I was laid off at 58 years old, I have substantial debt and a high mortgage payment, and my severance package will only cover these expenses for seven months; what should I do in addition to looking for a new job?
I am 58 years old and I was laid off on January. I have $12,000 in credit card debt and $25,000 in student debt. I am financing my car and leasing my wife’s car. We are co-signers for our daughter's school loans, which are about $150,000. She is struggling to make ends meet right now. Our monthly mortgage payment is 3,390k. Me and my wife have approximately $400,000 between our 401(k), IRA and one other retirement account. My severance will cover our expenses for seven months. Is there anything else I should do, in addition to looking for a new job?
What you have done in the past is done. There is nothing you can do about it. Going forward, take any legitimate job and start making some money; become extremely frugal; avoid further debt and do not touch your 401(k) unless you must.
Sorry to read about your current difficult situation. I know it can be a scary and uncertain time.
My first piece of advice would be to reduce your expenses as much as you can during this time of transition. I would continue to make your debt payments, but do not pay any extra. Cash is king in your current situation! Your first goal should be to stretch the available cash (severance) as long as possible until you start working again.
If your new job starts and still have severance cash available (or they are still paying you if the severance is collected over time), I'd recommend using the excess cash or cash flow to: (1) build an emergency fund (if you don't have one already) and then (2) eliminate some of your debts. Specifically, the credit card debt, student loans and car obligations should be eliminated. Don't spend those extra funds on new consumption; use them to change your long-term financial health by eliminating debt.
Please don't touch the retirement accounts unless you absolutely have to. If necessary, hopefully you'll be 59.5 years old so you won't also owe a 10% penalty. Using those funds early will severely undermine your retirement income later in life.
Best of luck to you! I hope a job opens up soon!
Sorry to hear you are going through a tough time. If it is any consolation- there are many people of your age, in your situation. More and more people are working longer and postponing their retirement especially if they have been laid off at some point in their career.
In addition to looking for a new job you may want to see if you can do some part-time work to supplement your income until then. You don't mention if your wife works or is interested in working- if she is not working currently, maybe she can also look for a part-time or full-time work. You will of course have to start living frugally and paying off your debts when possible. Credit cards usually have very high interest rates. You may want to see if there is any way you can reduce your interest rate, for example by balance transfer to a card or a loan that has better terms. Try not to touch your retirement account- you will need that when you retire.
Another thing: It is commendable that you put your daughter through school, hopefully she knows about your sacrifices- so that she works as hard as possible at school and after graduating.
I think the key is what not to do. I would not touch any o fyour IRA's or 401(k)'s. Not that you are close to the point of "bankruptcy" but these assets would be protected if you need to go down that path. Besides that you are doing the most important thing which is networking and trying to find new employment. I would also freshen up on your states unemployment policies to see when and if you'll be entitled to unemployment benefits. Some States would require after unemployment payments, some start now, and some you wouldn't be eligible if certain situations. Naturally the other thing I would do is slim down expenses as best you can to the bare minimum until you've secured new employment. Good sites for looking for a job are indeed, linkedin these days, and depending on the level you were I've had lots of clients find success using a recruiter. Best of luck and let me know if any other questions or can help in any way.
Hi - I’m so sorry this has happened. It’s really hard and unfair. My heart goes out to you and your family. I'm in my late 50's too, and change is so hard for me. I like going to the same places with the same people, and it would be scary to have to interview and then do new things with new people in a new office. But once you get your arms around this change and take the steps you need to take, you'll be able to get out there and find a good new career situation.
The advice the other advisors have given is excellent, and I hope that some of it helps. Ideally, you will find a new, better, higher-paying job that you like more than your old one. I hope that happens. Here are some other action items to consider:
- I’m assuming that you’ve filed for unemployment already. It’s not much, but any little bit helps. You may also find the unemployment office job website to be very helpful. It’s good in North Carolina.
- Would you consider selling your home and moving to a smaller home? Or maybe moving to a new city for a new job? If it’s a seller’s market in your area (like it is in Charlotte, NC) that action could give you a lot of financial relief.
- Contact the student loan folks and ask for forbearance or deferment.
- You’ve got 7 months of severance, and I feel confident that in today’s job market, you’ll find a job within 2 or 3 months, then you will be back on your feet.
- Use LinkedIn, the Muse, your field’s trade association publications, your alma mater career link, and the many other helpful job sites out there to help you find a great new job as quickly as possible.
Best of luck to you and your family – am sending good thoughts for a speedy return to work.