Staying Out of the Red Despite the Pink Slip

If you have lost your job or are facing a layoff, you need a plan for coping financially. This is especially true if you haven't been able to build an emergency fund or you've been living too high and have never considered that there might be a disruption in your income.

Let's start with some tips for folks who are still employed but who know they won't have a job for long. Here's how to prepare for that pink slip:

· If you haven't built up an adequate emergency fund, stop your retirement contributions. When faced with monthly bills and no paychecks, you need to stockpile as much cash as possible. If you were to contribute that extra cash to your 401(k) and later needed it during a long period of unemployment, you could be looking at a 10 percent penalty for withdrawing it in addition to income tax payments.

· Lower the withholding on your remaining paychecks. Your taxable gross income is likely to be lower for the year even if you find a new job in a few months.

· Make the minimum payment on your credit card. You need to begin saving as much cash as possible for essentials -- the rent or mortgage, food and utilities. Once you are employed again and out of financial danger, return to aggressively paying down that debt.

· Review your budget (I hope you have one) and cut every expense that is not a necessity. This suggestion may appear simplistic, but many folks facing a job loss don't move fast enough to cut expenses. People waste money on high cellphone bills or allow their teens to continue texting. Only after the paychecks stop do they panic and begin to cut.

Cellphone users who send and receive e-mail and text-message alerts, take and send photos and videos or download music report an average monthly service bill of $77, according to a survey by market researcher J.D. Power and Associates.

The time to start cutting back is the day you know or are pretty sure you're being laid off. Get the least expensive phone plan possible, with the fewest minutes, and actually use the phone only for emergencies or as a contact during the job search. Or, be radical and cut out the service altogether.