If you know you are about to get canned, consider yourself lucky. Not because you’ll soon be free of that doofus boss of yours. You are lucky because you have time to plan and transition. I recently met with a client who faced this challenge. At first she was anxious as you might imagine. She was concerned about finding a new job and how to survive financially. But when we looked at all her resources, she realized that this transition was really a wonderful opportunity. My hope is that by sharing the outline of what we put together, you might be able to put your own transition plan in place too.
The Situation
Marilyn is 59 and has been working for the same insurance company for over 25 years but the powers that be decided to decimate her department. She was certain that her job would be gone within 3 months.
The Plan
Marilyn didn’t know how much she spent each month so it was tough to be sure what her financial needs were. But we knew that Marilyn spent what she took home so we figured that she needed to earn about $4000 per month before tax.
Next, we looked at her other sources of income. She knew she could find other work but she’d earn a lot less money. She could find a new job easily but it would pay her about $2000 a month. She also knew that once she reached age 65, her passive income would be about $4500 a month. That was fine but she was still short $2000 a month for the immediate short-term.
She went through her expenses and realized that it wouldn’t be hard to shave $500 from her monthly spending. That still left her $1500 on the wrong side of the ledger.
She considered selling her condo and becoming a renter. When she realized all it cost to own a home, it seemed to make sense from a cash flow standpoint. This would save another $1000 a month leaving her only $500 in the hole.
To cover this deficit, we calculated that she’d dip into her savings until she reached age 65. At $500 per month, she only needed a total of $36,000 to tide her over the next 6 years. Marilyn had a plan that would work. She was happy and excited about the future.
How You Can Use This Template
First, you need information if you want to map out a strategy to get you through a situation like losing your job. What do you spend now? What can you cut? How much can you earn in another job or new career? How long will it take you to find work?
What are your other sources of income? When do they become available to you? How long will they last? Are there better opportunities to spend less and/or earn more if you move? Of course you can’t know the answers to these questions with certainty but you need to make educated guesses in order to formulate a plan.
Once you have this information, map out your cash flow projections (income and expenses) on an excel spreadsheet so you can see how things are expected to play out.
You can easily navigate a big financial change like losing your job as long as you stay present, keep your emotions in check and take a sober look at the challenges and opportunities. Don’t start off with any preconceived notions.
Have you ever had to overcome losing your job*? How did you do it? What would you do differently today?
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