Some of my most popular posts have actually come out of tough circumstances that occurred in my life or others. For example – the post on what to do when your car gets stolen has been widely read and that came from the time my car got stolen (and then found). Another one is preparing for the unexpected; the story of how one of my friends lost his wife in a car accident. There’s an old saying that goes ‘prepare for the worst, hope for the best’ and getting your car stolen or losing a family member isn’t something we really have a lot of examples of – and so I’m in a weird way happy that our stories can be shared with others to either help them better prepare or help them get through it if they find themselves in an experience like this.

In my latest installment of “preparing for the worst” – I had the chance to sit down and interview a friend of mine who lost his job earlier this year. I personally work in the tech industry, and have a lot of friends and colleagues there as well. Late 2022 and 2023 has been brutal with layoffs and companies have had to cut their workforce sometimes in the range of 10 or even 20%. Layoffs.fyi has been a great site to check and it looks like there have been just over 400,000 people in tech that have been laid off.

Thankfully many have been re-hired; some by new companies and even some by the same company. Some companies are announcing that they plan to massively rehire some of the people they let go, which just blows my mind having just paid all this severance and put these folks through a rough even traumatic time.

One of my friends did lost their job in February of 2023 and thankfully got a new job in July of 2023 at a company he really likes. This friend and I often think similarly when it comes to our finances and I was really curious to pick his brain on how it all went down and hear his story. So, here’s what I learned from my friend who got laid off in 2023!

If this caught him off guard; how did he prepare, what would he do differently?

I was really curious to understand where his head was at when this happened. How much of a surprise was this? Did he prepare in any way? Were there things he wished he done anything differently? So I’ll start by saying that he does have an emergency fund – the recommended 3-6 months of expenses stocked away in a separate high yield savings account. I cannot stress enough the importance of having an emergency fund – if the past few years of a pandemic and a recession didn’t convince you of the need for one – I’m not sure what did! So, my buddy did have a few months of money stocked away if and when something went awry.

Outside of that, like many of us, we did hear rumblings and rumors and worry that we could be affected. My buddy’s company did announce that layoffs would be coming, just of course not when, where or how many. My buddy shared that he was actually let go in one of the later waves of layoffs (it wasn’t a massive rip the Band-Aid off situation) and that the layoff actually had caught him off guard a bit as he had thought he had made it through. However earlier in the year he was a bit worried and did two critical things. A) He worked to pre-fund as much of his 401k and 529 (college savings for kids) as he could. There is a max you can contribute each year for tax benefits and so he went ahead and used some early paychecks to get ahead on those. B) He kept his cash balances a little higher. My buddy (similar to me) has a balanced budget each month and after expenses he will put some money to savings – either in a savings account or an investment account where he buys index funds. In this timeframe being a little spooked and a little worried – instead of putting money in the stock market (where he could have easily pulled it out but there could be more tax implications and the market is volatile so he could have lost money in the short term) he put it in cash. Just in case!

Finally, the last big non-financial thing he did was a practical piece of advice he’d received from someone who had been laid off and that is working to pull any personal documents or files off his work computer and onto his Google drive. Like many of us, my buddy had personal files that he would hate to lose. Every company does layoffs differently and you’d hate to wake up one day to find your laptop has been cut off!

YMF Take: I was in a similar boat in early 2023 – I too was very much at risk of being laid off working in tech. I didn’t do any of the things he was doing – aside from having an emergency fund. I think a good practice moving forward is 100% to have an emergency fund, try to be in the habit of storing personal stuff in your own cloud storage (or personal computer) and I did like the recommendation of more cash instead of investing as things get spooky.

What did the first week look like? How did it all go down?

Layoffs are not the end of the world but can certainly feel like it at the time. I wanted to hear how it actually all went down and although every company and each layoff can be different I think it’s helpful to hear how it might go down. PS one quick humorous story – years ago my company had layoffs and it came in the form of an email at like 6am saying “today will be a hard day” – and my buddy (different buddy) had the unfortunate luck of not checking his email and choosing this day to bring his dog into the office (it was dog friendly) and people were like “oh is this a therapy dog the company brought in?” and the dog actually wandered off into a large conference room where the mass layoffs were happening and the CEO walked the dog back to my buddy!

For my interviewee – the day began actually with a bit of a bad feeling that turned out to be true. The day prior he attended a managers meeting with talk of an upcoming round of layoffs – but my buddy wasn’t mentioned and once again, felt in the clear. He said we woke up around 3am to check his email and then again at 6am right when the dreaded email came out. And that was how he found out he had been laid off.

Right then and there he started losing access to systems – internal access to chat tools and folders and core systems was gone. He kept email for a day or two and his calendar for about a week. True to the advice he had received – he was glad that he pulled personal things off his Google drive prior.

He said the first week was mostly just connecting with people wherever he could. That first week he then took some time and digested the information and started making peace with the fact that it’s over. He started digging into the severance package and realized that it was in fact pretty generous and he felt a peace that he would be ok.

What does severance look like?

Of course it’ll vary at every company but in his case, he got 26 weeks of severance pay. It got a bit confusing (doesn’t it always), but he was made a ‘non-working’ employee and continued getting his regular pay and benefits for 75 days. Then the severance kicked in but what was interesting is that you had to wait 60 days to get the severance, which was paid in a lump-sum payout. Prior to the end of his non-working employment, he had to sign a separation agreement in order to get the severance. He mentioned that some folk did not – they had thought they had signed but either forgot or something went wrong – he stressed the importance of saving PDFs! Those poor folks apparently did not get their severance. My buddy was in the clear and after that 60 day period – he was then paid on the next standard pay date his 26 weeks severance in a lump sum (i.e. not a small amount of money).

What is crazy to me is that there was essentially a 60-70 day period where my buddy didn’t get paid. He knew the severance was coming but he essentially had to go without pay for 2 months! He ended up being fine (emergency fund and he had stocked up his cash accounts) but I worry for others that might not have been as fortunate or as prepared! It’s also worth calling out that he was given paid Cobra for 6 months. Cobra is the continuation of health insurance benefits – basically if you quit or get fired you can elect cobra and hang on to your employer’s insurance plan but you have to pay the full amount – not just the employee paid premiums. His company was generous enough to pay the whole amount for him – for 6 months.

YMF Take: That 2 months without pay makes me nervous for others and myself. Further reinforcement of the need for an emergency fund! You could always restock it once the severance check came in but that’s a long time to be without pay! But also super fortunate to get great severance like that!

What did finding a new job look like?

I was quite curious as to what searching for a new job post being laid off would look like. I would imagine on the one hand that it could feel quite frantic – feeling the desperate need to get a job that is bringing in income vs. wanting to be smart and not just pick the first job that comes your way.

My buddy relayed that thankfully he was financially in a spot where he didn’t immediately feel the need to say yes to the first job he took. He had just gotten a severance check worth 26 weeks of income – basically 6 months so he knew he had some time to find a job that he actually liked, not just the first offer that came his way. He did say that it was quite competitive out there – especially for tech jobs. Thankfully he’s built up a decent network of old colleagues and friends and he said that networking was HUGE in helping him get a job.

He had a few interviews right off the bat but frustratingly those fizzled out on him. I think it’s a sign of the times with this job market and people are angsty all around – including hiring. He had one time where he got the offer but was then told the position actually had been pulled back, and another time he realized he was interviewing for a position that wasn’t actually open yet – and that might not. It’s tough out there! After 2 months of job hunting he was able to land a job that he’s happy with!

YMF Take: Networking is super important and it’s a smart idea to continually build your network – you’ll never know when you may need to tap into it!

Filing for unemployment

My buddy did go through the process of filing for unemployment. Every state is different in terms of how much or for how long they’ll pay, and my buddy said that he at first felt a bit weird about applying for it – like he had a good safety net already with his emergency fund, and he knew he was getting severance in 60ish days, so he kind of felt like he was taking advantage of the system here. However, he was talked by another buddy into filing for it – he realized he’s been paying into the system all this time so why not go for it. It’s true – as part of your paycheck / taxes you are paying into the unemployment programs so I agree and don’t think you should feel bad about it.

He said that as with any government agency it took a lot of paperwork and took some time but was did get approved and got $365/week from the state. This went away once he got his severance but he said it was a nice extra cushion to have!

Any advice for others or his future self?

To wrap it up, I asked “hey what would you have done differently…or what advice could you give someone that might end up getting laid off in the future?” He gave me two pieces of advice. The first was that there is no company loyalty anymore. You are essentially a paid mercenary and you’re happy to stick around as long as it makes sense for you, and your company could at any time let you go when it makes sense to them. It’s not personal, it’s just business. I quite like this mindset and have tried to adopt it myself. We had layoffs at my company and I could have been laid off myself but wasn’t. I try to view this as a selfish relationship and realize it might not last. For the time being I’m enjoying the work and am getting a nice paycheck but I know that it could change in the future but for the interim I’m going to maximize my pay and benefits all while delivering a quality product in terms of my work output.

My buddy also stressed the importance of an emergency fund – it helped him sleep so much better all throughout this process knowing that a layoff wouldn’t wreck him – and it ended up not wrecking him! A layoff is simply a part of your journey and a phrase I’ve enjoyed saying in bad times is, ‘this too shall pass’. My buddy is already looking back and feeling blessed for where he is now!

A layoff can be a scary event; even the threat of layoffs can be terrifying. I would say what my buddy shared was not to be paranoid about it happening, instead always be smart with your career in terms of growing, networking and taking job chats here and there, and of course to have an emergency fund. Finally be selfish at work and remember it’s not personal it’s just business!