Leaving your job — or get laid off? 5 things to do as soon as possible


So, you quit your job? Or... maybe you even got fired. What happens now? You don't have a paycheck coming in, so the future can look pretty scary. 

Sadly, a landlord doesn't care if you quit because your boss was a jerk. And the local grocery store isn't interested in how you got fired because the boss had a nephew to promote. You've got bills to pay — even if you aren't getting paid.

But being suddenly jobless is definitely not time to panic.

Instead, now is the time to become a master of your money — a financial planning jedi, if you will.

Good news: If you make just a few simple moves after you get fired, laid off or voluntarily leave a job, you'll be OK. You won't even have to move back in with your parents. Not that there is anything wrong with that.

Here's your game plan.

1. Check out options for health insurance for the unemployed

If you had employer-sponsored health insurance, you may no longer be covered if you quit your job or are let go. You do not want to go uncovered, so you need to look into your options right away. 

The Consolidated Omnibus Budget Reconciliation Act — known as COBRA for short — allows you to keep your coverage under group health benefits if you voluntarily or involuntarily leave your job.

Your employer is only covered by the act if it employs 20 or more people, so check with human resources at your company to see if keeping your group policy is an option for you.

While your employer may have to let you stay covered under a group policy, your employer will stop paying premiums when you leave your job.

This means you could be forced to pay the entire insurance cost if you keep group coverage through your employer. Talk to human resources to find out exactly what the cost will be.

If the premiums are high, and they might be, explore other options.

The Affordable Care Act — aka Obamacare — guarantees coverage, plus subsidies if you qualify based on your income. Yes, the open enrollment period ended Jan. 31, and it is unclear what the future holds for next year, but there is good news for you: When you leave or are fired from your job outside of an open enrollment period, you qualify for a special enrollment period through the Health Insurance Marketplace.

A qualifying life event, like getting fired, gives you 60 days to enroll from the day that the event happens.

You should act right away because you don't want to have an unexpected health emergency without insurance. Sign up immediately after losing your job and you can start coverage the first month after your employer coverage ends.

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2. Learn how to file for unemployment

Unemployment benefits can provide income if you have lost your job through no fault of your own. If you left your job voluntarily or were terminated for misconduct, you will not qualify. 

Unemployment is administered at the state level, so you will need to apply for benefits where you live or where you worked, though the Department of Labor points people to a helpful tool that lets you easily find your state's program.

Qualification requirements differ by state. In general, you should be eligible for unemployment if you worked for a set minimum number of hours and weeks in the months before applying for benefits. And you'll typically file with the state where you last worked, even if you live in a different state.

Your benefits will be equal to a portion of what you earned, and you are limited in the number of weeks you will be paid benefits. Still, you should make applying for unemployment a priority — so you have at least some income.

3. Cut nonessentials from your budget

When you no longer have any income coming in, you really can't afford to waste money. Now is the time to go through your spending with a fine-tooth comb and look for ways to save.

Cut out your cable and switch to a streaming service. Better yet, use free services and the library for movies.

See if you can switch to a cheaper cell phone plan.

Look for ways to save on groceries and spend less on food. Contact your utility companies and see if there are any programs that provide assistance for people with low incomes that you may qualify for now.

In general, learn to shop smarter.

The less you spend, the easier it is to survive on your unemployment benefits and the longer your savings will last.

4. Look into options for loans

If you don't have enough unemployment benefits or savings to cover all your household bills, you could find yourself in debt when you leave your job.

Many people just default to using credit cards to pay for necessary expenses when they are unemployed — and racking up debt. This is a really bad idea because credit card interest is sky high.

Your first step if you cannot afford to pay all your bills is to see if family or friends might be willing to give you a low-interest or no-interest loan.

If you are going to borrow from a loved one, consider making a contract that spells out how much is being loaned, what the repayment schedule will be and what interest will be charged. 

There are state laws that limit who can make loans on a regular basis, but loans to family and friends are generally exempt. Usury laws, which also vary from state to state, may limit the amount of interest a lender can charge. (Of course, if your family or friends are loaning you money, they probably will not charge a high enough rate to violate these laws.)

If no one in your life can give you a loan, consider a personal loan through a bank or credit union. While it's bad to borrow if you don't have to, it's typically cheaper to borrow from a bank or credit union than to use a credit card.

5. Roll over your 401(k)

If you had a 401(k) retirement account at your old job, you need to make plans to roll over the account. If you cash out your 401(k) and take the money out, you will pay a substantial tax penalty — so try to avoid that at all costs.

According to the IRS, you should roll over your 401(k) into a new retirement plan or individual retirement account within 60 days. An IRA is an account you open with a bank, brokerage firm or other financial institution that gives you the chance to save for retirement tax free.

If you get a new job within the 60 day period, you can move the money from your old 401(k) directly to your new one.

Mohd Bahiri Bin Ibrahim/Shutterstock.com

If you aren't sure you will have a new 401(k) to move money into, you can open an IRA at many banks and brokerage firms: NerdWallet has a good ranking.

Talk to the financial institution where your 401(k) is held and give them your new account info so they can take care of directly transferring the money from your existing 401(k) into your new account.

Finally, keep your chin up! For more advice about how to make it through this tough time — and bounce back like a boss — check out Mic's guide to surviving a layoff.

Sign up for The Payoff — your weekly crash course on how to live your best financial life. Additionally, for all your burning money questions, check out Mic’s credit, savings, career, investing and health care hubs for more information — that pays off.