The Unexpected – Is it Making You Nervous?

The other day when I called my brothers to give them the scoop on my mom (she’d had some medical problems, but she’s fine now, thankfully), I talked with my older-younger brother right away, but I was a bit surprised when my youngest brother didn’t answer the phone right away, and even more surprised when it was nearly an hour before he returned my voicemail message. That’s not like him, especially where our parents are concerned.

When he finally called back, I was concerned. “What’s up?” I asked tenderly. 

The Unexpected

“Yeah, sorry about that. I was in a meeting for work. They just laid off six people. Nobody saw it coming.” 

Doug works for a medium-sized graphics design/media production type of a company here in our large metropolitan area. He’s been there for over twenty years (thank you, big sister 🙂 ) since a boyfriend of mine convinced him to apply to the company when he was just 19. Luckily, his long-term employment with the company made him immune to this round of layoffs.

“We’d been slow for a few months, but that was over and things are picking up nicely again. We just didn’t see this coming,” he repeated.

Although Doug’s main form of communication is wit (when he was in the sixth grade, he had my mom convinced that he needed a Nintendo for school), he really is a caring guy and was genuinely worried about the six co-workers who no longer had jobs.

My first thought of course, as a PF blogger, was I hope they have emergency funds.

Hearing about people’s unexpected income losses always makes me a little bit nervous. And a little bit more motivated to keep on our path toward debt freedom.

Too Little, Too Late

Recent studies show that 69 percent of Americans have less than $1,000 in savings. Of that number, half don’t have anything in savings.

Based on odds alone, the chances are that three out of the six of my brother’s co-workers will be significantly financially impacted by this layoff due to the fact that they have no money in savings.

The point?

The point is that they call them unexpected emergencies for a reason. Just because your job seems secure, it doesn’t mean it is. When I was laid off from my job at the end of 2003, the mortgage industry was still doing well. It would be a few more years before the bubble burst, but the higher ups at the large bank I worked for must have known something was coming when they strongly suggested mortgage reps lay off their assistants.

And I remember when Doug’s company was bought out a few years back by a larger company. The buyout came as a surprise, and job losses went with it as they eliminated duplicate positions and generally cleaned house.

This is why financial fitness is so dang important.

The less debt payments one has, the less money they need if they lose their income. Unemployment maximums here are around $550 a week. $2,200 a month income may be doable for some people, but for many it doesn’t even make a dent in covering their mortgage, car loan and credit card payments.

Having an income dip down to $2,200 a month is not viable for a lot of people and families living with large debt payments. Heck, our family needs just under $2400 a month to cover the basics alone.

Rick’s job is pretty secure, but it comforts us knowing that we’ve got money set aside in savings that could be used if need be. And it comforts us knowing that every month our debt load is getting smaller.

Just Do Something

If you haven’t yet begun your journey to debt freedom, I encourage you to do so. If you’re not interested in going “gazelle intense” like Dave Ramsey suggests, just do something. Pay an extra $25 a month on your smallest debt and get it paid off a little bit faster. Put 2% of your net pay into an emergency fund. It doesn’t even have to hurt, just start making small steps that will add up to big results over time.

Let the unexpected in other peoples’ lives make you nervous. Let it motivate you to turn your own financial life around. The more financially secure you are, the less that unexpected job layoff or other event will affect you. So start creating your financial security blanket today.

 

18 comments on “The Unexpected – Is it Making You Nervous?

  1. Unfortunately these events are all too common these days. Working for a single company for your entire career is uncommon, you need to be ready for events like this. I hope your brother’s six co-workers are prepared. If they are not, they fear and stress associated with a job loss can be suffocating.

    Having cash savings is an immediate fix for a job loss. Another key is building and maintaining a professional network. This is a great way to get you back on your feet profession if a job loss occurs.

  2. I think it’s very healthy to “expect the unexpected.” This doesn’t mean you have to live in fear. It’s just reasonable to recognize that life always throws surprises at us somewhere along the way, and being prepared to some degree makes sense. I know having an emergency fund helps us face the future more calmly!

    1. Yes!! We always expect the best, but be prepared for the unexpected at the same time. Life is better there.

  3. Please people. If a bank tells you that you can afford a $350,000 mortgage, find a home for half the price or less, even if it’s a “fixer upper”. You will be so thankful not to be facing foreclosure within a few months of a job loss.

    1. Kay, that is our story. We did take the maxed-out mortgage, and within a few months of taking on that mortgage, the career upheaval began. It was not so much a sudden change as a train wreck in slow motion (5 years of roller coaster before 6 years of under/unemployment set in for real). We would have been so much better off taking a smaller mortgage – or not moving out of our small starter home at all. And just because we faced the unexpected once doesn’t mean we won’t again. We are so much better prepared if it happens again!

      1. Wonderful comment, Ruth. We did something similar. Always leave yourself breathing room when it comes to expenses and debt.

  4. We thankfully are prepared for most emergencies. I’m switching jobs right now, which means I won’t get a paycheck for about a month. I’ve had that happen in the past and it was devastating. I nearly went into debt just to keep myself fed. But this time, we have a healthy savings account that will support us while we wait for our income to come in.

    1. That is awesome news, Mrs. Picky Pincher! I’ll bet it feels totally different this time now that you’re prepared….

  5. Several years ago, when we had little ones, I had just quit my job, and we had quite a bit of debt, the prospect of a job loss was terrifying to me. Even though we had the debt, the first thing we did was figure out our bare bones budget and save enough to cover 6 months of that budget. Though it wasn’t complete insurance, it made me feel infinitely better. It’s worth it to prepare!!!

  6. We just had a family friend lose his job due to corporate downsizing. The bad part is he moved several years ago with the same company to avoid losing his job then. Only to have it happen a few years down the road.

    I’m not exactly sure what their financial shape is, but, I do know they have some loans to repay still (mortgage, student loans, etc.) And it was a reminder (to me & my wife) to keep an emergency fund tucked away and to trust in the Lord to open a new door soon.

  7. The unexpected should make us a little nervous, whether it’s a job loss or some other kind of financial emergency. That discomfort pushes us to do something about it. It’s scary how many people are unprepared for even a basic unexpected problem. I hope your brother’s colleagues are prepared and find new employment quickly.

  8. I’m pretty cynical about job security these days. If you work for yourself, you can trust your employer. The rest of us need a strong plan B that includes an emergency fund, among other things.

    Keep your expenses down and your skills and contacts up.

    1. So true, Emily!!! This isn’t the olden days where one could count on staying at a job for forty years. Very rarely does that happen anymore. This is why we’ve really worked on establishing multiple streams of income. It makes a difference!

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