Contingency plan husband lost jobPaul 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.

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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?

Contingency Plan

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 (psssst: that's why you should immediately download my Layoff Empowerment Checklist to print out, skim over, and keep in your personal file at work). 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.

(An exhaustive list of what you need to do when after being laid off is available here).

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.

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 Click To Tweet

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? 

Catch-Up On My Documented Self-Employment Journey (spoiler alert: there's a layoff, a few tears, lessons learned, financial changes, and all sorts of goodies that occurred after I pulled the plug on my 9-5):

I Have Chosen to Chance the Rapids: Taking My Writing Full-Time>>
Blogging and Writing Full-Time: Financial Changes to Come>>
Blogging and Writing Full-Time: One Month Update>>
Self-Employment Update: Six Months After Taking that Leap>>
Contingency Plan “Husband-Lost-His-Job” is in Full Swing>>
Update on the Unemployment Situation in Our Household>>
How We're Handling Health Insurance in Unemployment>>
Surviving {and Thriving} In My First Year of Self-Employment>>
What We Did to Financially Survive 5 Months of Unemployment + a Free Gift for You>>
Behind-the-Scenes of Frugal Confessions' Second Year in Business>>

33 replies
    • FruGal
      FruGal says:

      Hi Marissa,

      We have frequent flyer miles and hotel points to use, plus a travel fund that we’ve saved into (above the emergency fund). Travel is a priority for us, and we haven’t had the time we wanted to do so. So we need to take advantage of this time now and are willing to spend some money to to do so (while putting a lockdown on most other spending).

  1. Financial Samurai
    Financial Samurai says:

    Yikes, sorry to hear this guys! Did he at least get some free COBRA, and a decent severance package from his years worked? The unpaid vacation days is nice too.

    I like your contingency plan. Please let me know if I can help if you are looking for freelance work or what not.


    • FruGal
      FruGal says:

      Hi Sam,

      Thank you so much for checking in + offering your help.

      Unfortunately per the contract I cannot talk about his severance (as you well know from writing that great book about severance packages!), but we did not walk away empty-handed.

  2. Money Beagle
    Money Beagle says:

    That sucks. Was he singled out or was there a sizeable chunk of the overall people targeted for a lay off? It sounds like you’ve got things pretty much under control in the short term, and hopefully getting to the next endpoint is a bit easier than in 2008.

  3. Miss Thrifty
    Miss Thrifty says:

    Wow, a big change! As I know from experience, redundancy can sure take the wind out of your sails. But it’s great to hear that you are so well-prepared, and I hope that Paul is faring well. At transitional times like these, having a frugal queen for your other half is definitely a bonus. 😉

  4. jestjack
    jestjack says:

    Sorry to hear about DH’s lay off. This happened to me quite a while back…best thing that ever happened to me…honestly. Don’t forget to apply for unemployment right away and take advantage of any and all resources there. And I know it’s tough but start shopping for health insurance…probably gonna have to go thru underwriting and this takes time. Cobra is the law but many times this is way expensive as you will be paying both ends and the admin fees. Best of luck on your new adventure!

    • FruGal
      FruGal says:

      Thank you for your encouragement and help jestjack. I am afraid to look at how much COBRA is going to cost us….(I think the envelope came yesterday…so looks like I’ll be opening it today!).

      • mary w
        mary w says:

        COBRA coverage is generally expensive, however, you’ll probably only need it for a month or 2 right? Until you can get coverage under ACA.

        • FruGal
          FruGal says:

          Hi mary w,

          Insurance is next on our list of things to do…we haven’t received our quote yet for COBRA but I am sure it’s not going to be one I like:).

  5. Richard Buse
    Richard Buse says:

    I am self-employed, and health insurance for my wife and I is one of the items that comes from my income. We have policies with large deductibles. That keeps the monthly premiums affordable and we sock away savings to cover the deductible expenses. It’s nice if you know an independent insurance agent who really shops the health insurance market. If not, is a great resource.

  6. Richard Buse
    Richard Buse says:

    FruGal, I’m a freelance writer. Most of my assignments are corporate communications projects. My wife is an adjunct professor. She was also working part-time as a bookkeeper for a construction company, but job went away in August 2012.

    • FruGal
      FruGal says:

      It’s nice to meet another freelance writer! I freelance for several other websites (in personal finance).

  7. Little House
    Little House says:

    Sorry to hear about Paul’s lay-off. However, you are fully prepared and should enjoy the mini-retirement aspect of this. And, who knows, maybe better prospects will pop up. Good luck!

  8. Rebecca @ Stapler Confessions
    Rebecca @ Stapler Confessions says:

    Oh man, that stinks! I was just laid off too, so we are dealing with a mini-retirement too. We are trying to make the most of my time off while still making ends meet, but it’s hard nonetheless to put our financial goals (paying off student loans) on hold.

    As for inexpensive vacations — If you have interest in visiting any National Parks, they’re free this weekend!

    • FruGal
      FruGal says:

      I am sorry to hear about your situation as well Rebecca.

      Thank you for letting me know about National parks being free this weekend!

  9. Crystal @ Prairie Ecothrifter
    Crystal @ Prairie Ecothrifter says:

    I’m sorry to hear the struggle. For our self-employed insurance, I used to find the best policy for us. I would still suggest it now. The rest you seem to have a great handle on, so yay for that. 🙂 Have a fun mini-vacation and good luck!

    • FruGal
      FruGal says:

      Thanks Crystal!

      My father has insurance (self-employed), and he is being dropped at the end of this year. So I’m glad to hear you guys aren’t experiencing something similar.

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