Handling the Severance
Frank is losing his job in four weeks. He'll receive some severance but has no other savings set aside. Should he hold on to the severance as long as he can until he's employed again?
QUESTION: Frank in New York City is losing his job in four weeks. He’ll receive some severance but has no other savings set aside. He’s considering using some of the severance to pay off debts. Is that a good idea, or should he hold on to the severance as long as he can until he’s employed again?
ANSWER: I would pile it up. You need to pile up as much cash as you can until you land a job. The day you start the new job, the severance becomes your signing bonus. You use it to clear debt and clean things up. Your most important thing is food, then lights and water, then shelter. Debt is not on that list. We must take care of your basic family needs before we do anything else and make that money stretch as far as we can.
Plus, the bigger cushion you have between you and the wolf at the door, the better you do when you’re interviewing. You don’t come off as needy or desperate, and there’s nothing with your body language or the way you carry yourself. You come off as confident and saying you want to add value to their company, but you’re not freaked out and begging for a job.
You’re an accountant, so you’ve got a skill that companies need, especially as they are turning a corner coming out of a recession. I’m not panicking with your field, you’ve got a great skill.
The week that you start and you’re settled in, start writing checks out of that money.