Paul was laid off from his job last week.
He had an inkling the day before when his company said they were flying out a representative from their Atlanta headquarters. I felt a gut-jab after he mentioned the possibility to me that night, but overall thought it probably wouldn’t happen. Ever since his company was bought out by another that buys companies and sells them for profits we knew this could be a possibility. But that was two years ago.
And then the next day, I got the text.
By the time I received it, he had already packed his few belongings into a box and been [politely] shuffled out the door.
That’s generally how it happens, and the two of us would know; in 2008 we both found ourselves laid off within two weeks of one another. Out of that came great things: the creation of Frugal Confessions, finally moving to the same city as one another (we originally met in Japan in 2003 and had never lived in the same time zone prior to 2008), and planting some seeds that have harvested beautifully.
And here we are again—together—with a table full of options + possibilities + decisions to make. Of course, even my sunny and generally optimistic personality has taken a beaten by this; change is difficult to take (specifically when you haven’t hand-picked it out of your closet). And even more so because of the huge, gutsy change I made to my own career just nine months ago when I quit my day job to pursue Frugal Confessions full-time.
So what do things look like for us right now?
If you’ve been reading, then you know we’ve been through this before. The thing is—from both of our childhood upbringings and from our own adult lives—we are well aware that life can serve up sour grapes at any particular hour, for any particular reason. Because of that awareness, we’ve learned to always plan for the best, and prepare for the worst. So while we planned for an uber-successful, business evolution (of which I am still in the midst), we prepared for any eventuality, including our breadwinner losing his job.
Here’s what we have going for us:
- Emergency Fund: We have cash reserves to weather the storm for the foreseeable future (though WOW do we not want to lose our hard-saved money).
- GI Bill Stipend: You might have heard me mention in passing that Paul has started college this semester. He went for two years before deciding to join the Navy right after 9/11 occurred. So he has two years’ worth of classes to take (after this semester) to finish his degree. Fortunately for us, not only is his GI Bill paying for all of the tuition + book stipend each semester, but we are also given a monthly stipend for housing.
- Frugal Confessions Business: When I quit my day job this past February, my first financial goal for my business was to pay the mortgage + escrow each month on my net income. So far this year, I have paid our mortgage bundle just shy of 7 times. I hope to continue growing and adding to our household income!
- Out of Non-Mortgage Debt: Getting ourselves out of non-mortgage debt in 2010 was key to all of this. We knew this was a priority in good financial times, because who knows what may happen down the road (ahem)?
- Roth IRAs are Maxed for the Year: I like to set up our finances so that we max out our Roth IRAs in ten months instead of 12 months ($550 per month, per Roth IRA). This is so that at the end of the year when expenses seem to be higher, we will have that extra monthly cash flow. There are possible dollar cost averaging consequences doing this, but for us, it works. And especially now, as this adds an extra $1100 to our monthly cash flow.
Immediate Financial Steps for Us
Most people don’t expect to be laid off. Even though Paul had an inkling the night before, and even though we technically plan for financial catastrophes anyway, it was still a shock to both of us (even now I’m thinking did I really just type that? Oh yeah…that happened). Unfortunately, in the midst of all of the emotions that come rushing to the surface, there are large decisions and steps to take almost immediately afterwards in order to mitigate financial issues and maximize the new deck of cards.
- Submit Final Business Expense Reimbursements: There are a few business expenses that need to be submitted and a small timeframe to do so.
- Downgrade His Cell Phone Plan: Paul’s phone has one of those crazy-large data plans because it’s his work phone that we are reimbursed for each month. We will be looking into downgrading the data plan. If all else fails, the 2-year contract is up in February.
- Institute a Spending Lockdown: As I mentioned above, I want to preserve our savings as much as possible. However, our “means” that we need to live within have been significantly reduced. For now, we’ve put a big foot down on spending until we figure out what we want to do (see below).
- Figure out Healthcare Insurance: Since I am self-employed, I do not have a health insurance plan for us to fall back on. We lose our health insurance at the end of November, so need to figure that out in the midst of all the current healthcare confusion. Honestly, I am not looking forward to being thrust into the healthcare market right now.
- Step it Up on the Pre-Holiday Purge Challenge: Paul is taking over this task for me and working on taking photos and listing various items off of our original for sale-list. We’ll take any extra money we can get! Updates to come.
Carve Out Time for a Mini-Retirement
Here’s the thing: we’ve been in this situation enough times before to have confidence in the fact that we will find gainful and (hopefully) more fulfilling employment in the short-term future. We also have cash reserves.
Though it may seem counter-intuitive, we know that we need to take advantage of the extra time on our plates now to do the things that we value in life that need time to breathe. Tim Ferriss calls this a mini-retirement and thinks that life should be punctuated by them. I happen to agree, so long as it is in a fiscally responsible way. In our case, it seems that we are always thrust into ours instead of choosing them, but it’s the same thing, right? We need to seize the day, the weeks, and the short months that we have together and do some traveling. I can work from anywhere, and really, the only thing holding us back are Paul’s college classes. I think I read somewhere that we won’t live forever…we might as well drink from life (while being fiscally responsible) when we can.
First up? Free afternoon at the Houston Zoo tomorrow, and cashing in on all of those frequent flyer miles for a mini-getaway.
This is not something that we chose, and it’s going to be quite a transition for us. But the fact is, we’re okay and have the financial breathing room necessary to make some lifestyle design choices instead of cowering away in a corner and choosing something mediocre out of fear. Why is that? Because I generally follow my own advice. What good would I be as a finance blogger if I didn’t? Better yet, where would we be if we didn’t?
Have you ever experienced a layoff? What things did you immediately change? Did you have cash reserves to keep things going?