Surviving a Layoff or How I did it.

I see the light at the end of the tunnel and it is not a train.  My house is under contract and I’m making a decent profit on it. I’ll be able to pay off all my outstanding debts, put away a good chunk for the kid’s college fund and have enough to live on for the next year if I manage my money well. Next week, I’m moving my furniture to the new house in Pittsburgh.

Here are some of my tips for surviving a layoff in the Little Depression.  Please note that if everyone took this advice, we’d be plunged into another recession because when you’re in survival mode, spending money to keep the economy going is not your first priority.

Pre-layoff

1.) Prepare for a layoff well in advance of one.  Have at least 6 months salary saved up.  If you can, set aside a year’s mortgage and tax payments.  My savings combined with NJ’s unemployment pay helped me immeasurably.  Kudos to the NJ Department of Labor.  They were kind, respectful and helpful.

2.) Pay off as much debt as you possibly can.  Don’t buy a new car unless you can pay cash or the monthly payments are low enough that you can still eat on your unemployment check.  Maintain your car.  Payoff your credit cards.  Don’t go on vacation.

3.) Make sure you are healthy.  Get a yearly physical, address health issues when they crop up and you still have insurance.  Don’t put anything off.

During the Layoff

4.) Try not to panic.  I panicked and almost made some major, major mistakes.  Thank goodness I had Katiebird.

5.) Get a Katiebird.  It’s probably best if the person lives in another state and can’t see you everyday.  Just chit-chatting with another person over stuff can calm the nerves.

6.) Don’t take the first job you see.  Take your time and develop a Plan B.  Consider what kind of work you like to do, where you want to live and whether you can afford to stay where you are.

7.) Don’t rule out working for free.  If you’ve saved money and you’re covering your bills, use the time you have to stay current with your skills or learn something new.  I was fortunate enough to hook up with some people I used to work with who let me participate in some projects.  As a result, I’m looking forward to a publication that was recently submitted and have been invited to stay on an ongoing project.  I’m now getting paid a small amount but the whole experience kept me sane and I appreciated every minute of it.

8.) If you can’t afford to stay where you are, move.  I used the last year to fix up my house, learned how to install faucets, wire lighting fixtures and garbage disposals and experienced the joys of ripping out 25 years of creeping juniper in order to create “curb appeal”.  In the meantime, I looked for a bargain house in my target city and found one.  I paid cash for the house I bought (more on how I did this later).  Now, when I move there, my biggest expense will be my health insurance.  I will have no mortgage and the house is about 1/4 mile from the bus line.

9.) Do whatever you can to keep your health insurance.  COBRA is ridiculously expensive.  In fact, it cost me about half of my unemployment checks. There really should be a law preventing that. But you never know when you will need medical care so don’t drop your insurance under any circumstances.  Also, keeping continuous coverage will help you transition to an individual policy.  Don’t skip this step. I’ve known people who thought they could get away with not covering themselves or their children and they are now regretting it because after 63 days of no coverage, it’s really difficult to get affordable insurance on the individual market.

10.) Cancel any monthly bills you can live without.  I cut the cord on cable but kept internet.  It turns out that Brook and I didn’t really miss much.  I reduced my car insurance because I was no longer commuting to work.  Don’t buy a lot of clothes and other material goods but don’t forget to treat yourself once in awhile to a Grande Cinnamon Dolce Latte or a Gelati from Ritas.

11.) Use your IRA carefully.  I rolled my 401K into an IRA and purchased my new house with part of it.  You can do this without tax penalties if you return the money to your account within 60 days.  That 60 day thing seems rather arbitrary and rules out using the money for things like starting your own business but that’s the deal.  This is what Congress legislated.  It’s a shame that my generation has been snookered by fast talking financial planners in expensive suits to socking our nest eggs and rainy day funds in “instruments” and retirement plans that are not liquid without huge, and I do mean HUGE tax penalties, but there you are.  You *can* use this money but you need to be very clever about it and ask a lot of questions over and over again to make sure you’re doing it right.

I recently met a woman who created her own IRA real estate investment fund.  She now invests her IRA money in this fund and uses it to purchase houses all across the country.  She fixes them up and rents them and plans to earn enough money to retire from this fund.  In her case, since she’s not taking the money out, there’s no tax penalty.  Something to think about.

So, now, I’m just waiting for the final pieces of my move to fall into place.  I don’t have a regular full time job yet but for now, I’m Ok.  I have some money left over, my kid’s future is not dismal and my health insurance is covered.  I didn’t lose my house and my credit is still pretty good.  When I move, my standard of living will be about the same as it was in NJ.  My house is about the same size and I’ve got more land.  It’s in a nice neighborhood and my neighbors are about the same socio-economic status as before.  It’s just in a different city.

I can work from home but I’ll probably be looking for a job when I get there.  At this point, I can bartend and still be fine.

That’s not to say that there weren’t bumps along the way.  There were plenty, including one major one that I will tell you about someday.  But in any case, it *did* get better.  Whether all this frugality is good for the country is another story and there’s no doubt that the idea that researchers can afford to do research on their own without the economy of scale of a bigger lab or company is just utter nonsense.  I don’t believe in “creative destruction”.  As Gandalf said, “He that breaks a thing to find out what it is has left the path of wisdom”.  Breaking the economy, breaking up R&D facilities, breaking up families and lives, just to see what happens and assuming that everyone will land on their feet all ticketyboo is not a good economic strategy.

But I survived.

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What are your layoff tips?  Add them in the comments.

 

 

Mozart Concerto

That’s what I’m listening to right now.  Concerto 20 in D minor, K 466, Romance.  It’s lovely and a nice end to the day that started in the bureau of Vital Records in Philadelphia where I was lucky number 81.  Why did I need to go to Vital Records you may ask?

Well, it turns out that my most recent employer would very much like to get rid of its pension obligations so it is offering us lucky duckies a once in a lifetime opportunity to receive a lump sum payment, which I may elect to use now and pay a hefty tax, or roll over into my IRA.  It has taken me awhile to figure out what to do here.  I could just pass up this once in a lifetime opportunity that will not be offered again under any circumstances or I can wait until I’m 67 and get the measly amount of the current value of the pension times four.  I have elected to take the money and sock it away in my IRA, and rely on hope vs experience where the market is concerned.  But to do it, I needed my birth certificate and despite the fact that I actually have a folder in my file cabinet clearly labeled “Vital Statistics”, my birth certificate was not in it.  Go figure.

So, I hopped on down to Philadelphia today to visit the closest Vital Records office for the state of Pennsylvania (I was born in County: Allegheny, City: Pittsburgh, Hospital: Pittsburgh Hospital, Year: MYOB).  There I was given the opportunity to pay $18.00 for the privilege of parking for the hours I spent there and $10.00 for the certificate.  In spite of the wait, the civil servants who processed my request were friendly and efficient and I had an opportunity to witness a dozen or so of them in a demonstration on the sidewalk at lunchtime while I waited.  Whatever it was they were demonstrating about was getting a lot of support from the traffic that passed by.  I found this to be reassuring because it meant that they would return from lunch in a good mood.

The friendly and efficient lady who took my check gave me my receipt and instructed me to return on Wednesday when I could pick up the certificate or I could choose to wait for snail mail.  It would take 18-25 days.  I opted to make a return trip.  Besides, it would give me a chance to meet with some researchers I am collaborating with at a local university.  Still, one has to wonder why printing a copy of the original document takes so long.  Maybe hiring more civil servants or modernizing the technology would help.

Meeting with my collaborators was very pleasant.  My brain gears are usually spinning without resistance and doing some work gives them a chance to engage.  All good.  But the trip home was long and I passed sections of New Jersey that still do not have power almost two weeks after Sandy.  One of those areas was Lawrenceville where the famous Lawrenceville prep school is located.  It’s the one with it’s own golf course on campus.  And although the powerlessness of the area around the school must have bothered the residents, for some reason, it did not trouble me as much as the powerlessness of the people in Newark who don’t have electricity.

The longest part was the section of road between Belle Mead and my turn, which was exactly 2.9 miles ahead, according to my navigator.  Route 206 is one lane in each direction at that point, as it is along much of the way through New Jersey.  I have lived in this town for 20 years and they are only now getting around to building a bypass.  So, I waited patiently in my car listening to the Red State Blue State episode of This American Life while I remained calm and relaxed. However, I really think that if you’re going to be in a traffic jam, it’s much better to be in one 37 miles away than 2.9 miles away from your destination.  This is my personal opinion based on my observations on how anzty I was to get out of the fricking car.

Ahhh, there goes the Mozart again.  So soothing.  I think I will sit here and drink my Trader Joe wine and dream of my next house where I can install the cast iron wood stove of my dreams, a Jotul F 370.  It’s sleek, it’s modern, it swivels.  It puts out 30,000 BTUs/hour, which sounds downright decadent after a hurricane.  It is to die for…

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