How much in reserves do you have to survive the layoff?
I would definitely cut out any unnecessary items right away. Then -- depending on how much cash you have to tide you over until you find another job -- you'll have to get even more aggressive with the budget, and cut some things that are really painful (but you can still survive).
My advice on creating a budget is getting an accurate picture of what you are spending money on and how much. This means actually looking at credit card statements, past bills, receipts -- the REAL data. Before I started getting serious about budgeting I could've sworn I was only spending $200/mo on eating out. Turns out that figure was closer to $400-$500/mo.
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