Welcome back all of you Drunk Millionaire friends!
Where have you been!?
If you’ve been a follower this blog, you probably noticed that I took a sabbatical from posting for a while. Okay, a long while. Sorry. It’s important that I preface this post with the backstory on what caused this writing lapse, as it pertains to the uncertain times piece of the title.
My employer has been in the throes of a corporate takeover for almost a year now. We’ve gone through many transitions and re-organizations throughout that time. Naturally, this has caused job uncertainty for me and thousands of my colleagues.
Thankfully, I have survived many rounds of cuts, but with this staying power has come an increase in job responsibilities. One of my coworkers was recently “let go” and the result of that firing is that I now perform his job as well as my previous job- without a pay raise. I believe the corporate world calls this synergism? Haha!
Don’t get me wrong, I’m happy to still have gainful employment, however I spend much more time performing my job than ever before (like way over 8 hours a day + weekends). With more cuts looming on the horizon, I had to take a break from The Drunk Millionaire to maintain the highest level of productivity as my job provides the majority of our family cash flow.
I decided to return to blogging with this post because I hope to provide advice and analysis from our circumstance to some of you readers who might be facing similar situations or have friends or family who are facing the same challenges.
It’s important to “read the tea leaves” in life and plan accordingly. My plan thus far has been to take a few precautionary steps that should give us time and options should disaster strike.
Precaution 1: Have a Disaster Fund
I’ve often written about having a Disaster Fund, which many people call the emergency fund. Thankfully, after we eliminated our debt, the first order of business was to build up about six months of living expenses that we keep in an earmarked savings account. We call this our disaster fund, and both my wife and I keep this account out of sight and out of mind unless disaster were to strike.
Losing a job is considered a disaster. Having this account has allowed us to sleep better during this time of unease. It took us a long time to build up these savings, but I would highly recommend you sacrifice now to make it happen, even if you don’t have job uncertainty. That’s the strange thing about disasters- they don’t like to work within your time frame.
Precaution 2: Increase Liquidity
Given the potential that I could have a job change in the relatively near-future, we’ve decided to go beyond the 6 month emergency fund with a cash heavy position until things settle down and the corporate merger is complete.
I’ve heard that “jobs” may look similar for the first year of the takeover, but by year 2, things can really start to shift around.
By shift around I mean that in my industry it’s common for an employer to keep a position, but require the employee to move to a new location or state. If it comes to that, my wife would have to leave her high paying job and we would move away from family: definitely doable, but not preferred.
Thus, having a strong disaster fund, and remaining fairly solvent will give us options (in a worst case scenario) to move or give us time to find a different job in our preferred geographical location.
In the perfect world, more money equals more time, which provides the ability to make decisions most in line with our life goals.
To actually increase liquidity, we have maintained our contributions to our retirement accounts (tax advantaged/matching), but have halted contributions to our additional investment accounts (all through Betterment). We’re simply funneling this money off into a separate savings account instead.
True, we don’t get a return on the money, however assuming things go well through this transition we can easily reinvest all of it in the future.
Precaution 3: Set a Timeline
Like I mentioned above, these tactics will only be our money play for a predetermined period of time. I’m not one to live my life with a fear based perspective, but I am trying to be wise about this current uncertainty we find ourselves in.
We’ve decided that by the end of the summer we will slow this disaster preparation phase as we should be able to handle anything that comes our way.
I believe that if you’re uncertain for longer than about 1-2 years, then it’s probably time to find another job, or make decisions with less of a cash-heavy approach and take on more risk with your investments.
Precaution 4: Live Thrifty
It’s great to save money, and remain cash-heavy for disasters, but it’s also important to reduce expenses, especially if you were to find yourself in a job-loss situation.
Unfortunately many people who go through a job loss continue to live the same level of lifestyle which means A.) You burn through savings or B.) You fall deeply into debt.
Option C.) is to reduce your spending so that you can focus on the important expenses like food, shelter, utilities, etc.
One area we’re trying to become more frugal is with the grocery bill. We have a couple of acres in the country so we’ve leveraged that advantage to produce food at home. I’ve written about this previously, so click here to read about our orchard, garden, and chickens!
You wouldn’t believe how much we save by reducing our restaurant expenses.