My house is 3 miles south of Kennedy Space Center.  My family and I have enjoyed watching many launches from our backyard.  We are even close enough to feel the power of the launch.  If the flight path is right and the winds are calm, the windows in our house will rattle from the powerful sound blast that follows lift off.

I have seen almost every Space Shuttle launch over the years.  At each one I am awed by the beauty and the incomprehensible technology that our space industry has harnessed.  Unfortunately, that experience seems to be coming to a close.  The shuttle fleet is being retired and the recently proposed budget from Washington does not include manned space flight in the near future.

While my wife and I are not directly involved in the space industry, we are directly affected.  Many of our friends, family members and clients work for NASA or one of the contractors involved in space operations.  Many, if not most of them face layoffs in the very near future.  The expectations are that 7000 Space Center employees will lose their jobs.  A lot of our friends and neighbors will be facing difficult financial decisions, and many will face some hardship.

Recent estimates say that another 15-20,000 jobs will be lost from area businesses that provide services to the space employees.

Many of our best and the brightest workers may need to relocate.  Some already have.  Our local economy will be hurt badly.  All of our property values will suffer.

It will be more important than ever for those affected by the coming changes to make smart financial decisions.  Over the next few months, I will publish a series of articles that will try to help them do so.  This is the first article of that series. 

There are three keys to surviving a job loss financially:  planning ahead; taking stock of your income; and cutting your expenses. 

Plan ahead

If you are still working, now is the time to start planning for the possibility of being laid off.  Although it will be difficult to determine how long you may be out of work, you should plan on at least six months.  If you are prepared to go for six months, you won't be forced to take the first opportunity that comes along if it is unsuitable.  You want to be able to make decisions from a position of strength, which comes from being prepared.

You should develop a financial plan for unemployment.  Make the plan flexible enough to allow for some adjustments if your situation changes.  One of the first parts of that plan should be a survival budget.  Make a list of all your income and expenses.  You may already have a budget, but this version should be a bare-bones version.  Only include expenses that are absolutely necessary.  This version of your budget should give you an idea of what income you actually need to survive.

Make sure your plan includes an emergency fund that is equal to six months of your living expenses.  If you haven't been laid off yet, it's very important to build this emergency fund now.  Once you have been laid off, it's hard, if not impossible, to get it funded. 

In the follow up articles of this series, I will try to give you some ideas on taking stock of your income and cutting your expenses.  You will also have to make decisions on employee benefits like health, life and disability insurance.  There will be decisions to make on what to do about your 401k or Thrift Savings Plan.  And there will be many other things for you to consider.  I will try to cover many of them, but if you have specific questions, feel free to contact me.