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.
“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 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.