by Bonnie Valentine

Created on: June 09, 2010   Last Updated: June 10, 2010

Being laid off from a job is a nightmare for the average American who needs every penny that is brought home to pay the bills. Typically, the first reaction is the array of emotions caused by separation from an employer. Financial considerations soon follow.

Rule number one is not to panic. Find out exactly how much unemployment compensation will be coming in. Calculate the difference between what was earned from working and the amount of unemployment. That number is how much household spending will need to be reduced per month.

The first thing to calculate is how much was spent on traveling to work. Many people find that the amount of money spent on fuel, eating out, parking, tolls, and work clothes often equals the reduction in income. The obstacle is often loss of health benefits. If that is the case shop around for a policy that covers major medical issues.

Look at all the extras and get rid of them. The number of things that can be eliminated from a household is often amazing. Reduce cell phone plans to the bare minimum or get rid of them if possible. Remove landline phones or reduce service to the most basic. Get rid of all premium television or internet services. Say goodbye to that pay radio service, TiVo, lawn care, or anything else extra that charges a monthly fee.

If the above is enough reduction in spending then things are in order. If not then it is time to keep looking for more ways to spend less. Eliminate eating out, stopping for coffee, buying anything that is not an immediate need, and start shopping for groceries at a discount.

Make every effort to find another job as soon as possible. Although it is tempting to wait until the unemployment almost runs out before looking it can take a long time to find a new job. Sometimes it is necessary to completely change occupation or relocate.

Everyone is going to have a different situation or circumstances. Rather than waiting until something like this happens an even better strategy is to be prepared for a financial emergency in advance. Get out of debt, save a six month reserve of living expenses, and cut back on expenses now as opposed to later. It is challenging to save in a culture that loves to spend so much. Think of how much less stress and worry there is for those who are prepared and it will make it easier to reduce expenses.

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