What is the 1st, 2nd and 3rd Thing You Should Do if You Lose Your Job?

It happened. Your boss calls you into her office and tells you that the firm is ‘downsizing’ your job. You are in shock. They are giving you one month of severance and they tell you when your last day is. What do you do first, second and third?

Don’t sign anything until you catch your breath and can read whatever document they are putting in front of your face to sign away your right to sue them. Once you get home, do the following:

  • Register for COBRA or purchase individual insurance – do not let you or your family go uninsured. Your company (if it has more than 20 employees and offers health insurance) is obligated to offer COBRA. You have to sign up within 60 days of losing your job. You company informs COBRA who sends you a packet with information for sign up.

You can also go on a health care exchange and buy individual insurance. If you’re married, you should be able to claim a “life event” and be put on your spouse’s insurance even if it’s not open enrollment. You must claim a “life event” within 30 days of your job loss.


  • Sign up for any unemployment benefits for which you are eligible – don’t discount this step. It may be uncomfortable emotionally, but nowadays, most everything can be done online. No matter how much you’re eligible for, it’s better than zero and it can be the difference between sinking or swimming for you and your family.


  • Trim your monthly expenses down to ’emergency expenses’ only – do it the night you’re laid off. After you get your composure back, go home and make a list of your monthly expenses. A true list of what you actually spend. Check your statements and checkbook to be accurate.
    You want to cut your typical monthly household expenses down to your ’emergency expenses’. Your ’emergency expenses’ are your regular monthly expenses minus everything you can be cut right away. It should be about 60-80% of your typical monthly expenses. If you spend $10k/month typically, you’re ’emergency expenses’ could be about $7,000.

To start cutting to your ’emergency expenses’, start with your list of household expenses. Cut the cable (keep the internet for job search), cut the kids activities, cut take-out, eating out, entertainment. Cancel subscriptions, give appropriate notice to house cleaners, babysitters or landscapers. Cut everything except contractual obligations (e.g. child support, car payments, student loans), groceries you can cook at home, basic transport (maybe only one car is necessary), basic housing (mortgage, electricy, gas, etc.) and medical necessities. It’s surprising how little you can actually cut on the first day because the majority of most people’s monthly expenses are in their housing, food and contractual obligations.

You will feel empowered if you can actually DO SOMETHING after being laid off. Having some control in your life will help you process these changes better. Being laid off feels like a complete lack of control. You didn’t see it coming, as opposed to being fired, where there are usually warnings and performance reviews. Take back some control by knowing what to do first, second and third.