You lose a job, and what do you think about first? Maybe, where you're going to find another one, but high on anybody's worry list has got to be: "What am I going to live on?"
When a Reduction in Force threatened one Education Department office, the financial fears were immediate:
"Am I going to lose my house?"
"I can't make it on unemployment compensation."
"Can I keep my children in daycare?" asked a single mother.
This anxiety can affect your job-hunting success.
"The apparent sense of impending financial doom may make it difficult to lead a normal day-to-day existence, let alone find another job," says Washington management consultant John May, 35, who has led four workshops at Education on how to manage your money if you are RIFfed.
But most people, he says, and especially bureaucrats and mid-income families, find they have far more financial resources than they might think to make it through three to six months of unemployment.
The key is to plan and to budget, says May, whose Common Sense Management firm counsels small businesses and associations on organization and money matters. An overall financial picture gives a sense of security so that you can tell yourself, he says, "I've got a couple of months' grace time before I have to make any big decisions."
And importantly: You will have determined that you can afford to spend the money for business lunches and trips needed in a job hunt.
"You have to spend money to make money," says May, who has never been RIFfed, but as chief of administration for the National Alcohol Fuels Commission helped phase out 35 employes last year when the group's two-year assignment was finished.
May has converted his Education Department workshops into a 120-page manual, "The RIF Survival Handbook: How To Manage Your Money if You're Unemployed" (Tilden Press, $4.95 paper). It is a 10-step guide, with budgeting charts, that he believes will convince you, "I will be able to get by."
Among the resources you might normally expect: Your final paycheck, payment for leave you didn't take, severance pay, unemployment compensation, your retirement nest egg. With a plan and some temporary cuts in your life style, you might be able to stretch this money out over the period of unemployment. If you can avoid it, he advises not dipping into your retirement funds. Your plan should tell you in what month you have to make that decision.
Some resources, May says, that might not occur to you:
* Borrow against your life insurance. Or if you don't have a policy, ask a parent, uncle or friend to borrow for you. Make it a proper business deal, possibly with the relative borrowing at a 6 percent interest charge and you offering to pay 8 percent, still below the market rate.
* Take out a second trust on your home for, say, $20,000. If that's going to increase your mortgage payments $400 a month, put aside $2,000 to meet the added cost.
* Get a loan on your car if you have completed payments on it.
"A good rule of thumb," says May, is to borrow on assets before selling them and to borrow from family before trying financial institutions." Remember, though, that it is easier to get loans while you are still on the job.
One other tip: If you are anticipating being RIFfed in a few months, change your W-4 form to claim more exemptions, which will increase your take-home pay while you are still getting a paycheck. (If you are not going to have a full year's income, the IRS is probably deducting too much from your check.) Better to have the money during your job crisis than months later in a tax refund when the need is not as critical.
A financial survival plan, says May, lets you know "how much you are going to cut back." It also puts control in your hands--"and not a creditor's."