Tuesday, Oct 15, 2019 • 28min
You Lost Your Job. Now What?
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With rumblings of a recession in the news, one recent poll found that almost half of Americans with jobs are worried about losing them. If it happens to you, whether you’re laid off or just plain fired, losing your job can send you into a tailspin. But there’s good news: While you can't control unemployment, you can prepare for it. Here’s how.
Expert: Tiffany Aliche
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Samantha Barry
Tiffany Aliche
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Break
Samantha Barry
00:14
She Makes Money Moves is a production of
Glamour
and IHeart Radio
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00:19
I was unexpectedly laid off, which left us without health insurance, without our college and retirement fund contributions, and really sort of dwindling emergency savings with which to pay our mortgage.
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Samantha Barry
00:37
I'm
Samantha Barry
, the editor in chief of Glamour
and this is She Makes Money Moves.Share
00:42
According to a recent Harris poll for career arc, 40% of Americans have lost their jobs at least once. And with rumblings of a recession in the news, that same poll found that almost half of Americans with jobs are worried about losing them. Whether you're laid off or just plain fired, losing your job can send you into a tailspin.
Share
01:08
Well let me just, let me just say, as I ease out of the office I helped build. I'm sorry, but it's a fact that there is such a thing as manners. The way of treating people. These fish have manners, these fish have manners. In fact, they're coming with me. I'm starting a new company and the fish will come with me.
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Samantha Barry
01:41
Today's guest didn't run out with the office fish, but a recent layoff has changed her outlook on job security. Her last position paid more than $150,000 a year. As a married mom, she earned most of the family's income.
Share
01:56
They decided in late February that some people had to go, and that' when I went, and that was very shocking. I know at this point I will never again go into a job saying "I'm going to have this job until I have another job". There will always be in the back of my head "what if?"
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Samantha Barry
02:14
A few months into her job search, she's trying to stretch her family's savings until she's employed again. This is her story.
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02:23
My name is Brandon Rankin, I'm 46 years old and I work in corporate communications..
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Samantha Barry
02:28
As a young married couple, Brandon and her husband were living a little better than paycheck to paycheck, but not much better. They both worked in
Norwalk,
Connecticut
. She was an editor, he worked in marketing and advertising. The couple didn't have much money when they eventually decided to buy a house. But they loved their life. Kids seemed like a natural next step.Share
02:51
And when I got pregnant we were just elated that we were going to have this baby, and we were finally at a place where maybe we weren't financially where we wanted to be, but we knew that we could make it work.
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Samantha Barry
03:07
Although Brandon's company didn't offer paid maternity leave, they would allow her to work from home whenever she was ready to return. Money was tight but they figured they would be okay if Brandon took a few weeks of unpaid leave.
Share
03:23
So I was fine, went to the hospital, we had our son, it was wonderful. we brought him home. And then I took another look at the finances and thought "Hm. We don't have the cushion that I thought we had". So I called work, I think this was for four days after I had my son, and I said "Okay, I'm ready to come back". And they thought I was kidding but I wasn't. It was important to me at that point not to miss a pay period.
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Samantha Barry
03:57
Working from home with a newborn was easy for Brandon at first.
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04:01
Not so much though when he became mobile. And then he became rapidly curious and really fast.
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Samantha Barry
04:09
Brandon could no longer give work the attention it needed, but without her income, they wouldn't be able to pay their mortgage.
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04:17
So we looked at the options, you know, what can we do? Putting our son in daycare was something that we didn't actually want to do, plus the cost of it would have really sort of negated any benefit of me going back to work for that too.
Share
04:35
So we decided to move back to where my family is from, where I was raised, in
Rochester,
New York
, where the quality of living is a little more affordable.Share
Samantha Barry
04:46
As soon as her husband found a job in
Rochester
, they sold their house in Connecticut.
For now, the family could live on his salary while Brandon stayed at home with their son. They planned to stay with Brandon's parents for a few weeks while looking for a new house.Share
05:02
It ended up being longer than that because three weeks after we moved back to
Rochester
, my husband's company closed and he lost his job. Yeah, he lost his job. So obviously, we couldn't buy a house. And my poor parents, we were actually there for nine months.Share
Samantha Barry
05:22
When Brandon's husband was offered his next full-time job, the couple bought a house of their own. Although Brandon was busy with their son, she was thinking about the family's financial future, debt, college tuition, retirement. She started to plan her next career move. Stepping away from full-time employment had given her some perspective.
Share
05:45
And it sort of allowed me to evaluate the aspects of the writing and editing that I had done before that I really, really loved. And some of the things that I didn't as well.
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Samantha Barry
05:56
After a lot of research, she chose to pivot to communications. It suited her skills and interests and the job outlook was promising.
Share
06:04
So I went back to graduate school, I got a master's degree in strategic public relations.
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Samantha Barry
06:10
The couple put a lot of thought into that decision.
Share
06:14
I think possibly when you're 18 years old you think "Things will just work out". But when you go back to graduate school and you're, you know, you're a little older, maybe 35 or so, you start to think about how much it's actually going to cost.
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Samantha Barry
06:28
It was nerve-wracking to borrow. $40,000, but for Brandon it was a calculated risk. She was offered a full-time communications job in
Rochester
before she graduated.Share
06:39
I arrived for the first day of work at my job and and it was great, everybody was really welcoming. I had an office, which was another wonderful thing. I was like, wow, I feel, I feel like a grown-up, I feel like I've done everything I'm supposed to do. Things just started to feel easier.
Share
06:56
The work was challenging and I was always learning something new and I loved that part of it. And I also loved not having to worry so much about what's next, what's next, what's next? We had finally gotten to the point that we had planned for where I had my degree, I had a job, we were a dual-income household again.
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Samantha Barry
07:19
Their son was a little older now and they wanted to share new experiences with him.
Share
07:24
We took them to
Disney World
and he loved it. You know, like any other kid, he's like "This is the life, mom!", and it kind of was.Share
Samantha Barry
07:32
Life continued to get better.
Share
07:35
Within five years of graduating my salary jumped from less than $40,000, what it was in publishing, to almost $100,000, which was great. I mean, we were able to do more things, you know? We love to travel, our son loves to travel, we took him to
Rome
. And those are the things that we kind of splurged on, but I look at and say, "Wait, would I go back and do that again? I would".Share
Samantha Barry
08:02
But Brandon was also spending money that might have been better off in a savings account.
Share
08:08
People say that when you make more you spend more, and I think that's true. You know, you look at the organic produce and you think "That looks much healthier, I'm going to get that". You don't end up getting as much ahead as you thought because you hadn't planned that you were going to scale your lifestyle up accordingly.
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Samantha Barry
08:29
And she was letting her guard down financially.
Share
08:33
I think that at every other point in our marriage, we knew that we had to prepare for some catastrophic event. You know, something bad to happen. So I think that at that point we were just thinking we've got everything we wanted, we've got everything we worked for. But what we stopped doing was preparing for an emergency.
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Samantha Barry
08:56
That's when things started to go wrong.
Share
08:59
My husband's company decided to downsize and my husband got downsized with it. And then I actually lost my job in a corporate restructuring. And at that point, they took excellent care of me, I did have severance so that I was able to have a little bit of time before I needed to panic. I didn't take that time, I decided to start looking immediately.
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Samantha Barry
09:24
Her husband quickly found contract work, but it was harder for Brandon.
Share
09:29
You know, I got into the point in my career where there just weren't very many jobs available at the level I was at in
Rochester,
because it's a very, very small market.Share
Samantha Barry
09:43
More on She Makes Money Moves right after this quick break.
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Break
Samantha Barry
10:11
I'm
Samantha Barry
, welcome back to She Makes Money Moves.Share
10:15
Brandon widened her job search to other cities and soon negotiated an offer. Everything about the job was perfect, except it was 400 miles away, in
Boston
.Share
10:25
So you know, we moved. We moved to
Boston
three months later. I became my family's primary earner. I was bringing home more than $150,000 a year, which allowed my husband to continue to work from home as an independent contractor, so that one of us could still be there for our son after school.Share
10:44
You know, in the
Boston
area which pretty much everyone knows, the cost of living is more than three times what we had left behind in Rochester
, but that was okay, because I could support our family on my salary.Share
Samantha Barry
10:58
Relocating wasn't easy, but the family was adjusting. Things were going well.
Share
11:04
I was at my job in
Boston
for a little over a year and a half. It was really enjoying, you know, the challenges that it presented and the work that we were able to do. And then I was unexpectedly laid off, which left us without health insurance, without our college and retirement fund contributions, and really sort of dwindling emergency savings with which to pay our mortgage.Share
Samantha Barry
11:30
Brandon had been through this before, so she fought hard for a better severance. They pre-paid a few months of their mortgage and curb their spending. So for now they're okay financially, but she's worried that they won't be for much longer.
Share
11:45
Something else is always on the horizon, isn't it? You know, I have to finish paying for my education. Our son we fully expect is going to go to college in five years. My husband and I need to have a solid retirement plan.
Share
11:58
In the past, we were definitely big planners. And because we work hard, our plans generally work out, but I think we know that's not always the case either. So at this point, we worry. There's the worry of not regaining the sort of comfort we had with our standard of living before and, you know, if we'll get it back again, and when we get it back again, what should we do differently?
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Samantha Barry
12:32
Today's expert has also been laid off. She lost her job as a preschool teacher and then lost her home to foreclosure and moved in with her parents. She also pivoted her career and today, instead of teaching three-year-olds, she's teaching women about money.
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Tiffany Aliche
12:52
Hey, hey, hey, it's me Tiffany, the budgetnista. I'm your favorite financial educator, I help women go from where they are to where they want to be with their money.
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Samantha Barry
13:03
Okay, Tiffany, Brandon. She's going through and has gone through what a lot of people listening will have gone through at some stage in their career, being laid off. It's not the end of the world, right?
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Tiffany Aliche
13:13
No, it's not. I mean, I've been, I mean, the recession I think put a lot of us out of work for a long period of time. That's one of the reasons why I started the budgetnista, honestly because I lost my job. It was devastating and it felt like the end of the world. But what it forced me to do was to look at how did I get here? Not the job loss, because sometimes you just can't help that.
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Samantha Barry
13:35
Industry, restructure, it is just many reasons.
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Tiffany Aliche
13:38
So the job loss, you couldn't help, but what can you help?
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Samantha Barry
13:42
In Brandon's case I was impressed that she fought for a better severance after getting laid off. I think most people know that you can negotiate your salary, but they don't know you can ask for more after you've been let go. In both cases, you might not get what you're asking for, but you have to ask. So hopefully you'll have some severance and savings too, once you're laid off, how should you be using or rationing this money?
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Tiffany Aliche
14:08
You start with a budget, and I call it your noodle budget. And so the joke is, you know, when you're broken, you're a college student, you live on ramen noodles. So the noodle budget is if you had to eat ramen noodles, meaning if you had to pare down to only your essentials, how much would that life cost? You know, what would we do if we got laid off? If we have to, we will drop immediately to our noodle budget.
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Samantha Barry
14:31
Yeah, right. Even if you feel like you're in the most secure job, you need to know your monthly noodle budget And then you need to have 3 to 6 times that in the bank.
Share
14:42
More on She Makes Money Moves right after this quick break.
Share
14:47
I'm
Samantha Barry
, welcome back to She Makes Money Moves.Share
14:52
Brandon and her husband have both been through layoffs, so they know it takes time to find a new job. How could they set themselves up to handle the transition better if it happens again?
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Tiffany Aliche
15:04
So, I think that when something keeps happening over and over, it's almost like you're playing a video game and you're stuck because you're doing the same moves. You have to do different moves if you're going to move past this board. How do you hedge your bets so when something does happen you're not left with nothing?
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Samantha Barry
15:20
Especially because she's having a hard time finding a job with the title and salary she just had. Nobody wants to take a pay cut.
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Tiffany Aliche
15:28
So, maybe it's thinking outside the box. So is it possibly working at a job and then you think to yourself, how can I consult or make additional income on the side? When you're making additional income on the side my tool rules are one, it's either something you went to school for because then people will typically pay you more.
Share
15:47
Or two, it's something that you are currently doing as your job. So, I used to teach. And so on the side I would tutor, so what that meant was that I didn't have to learn a new skill.
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Samantha Barry
15:57
She started her career as an editor, so maybe that's something she could incorporate into a side job. Is there a way for Brandon to grow money while also keeping it accessible? Sometimes they're at odds with each other.
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Tiffany Aliche
16:09
The more accessible your money, the less likely it is to grow. Financial institutions, they take your money and they invest it. That's why checking accounts typically you don't earn interest on it, because money in, money out. And savings accounts you can earn a little bit more interest because they don't have to worry about you withdrawing it so quickly.
Share
16:27
If you want it super accessible, it's cash. Look for an online-only bank that's going to, one be FDIC Insured. That means the federal government is backing your money up to I think $250,000, right? Also, too, that earns the highest interest rate. That online-only bank doesn't have the overhead of a brick and mortar, so they pass that savings on to you and you get to earn more interest.
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Samantha Barry
16:50
Right, there is actually a site called
NerdWallet
and you can use that to compare the interest rates that different online banks and bricks and mortar banks offer on savings accounts. What if you don't need the money right now, but you want to be able to access it, in say, six months or a year?Share
Tiffany Aliche
17:06
You might want to look into a CD, which is a certificate of deposit. So, your money is locked in for that period, six months a year. And if you withdraw it early, there's typically a penalty.
Share
Samantha Barry
17:17
Brandon always made contributions to her retirement while she was working. She has a
401K
and a Roth IRA
. Could she withdraw money from those if she really needs to, like, let's say, if her job search takes longer than expected?Share
Tiffany Aliche
17:31
I took the money out of my
401K
, and it's one of my biggest regrets. Because it is your younger selves job to look after your older self. So, imagine that you live with your grandma and you are like, "You know what? Grandma, you know, you're actually going have to work. Just get up, get to work. I mean, I'm working a little bit too, but you need to pull your weight".Share
17:53
We would never do that. But that's essentially what you do when you don't do everything you can now as your younger self, you are putting your older self to work. When your older self doesn't have the energy, doesn't have the capacity as much as you do. You have everything that you need right now.
Share
Samantha Barry
18:08
Right, so taking money from your retirement account should be your absolute last option. If you can figure out other ways to keep your head above water, I think it's important that you exhaust all those options first.
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Tiffany Aliche
18:20
I don't want you to go homeless, you know? But if you take money out of your retirement account and you're not at least 59 a half, you're losing 10% as a fee, and then on top of that, you're going to pay income tax on that money.
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Samantha Barry
18:33
So if you withdraw, let's say $100,000, you're going to pay $10,000 just in fees and then taxes on top of that. You're basically taking money from yourself, you shouldn't jeopardize your long-term financial future if you can find another solution to a short-term problem. But if the circumstances become really dire, what else can somebody do?
Share
Tiffany Aliche
18:56
Call whoever runs your water, call whoever you get your electricity from. Call them and see do you have something to account for hardship? Because oftentimes you'd be surprised, there are some companies that will extend grace to you.
Share
Samantha Barry
19:10
What's the script you can use when you call these companies?
Share
Tiffany Aliche
19:14
Hi, this is Tiffany. I'm calling because I've experienced the hardship, I've lost my job. I don't want to be late, you know, I want to continue to be a great customer. Is there some sort of assistance that you can offer me?
Share
Samantha Barry
19:27
What do they do usually in those cases, what can they do?
Share
Tiffany Aliche
19:29
Typically there's a pause involved and then they'll put that money on the back end, but at least it's something. So we all know for student loans, if you have federal student loans, there's forbearance, same thing. They put it on pause and it just continues to grow as you, even though you're not paying it, but at least you're not going into default.
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Samantha Barry
19:45
So you're still obviously going to have to pay off the loans, but it can buy you some time. What if the company says no and they won't put your account on pause?
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Tiffany Aliche
19:55
So, honestly, this was hard for me to learn, but when the recession hit, I had to acknowledge. Someone's not going to get paid. Like, you know what? Cellphone is going to be late. Cable, I'm going to cut it off, but the bill that I do, oh it's going to be late. You have to prioritize who is going to get paid based upon, like, you have to eat, you have to have a place to live, you know.
Share
20:14
So this is an extreme when you're really like, I don't have it. Will your credit score take a bit of a hit? Yes, but mine went from 802 when I was in my twenties, and then when the recession happened, I dropped down to a 547, and now I'm back in 800.
Share
Samantha Barry
20:28
Your credit score is a movable piece, and again, this is for an extreme situation. Layoffs are so difficult on top of financial uncertainty that you're dealing with all the emotional parts of unemployment and job hunting. The situation might make some people feel anxious or embarrassed.
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Tiffany Aliche
20:44
I know that it's scary and it's hard, but honestly finding some support in an accountability partner, so whether that's your significant other, your best friend, someone that you can speak openly about what you're going through financially, and you guys are working on it together. So I believe in that tremendously.
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Samantha Barry
21:07
You can't control layoffs, but you can control how prepared you are. That's the real trick to getting through one. Start building your emergency fund right now. Figure out your noodle budget, then put $100 into a savings account, or $10, or whatever you can afford today. Start there. Your first goal is to get that account to $1000 and then get it to six times your noodle budget.
Share
21:32
If you do get let go from your job, ask for a better severance package, make sure you go back and look at your employment contract, you could be entitled to more. If you lose your job and bills are stacking up, don't ignore the pile. Figure out exactly what you owe and call the companies to figure out how you're going to pay them. The only way you're going to get help is by having these conversations.
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Samantha Barry
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