What To Do If You Are Unemployed

These past ten years have been one of the best economic times for the vast majority of Americans. $6 coffee drinks, $30 workout classes, $1000 iPhones, $3,000 per month rent, $5,000 vacations, I mean the list of extravagant things that I see young 20-year-olds spend on can go on and on. Unfortunately, after one of the longest bull markets in industry, people are now starting to realize that good times don’t last forever.

If you are in your 20s, this is likely the first time you are witnessing a downturn. You may be stressed, anxious and unsure about what to do if you lose your job. But don’t sweat it, bad times come every 10 years or so and there is nothing you can do about it.

So first off, stop worrying about things that happen to you that are out of your control

Too many millennials these days waste so much time worrying about events that they have no control over. Life has been so easy up until now that most young people do not know how to handle failure. Yes, life is tough and you will get kicked to the curb at some point in your life even when you did nothing wrong.

But stop worrying about it and start planning on how you will move on with your life going forward.

Success does not happen in a straight line

If you read My Life Story – How it all Started, you can see that I did not get to where I am now that easily. I slaved away as an investment banker for a few years, joined a large hedge fund, burnt out and quit a $500K per job, worked at a start up hedge fund that fell apart after a few months, and suddenly became unemployed.

You probably have seen this chart a hundred times, but this is what success really looks like.

NOBODY who is successful got to where they were without experiencing some sort of failure. You need to realize that what happens to you is not what defines you. What defines you is how react and deal with your failures.

Steps to take when unemployed

If you are already unemployed, then these are the steps you need to take to make sure you get your life back in order.

1. Apply for unemployment insurance and Medicaid

If you were laid off or fired, you can collect unemployment and maintain health insurance for free. The amount of money is not much (maximum of $1,600 per month I believe), but it is enough to pay for a good amount of your living expenses. If you are under 26 and still on your parent’s health care plan, then no need to apply for Medicaid.

Yes, you may feel guilty or even embarrassed that you have to collect unemployment checks, but this is exactly why it exists! To help you for the few months (hopefully) of no income until you find your next job. You have paid a substantial amount of taxes to the government from working before, so don’t feel guilty from collecting those checks.

2. Reduce your living expenses

The largest expenses that most people have are rent/mortgage, car payments, food and entertainment. The easiest way to reduce your monthly costs is to decrease your living expenses.

Do you pay $2,500+ per month for your nice studio or 1-bedroom apartment? Then get out of your lease and move in with roommates or go live with your parents if they are in the same city.

Never used to cook at home? Well get used to it and set time aside every week to get groceries.

Lease a fancy car? Well run the math and see if it makes sense to pay early termination charges to get out of your lease.

3. Cut out all wasteful TV/movie subscriptions

If you subscribe to Netflix/Disney+/Cable, then cancel those subscriptions. These services may not cost a lot, but you do not need to waste time watching TV/movies when you are unemployed. You can get yourself hooked into a bad routine if you are tempted to be lazy and watch movies all day long.

The average person in the US watches close to four hours of TV every day. As people get older, this number only increases. Don’t fall into the trap of wasting a fourth of your day watching TV. It brings you no value.

4. Keep your gym membership

The one area that you should not cut out is your gym membership. I repeat, do not cancel your gym membership. It is one of the main mistakes I made when I went through a brief period of unemployment.

Maybe you can downsize from a $200+ per month Equinox gym membership to something that is more reasonable, but you need to figure out a way to keep staying active every day.

5. Delete your social media

If you check your iPhone usage, you can see that Instagram / Facebook / YouTube are probably the top apps you spend time on throughout the day. The average person spends over three hours on their phones every day. That is 20% of your day wasted on platforms that bring you no value and generate no income!

Even if you are not unemployed, deleting social media will guarantee that you will be more productive throughout the day and give you time to do the things you want to do (i.e. exercise, learn a new skill, create a side hobby/business, etc.).

6. Start renting books from the library

Get in the habit of learning new skills and concepts through reading. I regret not seeing the value of books growing up and only started reading in my early 20s.

People always ask me how I broke into the investing industry. I truly did not know a thing about investing until after my first year in banking. I literally read dozens of books in the span of a few months and just kept learning and learning about the space. I knew I loved the game of compounding money and I was instantly hooked once I learned more about the industry.

If you ever want to break into a specific field, people want to see that you are truly interested and passionate about it. Reading about that field you want to break into is the best way to get started.

7. Last but MOST IMPORTANT – Create a daily schedule to maintain a routine

This is one of the most point important steps to take. Keeping your mind occupied is the only way to stay sane when unemployed. You need to maintain focus on the end goal (finding another job). Unemployment can be very lonely, especially when all of your friends are still working throughout the week.

Buy a whiteboard, hang it up in your bedroom and create a daily schedule of three or four things that you want to get accomplished each and every day. Consistency is key here and overtime your routine will become natural.

Here is an example daily routine:

• 7-8:30AM: Head to the gym and exercise
• 9AM-2PM: Job search / applications
• 9:30-10PM: Read
• 10PM: Bedtime

Carving out time to do specific tasks is the easiest way to maintain focus and get things done. You can easily lose focus and become less productive if you are not consistent with your daily routine. So every day look at that whiteboard and check off the list of things you planned on doing.

Getting another job is the most important thing you need to focus on right now, so you need to carve out a large amount of your day to finding a job. Make sure to read 10 Steps to Find and Get That Job You Love.

Notice how in the schedule above, you still have a ton of free time to do anything else that you want to do. When you block off a set period of time to do specific tasks, you free up so much time during the day.

The most important thing to do when you are unemployed is maintaining a routine. Without structure in life, I guarantee you will get nothing done and will feel lost / hopeless.

How to prepare for potential unemployment in the future

If you are still fortunate to have a job, you still need to prepare for unexpected times. You may think that you will never be unemployed, but unless you have your own company, then nothing is guaranteed.

There are three things you need to do:

1. Minimize your fixed expenses

It shocks me to see people who make less than $150K per year and have kids, a second home with a mortgage and two $50K+ cars on lease. Or even people who have a high paying finance career but have the “golden-handcuffs” because they spend all the money they make each year.

The best steps you can take right now to prepare for unexpected times is to minimize your fixed expenses. You don’t need a large house with multiple empty bedrooms or a second home. It is always better to get an AirBNB each year when you go on vacation than to have a second home. Even if the second home is for rent, ask yourself if you are prepared to pay the expenses of that home if you can’t find any tenants.

2. Have a one-year emergency fund (at the very least)

Sure, if you make a lot and have a ton saved in the bank, then go ahead and have a second home or expensive cars. But if you do not have at least one year of money saved in the bank to support you, your family and pay all your living expenses, then you need to change the way you are living.

About $50K should be enough for the average single person living in an expensive city or a person with a family living in the suburbs. Start saving today to build this emergency fund.

3. Pay off all your debt before thinking about investing

It shocks me to see people invest their hard-earned money in the stock market when they still have $50-100K in student loans or credit card debt. If this is you, when the market tanks you get hit with a triple whammy: 1) you become unemployed 2) lose 50% of the money invested in the stock market and 3) still have all this debt that you have no way of paying off.

Don’t be stupid – pay off all your debt before even thinking about investing.

Wealth is destroyed if you have to sell at the wrong time

What happened to most people in 2001 and 2008 was that they lost their jobs and could not longer afford their mortgage or their car payments. Tens of thousands of people had to sell their house or declare bankruptcy during those times at rock bottom prices.

Selling your most valuable asset during the worst economic times is the easiest way to lose your wealth. So prepare for the worst and always have at least one year of living expenses saved that you can never touch.

To summarize:

Stop worrying about things that are outside your control and start taking steps to get yourself through unemployment. Maintain a consistent schedule so you get things done each and every day. Keep yourself occupied with things that are productive (reading, job hunting, learning new skills, exercising, etc.).

And for those that are not unemployed, reduce your fixed expenses and start saving for that $50K emergency fund today.

I leave you with a video of one of my favorite actors and motivational videos of all time. Listen to it every week so you keep on moving forward.

Denzel Washington Speech