Networking is crucial. So is smart money management. By Bob Frick, Senior Editor April 30, 2009 Cliff Heaton plays drums in a bar band for $100 a pop. He says he values the cash "a little more than before."Cliff Heaton was stunned, but certainly not alone, when he became a "mass layoff" victim in January. Mass layoffs occur when firms cut 50 or more employees at a stroke, and in January more than 2,000 companies made such cuts. Why is a mass layoff so bad? If you're caught up in one, you'll have to find work in an economy in which hundreds or thousands of people with similar skills have just reentered the job market, too. At the end of February, 12.5 million Americans were unemployed. What's even more disheartening is that so many occupations have been affected. SURVIVE THIS RECESSION "I Owe More Than My House Is Worth." "My Retirement Savings Are Gone." "I'm Buried in Debt." "I Can't Get Started." RELATED EXTRAS QUIZ: Test Your Recession Survival Skills COVERCAST: Survivng the Recession Heaton, 43, of Yardley, Pa., worked for a national market-research firm. He had an inkling that his job was in trouble, given that he specialized in research on the crumbling financial industry. "Still, the layoff was very sudden, and this environment is scary," he says. From a financial standpoint, though, Heaton and his wife, Katie, have done everything right. The couple's prudence prior to his layoff means they have no debt outside of their mortgage and, he says, "we've been a bit cash-heavy lately." That's an understatement. Due in part to some farsighted coaching from financial planner Jonathan Heller, the Heatons have banked 130% of their annual income. In normal times, says Heller, he'd recommend 30%, "but these aren't normal times." Advertisement Because of their savings and because Katie works, Heaton has bought some time to look for his ideal job. He says he's "still in the optimistic phase." But he's not kidding himself about the job market. "In a couple of months I'll start looking for something less than ideal." Heaton might not be even cautiously optimistic if he knew Matthew Tuck. Tuck, 37, was a finance executive at Lloyds TSB Bank in New York when he and many other colleagues received pink slips last October. He has a list of regrets, starting with time wasted looking for jobs online, where he got lost among the multitude, and time wasted seeking his perfect job. Now he's focused on networking and is "a lot more flexible." His maximum commuting distance has grown, his salary requirement has dropped from six figures to five -- and a move to Hong Kong may be in the cards. His financial situation is precarious. Living in high-cost northern New Jersey means his unemployment check doesn't even cover his property taxes. And he regrets paying extra to reduce the principal on his mortgage, a move he made after 9/11 when he saw that the families of some victims of the terrorist attacks lost their homes. But relatively happy endings -- after months of struggle -- do exist. Marc Engel, 52, of Far Rockaway, N.Y., made a smart financial move before he was laid off last July as an auditor at Marsh and McLennan. He paid off high-interest credit cards with a home-equity line of credit. He was able to get a credit line deep enough to dip into in tough times. Advertisement But the smartest thing he did, he says, was hook up with an outplacement firm. His resume was improved by a "kangaroo court" of other laid-off workers: "Everyone puts in their two cents and you feel like an idiot, but you become much more marketable," Engel says. Likewise, his interviewing skills were videotaped and critiqued. But the most valuable skill he learned was networking. After six frustrating months without a job, aggressive networking landed him his current position with CFO Consulting Partners, which "fixes broken accounting systems." It's not a steady paycheck because he has to line up his own clients. But Engel says he now thinks "there's more security from having a group of clients" because if one goes away, the whole paycheck doesn't disappear with it. The security of a salary from one employer, says Engel, is "illusory." HERE'S WHAT YOU CAN DO IN THE FACE OF A LAYOFF RELATED LINKS Visit Our 2009 Career Center What to Do If You're Fired Stay Covered After a Job Loss While you're still employed, build up your savings. Among laid-off workers, the average time spent unemployed is five months for those 45 and older, and four months for younger workers. Try to have enough cash on hand to comfortably cover your expenses for at least that long. Also, set up a line of credit you can draw on. If your home hasn't lost too much value, a home-equity line is one option, and low-interest credit cards will work in a pinch. And don't wait till you're unemployed to begin networking. Advertisement If you lose your job, start looking for work immediately. John Challenger, CEO of outplacement company Challenger, Gray & Christmas, says times are too tough to dally, even if you have severance pay. Contact other unemployed people, join a job-search group specific to your industry and get coaching. High-priced outplacement companies that help with resumes, interviewing skills and networking are fine if you can afford them, but try lower-cost providers, such as Five O'Clock Club and Hair Management. MORE PROFILES ON H0W TO SURVIVE THE RECESSION "I Owe More Than My House Is Worth." "My Retirement Savings Are Gone." "I'm Buried in Debt." "I Can't Get Started." Listen to our Covercast: Surviving the Recession for a candid chat with our writers.