What to do when you lose your job.

EFA's Guide To Surviving a Layoff

1. If you own your house, immediately stop paying your mortgage. Yes. I said it. And many financial advisers will probably lead you down the wrong path and still have you end up in the streets. You should stop paying your mortgages because liquidity and cash are the most important things to have. Depending on your lender, you'll probably have 3-6 months before they even begin foreclosure proceedings. When you get to that point, begin to pay bits and pieces to just string the lender along long enough for them to either give you favorable mortgage modifications, or forebearance altogether. If you're lucky like a few people, you can probably get away with up to 18 months. The traditionals will say this is a quick way to ruin your credit score. The last thing you need to worry about at this point is your credit score.

2. Rely on your side-hustle. Don't have one? Get one as soon as possible. Anything income producing is eligible. Selling old baseball cards on eBay, check. Fixing your neighbors computer, check. Sell Avon products, sell Noni Juice. Sell your kidney if possible.

3. Do whatever it takes to get a job. Desperate times call for desperate measures. Network with old college buddies that you haven't talked to forever on Facebook. Hustle yourself out to companies and offer to do things as a consultant. Call up your ex-employer's competitor and offer to give them a competitive advantage by hiring you (at a reduced cost). Wait tables at the local Waffle House. Sadly, I know of one situation in which a married woman with kids was put in a dreadful quid-pro-quo situation with a hiring manager. She is now employed. Do whatever it takes!!

4. Survival is key. You have to develop the instincts that it is now you and your family against the world. Don't get emotional or feel bothered when credit collectors begin calling you. Study up on avoidance tactics. Change your cell phone number (because you shouldn't have a landline at this point) if you have to.

5. Resist the urge to splurge. After being laid off my first reaction was to spend some time alone. Go volunteer in a homeless shelter to keep yourself humble and busy.

6. Get liquid as soon as possible. If you have a HELOC available, take out all the available money on it ASAP. Once your bank finds out that you're behind on your mortgage they'll probably close your HELOC anyways. Don't be worried about it either, since it'll probably get wiped in bankruptcy court. Got credit cards? Use those first as it is unsecured debt. Keep your cash that you have available on-hand and in a safe place as long as possible. Depending on your situation, you can probably extend your survival period by a factor of two from just using your ordinary emergency savings fund account.

Emergency Savings Account

We hear all the time about 3-6 months of savings for your emergency savings account. Then we hear from the "traditionals" to use the rest to invest in the stock market or in corporate bonds or some other complex financial instrument that you've probably never heard of.

Here at EFA, we're more realistic on the current state of the economy. We recommend the following guidelines:

Age 20-35: 9-12 months of living expenses.

Age 35-50: 12-18 months.

Age 50+: 3 years.

Here's our FAQ on the matter:

Q: Why should I keep so much money in a savings account?
A: Because you might lose your job and you don't want to go homeless in this economy.

Q: Where should I keep this money?
A: 95% In an online savings account. Keep a small amount on hand (such as $1000) in case you need physical cash in the case of real emergency (Hurricane, house burns down, etc.).

Q: Well, everybody else says I should keep only 3-6 months. WHy do you recommend more?
A: How many people that you know have lost their jobs in the past year were able to regain full employment within 3-6 months?

Q: Well... what if I don't have anything set aside right now?
A: Get on a college-like budget and save like a madman while you can.

Q: How much do I need per month?
A: Enough so you can have NO INCOME and still survive completely for that month. Mortgage, food, water, gas, diapers for the kids, sanitary items, etc. Be honest with yourself and understand that you should aim for having the very basics.