Wednesday, September 31, 2001

Don't let a pink slip put you in the red

Call it laid off, terminated, downsized or dot-bombed, the result is the same one minute you're working, and the next you're unemployed and without a regular paycheck.

If you have recently joined the ranks of the jobless or fear a pink slip is in your future, your number one priority may be to find a new job, but there are several important financial matters you need to address as well.

Here is some advice from the Georgia Society of CPAs that can help you stay out of the red when you've been handed a pink slip.

Be savvy about your severance package.

While severance pay is not mandated by law, many companies offer dismissed workers one to two weeks pay for each year of service.

Consider whether you should negotiate for more severance pay or other perks, particularly if circumstances, such as your age, may make it more difficult for you to land a new job.

In any case, resist the temptation to use your severance to pay off your mortgage or credit card debt. You may need the money down the road to keep you in the black.

Apply for unemployment benefits.

Each state has different eligibility requirements for qualifying for unemployment benefits. Normally, if you've lost your job through no fault of your own (such as being laid off) and you meet your state requirements for wages earned or time worked during a certain period, you can qualify for unemployment benefits. Most states now pay up to 26 weeks.

Don't forego medical insurance.

Most employees are accustomed to having the company pay all or part of their health insurance and other benefits.

However, once you're laid off, the cost of benefits generally becomes your personal responsibility. Medical coverage is expensive but make no mistake, no one, especially not the unemployed, can afford to be without it.

Under COBRA, a federal law that derives its name from the Consolidated Omnibus Budget Act, you and your family can remain covered by your company's health insurance policy for up to 18 months (longer in some cases). You pay the tab, generally at the company's group rate plus a 2 percent administration fee. You have 60 days to elect coverage under COBRA, and within that period you can choose to have the coverage begin retroactively.

Slash expenses.

The first step is to prioritize your bills and take a hard look at how you may be able to reduce discretionary spending.

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