc.
List expenditures you think you'll have to make during your job campaign. Don't cheat yourself and the success of your campaign by trying to cut corners on these. You must have resumes prepared; you should have personalized stationery and you'll need routine operating expenses-car, bus or train fare, lunch money. Also include personal-care items such as needed new apparel and more frequent haircuts and/or beauty shop appointments.
List items which are discretionary and can be cut. Cable TV, liquor, entertainment and country-club dues fall into this category.
- Identify and list available income and other funds you will have for at least the next six months. Include unemployment compensation and your spouse's income.
- Reinvest your pension funds. Take whatever action is necessary to reinvest your pension funds if you aren't vested in your former employer's pension system. You have only 60 days to rollover these funds into an IRA account. Don't miss the deadline. If you do, you won't be able to shelter the funds and you'll have to handle the money as regular income on your tax return. One other point: They're always there as a backup if your financial situation becomes desperate. Cashing in IRAs should be your absolutely last resort, however, since there are sizable penalties for early withdrawal of funds from these accounts.
- List other possible sources of funding. Include the borrowing value of your life insurance, what you might get from refinancing your home or taking out a home equity loan, your stocks and bonds, IRAs, etc. You hope you won't have to tap these sources, but be realistic. What liquid resources do you have? (A house or other property is really not a liquid asset!)
- Work out a revised six-month budget. If funds are going to be tight, contact your creditors and try to defer or rearrange payments on some of your major bills. Most creditors would prefer to know this in advance so they don't continue to push too hard. Notifying them also shows your "good faith intentions." You can avoid potential credit problems by taking this step early and working out a minimum payment schedule until you are employed again. Utility companies will often work with you, as they do with others, to equalize payments during this time.
- Set up an accounting procedure to keep track of your job-search expenditures. Many of these will be tax deductible.
- Discuss your projected budget fitting with other family members.
