What is Your Plan B if You Lose Your Job?

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One of the strategies that I advocate is to be prepared when (because it is inevitably going to happen, just when exactly we don’t know) we hit the national or global financial crisis is reducing your costs.

But it doesn’t have to take a big global financial catastrophe to impact your life.

What happens if you get downsized from your job and you’re in your 40s, or 50s?  Too old to be a viable job candidate competing against younger and cheaper employees. Too old (you may think so, but you’re actually not) to learn a new trade or skill.

What happens if you get injured or you encounter a medical issue that means you can’t work like you did before?

What will you do if you’re not sick enough to qualify for disability (and if you are, it’s just a pittance compared to your current salary), but you can’t work like you did. What then?

In real life, this is what it might look like. (This is based on a real story, obviously with names changed)

Sam and Suzi both worked in the insurance business. Sam was a high producing sales agent, paid a commission for selling home and auto policies. Suzi was a claims adjuster. They had a plan for retiring on the beach in Baja California (Mexico) in their mid 60s with a lower cost life style. They were healthy and were on track to save money up for that. With their social security, it was going to be enough.

And then the industry changed. I don’t know about you, but we now buy our home and car insurance online. Insurance companies have cut out the “middle man” and passed the savings on to you.

Suddenly, almost overnight, Sam had no business. Suzi was still working because, at least for now, claims adjusters were needed. But her income wasn’t enough to keep up their California lifestyle – high mortgage payment (with equity in the house), property tax and the general the high costs of living in California.

Suzi made the decision to “retire” early (quit her job) and they  immediately switched to a lower cost of living. But instead of the house on the beach, they had to settle for a house a bit inland with no ocean view.

They had to immediately tighten their belts. They sold the CA house and added the equity to their savings, but that was all the money they were going to get until the Social Security payments started coming in. And those were now going to be less than they had counted on, because the last 10+ years would show no income.

They had to move quickly and without a plan. Thank goodness the real estate market was still strong when they went through their own financial crisis. But, what if the real estate market was down too? What if they hadn’t been able to pull out that equity? We know the terrible cost of relying on real estate values to always be high. Just look at 2008-2009. If your home is your only real asset, it is illiquid at best. You have to wait to draw it out and there is no certainty that you will be able to sell it and at the price you need and hope for.

Now imagine that this is your story. What would you do?

On Monday, May 27, 2019, I’m going to start some discussion on my Facebook group, Diane Kennedy’s US Tax Group https://www.facebook.com/groups/DianeKennedysUSTaxGroup/. The starting point is the documentary “Power of Zero” now available for rent on Amazon for $3.99/$4.99. I strongly recommend you watch this, even if you choose not to participate in the Facebook conversation starting this next Monday.

A couple of points:

There is no charge to be part of the discussion.You have to be part of the Facebook group to participate.

The info will not be anywhere else. Just Facebook. If you don’t choose to use Facebook, I totally understand, but there is no other option.

You don’t have to be “live” at any particular time. I’ll make a series of posts on points from the documentary and then add my own personal strategies. For example, they have 2 solutions for individuals. I have 5 basic ones and a couple of advanced ones.

If you have questions or comments, please post them to the Facebook group. I won’t be able to respond individually to all emails sent to me regarding this. (I’ve already received a lot)

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