Preparing for Job Loss - Losing the primary family income

So far in this series I've talked about how job loss can strike unexpectedly and how to handle the loss of income that is not the primary family income.

While losing non-primary income would likely cause some changes in your budget, it probably wouldn't be a devastating loss. But what about the loss of your primary household income?

My husband in the primary income earner in our home and after retirement and daycare expenses we basically live on his one salary. For that reason, this would require more extreme changes than the loss of my secondary income.

First steps

From a practical standpoint, the first priority needs to be covering the normal monthly bills- mortgage, power, water, etc. To do that, our first steps would be to take my daughter out of daycare and file for unemployment.

In addition, I'd need to drop my 401k contribution down to 6% (the amount my employer matches) at most and possibly drop it even further in order to increase my take-home pay to cover our bills.

Having an emergency fund or stash of 3-6 months living expenses would come in very handy here. You've lived frugally and socked away the extra for a rainy day.... and now the rainy day is here! Don't be afraid to tap into those emergency accounts for necessities like insurance premiums and other expenses that cannot be cut.

Also, make sure you inquire about any severance package or job placement services available through your former employer.

One thing you don't want to do is cash in your 401k or other retirement account. While the quick cash might seem appealing, you'd be paying stiff penalties and squandering your long-term retirement plans.

In our situation, my husband would need to start looking for a job right away, and take on more duties at home to decrease our expenses (including dropping our cleaning service and other little luxuries). Lucky for me, my husband is a great cook so he wouldn't mind doing more cooking at home to cut costs.

Picking up on the meal planning and frugal shopping would be a bit more challenging for him but I think he would do fine with it. He isn't a planner by nature, nor is he frugal by nature, but he's adapted to those concepts over the last few years as is necessary once you get married, buy a house and have a baby.

Job Hunting

A current, polished resume is a must-have in today's market, where many experienced professionals are out of work. In addition, it would be great to secure a recommendation from your previous manager(s) if at all possible.

Networking sites like LinkedIn, Facebook & Twitter can provide a valuable way to get the word out that you are looking for a new position.

Another thing to keep in mind is that freelancing or other multiple sources of smaller income might be more practical than finding a single new full-time job. This might be the time to try and turn that hobby into some pocket money or to explore other income streams. You might also use some of your new free time to pursue online courses or other continuing education options.

Finally, don't limit yourself by feeling that any job is "above" or "below" you. Working part-time at the grocery store might feel demeaning. But if you are earning some extra money and getting a discount on the family groceries, it might turn out to be a great option for you.

Keep a Positive Attitude!

Most important is to keep a positive attitude and not feel defeated. Who wants to hire a sad sack that can't get over the loss of a job? Realize that you have plenty of skills to offer your family and prospective employers.

Keep your frugal habits, use the emergency cushion that you created for just this situation, and be proactive about finding your next adventure!

Read the rest of this series.

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