How to feel safe when your job isn't

What do you do if your industry is shrinking, but your monthly bills aren't? You come up with a plan - and hope you don't need it.

By Josh Hyatt, Money Magazine senior writer

(Money Magazine) -- Professionally, Don Megge is living on borrowed time. For starters, he works in the auto industry - a field in which plant closings, employee buyouts and layoffs are an everpresent threat.

But Megge's job insecurity isn't just an industrywide issue, it's something he's staring straight in the face. A nine-year veteran of Chrysler, where he oversees production systems, Megge has already been laid off twice and has seen his work group of 125 cut in half.

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Don Megge doesn't know what's on the road ahead, but he's preparing anyway.
Steer your way out of a career skid
With Don Megge's job stuck in neutral and possibly going into reverse, he needs to shift gears. Here's how he can do it.
1. Look for new income
Don isn't the only one who can help keep the cash flowing. His wife Susan works as an administrative assistant, but her real passion is devloping her Website, 40isbeautiful.com Those Web-savvy skills could be useful in finding a higher-paying job.
2. Set aside their tax refund
Don estimates that the family will receive a tax refund of $1,600. That needs to go directly into an emergency fund. "They should just put it aside, so they have some sort of savings," advises Janet Tighe, senior financial planner at Mintz Levin Financial Advisors in Boston. "It may not go very far, but it will get them started."
3. Get moving
Despite the couple's attachment to the Detroit area, they need to consider relocating. Megge "has a skill, and it's somewhat transportable," notes T. Michael Dolan, executive vice president at the Society for Lifetime Planning in Troy, Mich. Dolan points out that many automakers have plants in the U.S. "It's ugly around here," he notes. "But there are still places [like the South, where new auto plants are being built] he could go."

And that was before February, when the company announced plans to slash an additional 13,000 workers from its payroll in the next three years.

"At any time, management could look at me and ask, 'Why are we keeping this person?'" says Megge, 45. "I'm never sure what's coming next."

The Megges' finances are on the razor's edge, but to look at the way they live, you'd never guess. There's a Dodge Durango next to a camper in the driveway, a Harley-Davidson (Charts) in the garage and a pool out back.

"We have a nice lifestyle," says Don's wife Susan, mother of three (two children are from a previous marriage). Despite Don's precarious position, "We spend what we want to spend, and it always works out," she says. Which hadn't seemed like a problem (the Megges earned a comfortable $140,000 last year) until it became clear that the rug could be pulled out from under them at any moment - and they have no extra cash to fall back on. "Every week we hear that the layoff is coming the next week," says Susan, who is 44. "The uncertainty is awful."

And it's not just a Michigan problem, or an auto industry problem: In a competitive global economy it's inevitable that some industries will be undergoing roiling change.

Even big-name players in a formerly secure field such as pharmaceuticals (see Pfizer's (Charts) and Merck's (Charts) layoffs in 2006) have had to let go of workers to keep profits afloat in their rapidly changing industry. According to MIT Professor Olivier Blanchard, approximately 6 million Americans leave their jobs each month, either through layoffs or quitting. And while it's one thing for a recent college grad to switch jobs almost annually, a larger proportion of those affected by this churn rate are men in their forties and fifties - men with high incomes to replace and financial responsibilities.

If your field is currently in a rough patch, you've got to do something before something is done to you. You can't eliminate the anxiety that it causes, but you can make sure that if the worst happens, you have a plan. Here's how:

Change Your Ways - Now The best way to nullify worries about the chance you could lose your job? Behave as if you already have. What spending could you cut back? Any expenses you could eliminate entirely?

You can't make these tough but necessary decisions if you don't have a clear picture of where your money's going, so the first step is to track your spending - something the Megges have never done and need to start doing now. Says Don: "It's not bad budgeting. It's not poor budgeting. It's no budgeting."

Once you know where your money is going, it's easy to make cuts. Did you get the deluxe package from the cable company? Downshift to a basic plan. Eating out three nights a week? Cancel your upcoming reservations. And pay down as much debt as you can, while you can.

Start Building a Cushion -Now Any and all money you save by cutting back should be socked away in case of an emergency. Set up a separate savings account that isn't linked to your ATM card - the more difficult your money is to access, the more likely you'll leave it be when you're at the mall. Under normal circumstances an emergency fund would equal six months of your income. That may not be possible right now, but put away as much as possible - every dollar counts.

As a last resort, open up a home-equity line of credit or apply for a low-rate credit card that you hope you will never have to use. Just remember - it's a lot harder to do either of those things if you're already unemployed, so do it now.

Know Your Benefits The Megges have a pretty good safety net: Under the terms of Chrysler's union contract, Don will continue to be paid and covered under the company's health plan for 10 months.

But most people aren't that lucky when the pink slip shows up. That's why it's best to find out about your health-care options while you're still employed. By law your company must keep you on its health plan for 18 months after a layoff, but you have to pay the entire premium. Find out how much these so-called COBRA payments would be. Also ask whether you could go onto your spouse's insurance plan. While many employers consider a spousal layoff to be a life-status event (which means you can switch to their plan immediately), it's not a given - some will let you change plans only during open-enrollment periods.

Get Additional Training Spending 20 years at the same company can mean you have a wealth of experience - or that you're set in your ways. In the meantime, new skills and practices may have been adopted that you've managed to do without.

Ask yourself: What's the key issue that everyone's talking about in my industry? If you can't speak confidently on the subject, take time to educate yourself. Catch up on the latest trade publications and blogs or attend a college course to pick up a new skill. Learning new technologies and practices will help you stay competitive with younger (and cheaper) candidates who have the latest education. You may even improve your value to your current employer once the clouds over your business lift.

Network, Network, Network What's the best time to look for a job? While you still have one. You're a more attractive candidate that way, so start your job hunt now, instead of waiting for the severance check to arrive. Start going to job sites online and ask friends and colleagues about other companies that may be hiring. Keep your résumé updated and ready to send.

Don Megge's trying to take charge now: He's already asking around about jobs in the home-construction business, where he has some prior experience. There is a rumor that Chrysler will expand operations at Megge's plant, but he's not counting on it. "Might that save me? Yes. But I don't want to put too much stock in it," he says. "Who knows what I'm going to have to do?"

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.