Laid Off? Here’s What Not to Do

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There are plenty of steps to take if you are laid off, but what you don't do may be more important.

With the unemployment rate at 7.2% last month, up from 4.9% a year earlier, it's realistic to imagine you may be one of the unlucky ones out of a job in the near future. Here are some big mistakes people make after being laid off that you want to avoid.

Take a vacation or extended break: When the economy was strong and jobs plentiful, those laid off sometimes decided to take a mini-vacation or break before beginning their job search. Doing that today could be disastrous to your finances. Chances are, it's going to take time to find new employment, so beginning the process as quickly as possible is in your best interest. If you need a break, try to negotiate a week or two before you start your new job, but only after you have secured it.

Keep living like you didn't lose your job: There are a lot of reasons why people justify continuing their old lifestyle. Doing so will drain your limited finances quickly. If you have lost a job, come to terms with it immediately and begin cutting out all unneeded costs right away. It's much easier to upgrade your lifestyle when you find new employment than to run out of money when you haven't been able to find a job.

Get lazy: If you lose a job, you should immediately treat finding new work as your new 9-to-5. That means getting up in the morning, working just as hard and spending the same hours doing all the things you can to land new employment. It's easy to get lazy, rise late in the morning and devote only an hour or two a day to finding a new job.

Only look for a job at the same level: Let go of your past job title or level. Expecting to meet or exceed your previous status will hinder you from getting hired again. Consider other opportunities. When times are tough, remember that some income is better than none.

Refuse to take a job that pays less: In the same sense as with a job title, you should come to terms with the possibility that you may earn less. With the current economic conditions, you'll probably make at least 10% less. But just because you accept a new job doesn't mean you have to stop looking for a better one.

Tap your 401(k) for everyday living expenses: If you lose your job and the first thing that comes to mind is that there is nothing to worry about because you can always use your 401(k) money, you have started your unemployment with a financially damaging frame of mind.

While that retirement money may look tempting, it really should be used as an absolute last resort. You should not consider using it until after you have cut your budget to the bone and gone through your emergency fund while spending at least eight hours a day looking for work. Using your 401(k) money means you end up sacrificing your retirement. Building it up again is going to take a lot more work than you could ever imagine.

Get angry and badmouth your former employer: There is going to be resentment and anger if you are laid off, but don't publicly air that for all to hear. Bite your tongue, swallow hard and keep a smile on your face. There is a good chance a new employer will call your old company. If the new employer hears you were well-liked and got along with others but the tough economic times made the layoff necessary, you will be more likely to be hired. The new company wants someone coming in with a positive attitude, not someone full of resentment.

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