If you think you’re going to be a casualty of mass layoffs at work, you need to take steps to protect yourself before it happens (if possible, of course). Here are a few financial steps to take if you sense pink slips may be on the horizon.
1. Pay back any 401K loans you may have taken. If you know layoffs and firings are on the horizon, pay back as much of any 401K loans you may have taken out as you possibly can. Why? Because whether you’re laid off or fired, you only have 60 days maximum to pay any outstanding balances on those loans before they become taxable income. On top of all that, you may have to pay an early distribution penalty if you’re under 60 (and if you’re reading this, you probably are) and may have to pay even more income taxes and penalties depending on what state in which you live or work. Yikes!
2. Get more money in your emergency fund. We’ve gone over this a few times, ladies, and now is when it really matters. You should have enough cash to tide you over for rent, food, and utilities until you’re back on your feet. Start saving as much as you possibly can.
3. Check your IRS withholding. Since most Americans get a tax refund at the end of every year, try to keep as much cash as you can without having a penalty later. The IRS Withholding Calculator can help you make the most of each of your checks now so you’re not waiting to get your own hard-earned money back later on.
4. Familiarize yourself with the Unemployment Insurance process. It’ll save you potential delays later in getting money that you’ll need. Also remember that this money doesn’t last forever, so don’t expect to coast on it: Depending on your state, you’re on your own within six months to a year.
5. Get your health insurance in order. You may be eligible for a COBRA plan under your employer, but that may not actually be the best option, because many of these are a lot more expensive than just buying your own. Check out healthcare.gov to compare plans and find one that works for you—if you’re young and healthy, you may actually save a lot of money this way.