Laid off? First chore is to accept reality AFTER THE AX FALLS

THE BALTIMORE EVENING SUN

From entry level to executives, the ax has been falling as the recession takes hold. While the impact of a pink slip can vary according to a family's circumstances, a job loss is a crisis. But there are steps you can take to help see you and your family through until you get another job.

First of all, you need to accept reality. As simple as that sounds, it's surprising how tough it is, say experts.

"They need to face up to reality. They need to jump on it right away. That's their best shot," said John Gengler, education director at the non-profit Consumer Credit Counseling Service of Maryland. "People tend to procrastinate too long. It's a denial of reality."

Men, in particular, Gengler said, have trouble facing the loss of a job.

"There's nothing more devastating to a man than losing his job. He's knows it's his job to support his family. It attacks his ego," Gengler said.

Here's some advice offered by Gengler and others:

* File for unemployment benefits immediately.

People do not understand the unemployment compensation system, says Edward A. Mohler, president of the Maryland State and D.C. AFL-CIO.

You can only collect benefits -- up to a maximum of $215 a week for 26 weeks -- beginning from the time you file, not from the time you're laid off. "You'll find people waiting two, three, four weeks to file, thinking something's going to turn up and then they go in desperation. But then they find they can't get it in arrears," he says.

Even worse, he says, are those who don't file at all.

"A tremendous number of people think of unemployment as welfare," he said. "It's a service. This is not charity. This is not welfare."

* Analyze -- at once and on paper -- your financial situation.

"In the beginning I try to have them review their severance benefits, health insurance, disability insurance, life insurance, unemployment benefits and liquid assets," says John G. Craten, a Legg Mason vice president and head of the firm's financial planning unit.

The key to financial survival, he says, is to restrict expenses and use liquid assets -- severance, cash savings, etc. -- to pay essentials. This is not the time to take a trip because you have time off and need to relax.

* Hold a family conference, including the children, and explain your predicament. Try to be upbeat but make it clear that it's not business as usual. Go over your expenses and see what you can cut.

"I sit down and go over past spending habits. Obviously it would be a drastic spending change," says Craten. "It's time to read them the riot act."

* See that important payments are made no matter what.

A mortgage is usually at the top of the list, said Craten, because for most middle-income families their home is their biggest asset.

If there's going to be a problem paying the mortgage -- or if one develops along the way -- talk to the mortgage holder. Often, says N. Mark Freedman, a partner in the Towson accounting firm of Katz, Abosch, Windesheim, Gershman & Freedman and president of the Baltimore Association of Financial Planners, a mortgage holder will agree to interest-only payments or some other arrangement. Lenders, he points out, are not anxious to DTC take back a property, particularly in this real estate climate. "Keep them informed all the way," Freedman said.

You also need to keep your health insurance coverage. If your spouse works, check to see if you can get coverage there. Otherwise, federal law requires that your former employer allow you to remain in the group plan for as long as 18 months -- but at your own expense. If that's too expensive, check out HMOs.

Unfortunately, said Susan Yochelson, director of AFL-CIO Community Services, almost none of the jobless people her agency deals with keep their insurance because they can't afford it.

"Most people don't pick up health insurance," she said. "They join the ranks of the uninsured and hope nothing happens."

Contact other creditors such as retailers or credit card companies and be honest about your situation; propose a repayment plan of your own, but don't suggest a plan that you cannot keep, advised Gengler. Too often, he said, people don't talk to companies because they think it's useless.

If you can't work out an arrangement with creditors, Gengler advises, seek help, which is free, from his organization before you use up all your savings and severance. The CCCS can work out repayment plans with creditors and help you draw up a budget. You can arrange an appointment in the Baltimore metro area by calling CCCS of Maryland at 747-6803. Elsewhere, you can find the nearest office by calling 1 (800) 388-2227.

"If they have severance or savings we could possibly stretch two to three months worth to eight or nine months. If they level with us, we'll do what we can to help," he said.

* If you're a union member, notify officials that you have been laid off.

Many of the locals, Mohler said, have programs under social services committees and can also provide counseling for the emotional shock of losing your job. You can also get help on how to write a resume and conduct a job search, essential for many who have not had to look for work in years.

* Don't liquidate assets unless you really have to.

Morry Zolet, registered investment adviser at Ferris, Baker Watts, advises people to first take steps to maximize income.

"If you're in a dividend-reinvestment program, get out and take the dividends," he said. "Switch from growth vehicles to income-producing vehicles."

Craten points out that, while you should always seek to preserve assets, this especially is not the time to be forced into selling investments because the market for many of them is depressed.

But, if you're forced to, try to see what you can sell or cash in with the least penalty.

If you must sell off securities, do so selectively, said Zolet.

"Try to spin off some of the dogs in your portfolio and keep the quality," he said.

Freedman suggests people look at the possibility of borrowing -- often at very low rates -- against the cash value of life insurance policies.

"People forget that," he said.

Craten also said that in some cases, loans may be available from the company that laid you off. You also can swallow your pride and see if any family members will loan you money.

But beware of bill-consolidation loans, which often carry high interest rates, Yochelson said. Borrowing, agreed Gengler, will only get you in deeper.

* Be careful how you handle any retirement-plan distributions.

If you're laid off and your company gives you a distribution from your retirement fund, you must roll it over within 60 days. Otherwise, you will be subject to a tax penalty on top of the income tax due on any untaxed contributions.

What's more, you will be hurting your future security; retirement funds are, after all, for retirement.

Dip into retirement funds, said Zolet, only as a last resort, such as preventing foreclosure on your house.

* Find out about programs that can help you.

For those without savings and assets and little or no severance, the economic crunch comes sooner rather than later.

"People don't believe they're not going to get recalled or find a job at the same pay," said the AFL-CIO's Yochelson.

The state-run Homeowners Emergency Mortgage Assistance Program, for instance, may be able to help those with conventional mortgages who are in danger of losing their homes.

The Maryland Energy Assistance Program helps pay for heat and is available to renters and boarders as well as home owners. The program runs through March 31 and is based on income of the previous 30 days. Assets are not counted. "this is a wonderful program," Yochelson said.

Baltimore City residents are eligible for Baltimore Works, a city job placement service run under contract by Yochelson's agency.

Some may also be eligible for medical assistance or food stamps.

First Call for Help, a United Way agency, can help determine which programs you may qualify for and provide information on where to apply. First Call for Help can be reached by calling 685-0525 in the Baltimore area or 1 (800) 492-0618 (toll free

elsewhere in Maryland). The TTY number for the hearing impaired is 685-2159.

* Consider part-time, temporary or consulting work.

While it may not be what you want, some income could help get you over the financial hump.

What to do

Here's are some steps to take if you lose your job:

* Accept reality.

* File for unemployment benefits immediately.

* Analyze your financial situation.

* Hold a family conference.

* Insure important payments.

* Notify the union if you are a member.

* Don't sell off assets unless you have to.

* Be careful how you handle any retirement-plan distributions.

* Inquire about programs that might help you.

* Find a part-time job.

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