Given that most employment is “at-will”, and the shaky economy, very few of us have the luxury of being unprepared for the financial impacts of a job loss.
Companies often go through financial restructurings during times of difficulty, so I thought it fitting to have a plan in place for my own “restructuring,” should the need arise.
At the end of June I will have $12,000 in my Freedom Fund.
If I am laid off, all finances will go in CONSERVE CASH mode. Currently I am spending around $2,250 a month, but I can cut that down to $1,700/month. At that level, I can stretch my Freedom Fund 7 months (and it can go even longer if I move back home).
Rent / utilities / DSL : $830 (I included a 5% rent increase)
Student loan: $160 (may be able to have payments suspended)
Car insurance: $120
Individual insurance: $125 (estimate from einsurance.com)
Prescription: $60
Gas: $200 (may have to drive further for interviews)
Food: $125
Car repair: $80
Total: $1700
I have another $12,000 in Roth contributions that I can withdraw – although I’d move back in with Mom & Dad before that happens!
Do you have a restructuring plan in place?
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I do not have a restructuring plan, but I have not officially started my budget yet – it will begin in July! But the plan is a fantastic idea and I will probably have one in place in the next year or so. For now, my parents have told me that I am allowed to lean on them when I need it (job loss, horrific breakup, etc).
I don’t have a plan, and I know that if we lose our contract it is likely many manzy people will be laid off.
I’ve done a quick calculation and I’d probably first see how much it would cost me to get out of my lease (though it happens to end roughly at the same time as our contract announcement).
You’d think 12000 would provide more than 7 months, but it really doesn’t.
My financial restructuring plan predominantly features getting a new job.
It sounds like you have really given this some thought. I do not have a plan. My husbands job is luckily in a very secure industry, although there has been talk of redundancies. We probably have enough in savings to last for a year if I worked very hard and we tightened our belts. That money is supposed to be there to pay off the mortgage though and I would not be happy if it had to go on living expenses.
Ugh, I’m always so focused on paying off debt I forget to save for rainy day things. However, My job is very secure, and if I was ever laid off there would be 15 new jobs for me, so thats helpful! However, I should start my own freedom fund soon!
We have a “6 mo” e-fund but if one of us lost our jobs there would definitely be restructuring. We are currently paying all extra income towards high interest student loans – that would stop. We have a lease with a 6 month option, meaning if we give one month notice we can move out any time after 6 months (which passed in May) so we might move to a cheaper apartment. And we would start canceling subscriptions like XM radio, Blockbluster movies, etc.
Hopefully we don’t BOTH lose our jobs at once, but even if we did I think we could make it a while job searching.
It’s definitely a good precaution to plan for things like this. It isn’t fun, but it’s like insurance – you’re really glad you planned it all out when you need it.
[sigh] I haven’t formally made a plan, but I pretty much know what I would do (eliminate all spending other than food and commitments I have, such as car payments). At this point I still have my down payment fund which would last me over a year since I’m living at home. If I have moved out though….that’s a different story. I’m not well enough equipped to even think about that yet, which is why I think I’ve been so hesitant to start my home search. Scary stuff, it is.
I have never thought about a restructuring plan, but it is definitely in the forefront of my mind now. Like you said, with today’s economy there is no telling what can happen. Of course I would have to secure my first “real” job after college before making sturdy budgets and restructuring plans because the parents are still plan A, B, and C. I know I will definitely have the knowledge and motivation to save, save, save once I get that stable job though
I have been at my apartment almost 2 years, so I can leave with 30 days notice. I’d look into moving in with one of my friends who owns a home to save on rent while retaining flexibility.
I would take one of my remaining vacation days and schedule all the doctor’s appointments I might need over the next few months, and get my prescriptions re-written for generics if possible. If generics aren’t available, I would mail-order a 3 month supply to stock up before insurance ran out. And, I’d weigh the cost of COBRA vs risk + a individual catastrophic policy.
Boo, I haven’t got a restructuring plan yet, I’m just working on cutting out and trimming all expenses NOW so that I can reduce the minimum needed per month. Somehow, somewhere, my maths are off though, because I’m still getting getting the balance I need.
I have a second job that I’m using to replenish my savings and provide a (slight) cushion in the event of a job loss. After buying a condo last year, one thing after another led to the almost complete depletion of my emergency savings, so I still have a lot of work to do. Fortunately, I don’t have any credit card debt, and I also have a large retirement account that I could dip into if things got really bad.
I don’t know how your food is only $125! Mine varies between 175 and 250 (depending on the month and if I have people over a lot).
I live alone (and only make $1760 after taxes), and for my lifestyle, it’s more than enough money, but I don’t have a car sucking my funds away.
If a bus pass is a possibility for you, it might be cheaper than all the extra expenses of having the car – I pay $100 a month, and know it won’t change until at least November (I locked into the price for a year). Because of this, it’s easier for me to set aside money for savings (when I don’t have much to work with after rent, loan and bus pass)
My student loan payment is significantly higher, however, at $325 a month. That one is the difficult thing to negotiate!
losing a job is such a hard thing, especially if it’s unexpected. my husband lost his 2 years ago a week after we got married…talk about a bad start to what should’ve been marital bliss. he was lucky to find a better paying job within just a month or so, and I even got promoted from a $9/hr job to a $34,000/salary position that same month.
I lost that job this past March (wrongful termination due to a medical condition…) and it has sent us into a downward spiral. Michigan is an employment at will state and that means there is NEVER any 100% security in the job force. We were on our way to financial freedom and now we’re further in debt than ever.