Yesterday was a tough day here at my office. Two people I work with were let go due to economy-related issues. My company was actually growing during the recession so I felt secure in my job, but I didn’t take into account the stability of the investors. It turns out that a large amount of funds were removed because of a big investor’s financial problems and my company needed to generate immediate cash flow. This just goes to show that you should never feel immune from a recession in your job.
After I read all of the great points everyone posted on which improvement I should make to my house, I became tempted to dip a bit into my extra savings so that I could do just one more project…. Wow, did I get a wake-up call as to why that would have been an awful idea! In light of everything, this seemed like a good time to review my emergency plan (that I plan on keeping in place!).
In case of layoffs:
*apply for unemployment
*always keep an emergency savings: eight months expenses in cash
*freeze all unnecessary spending- going out to eat, entertainment, etc.
*freeze unnecessary gas use; rely on bicycle for travel
*rent out second bedroom of house
*while employed, never accumulate debt; pay in cash for everything (or pay of card at the end of the month)
My additional back-up plans:
*My company allows us to rollover extra vacation days into sick day accounts. Although vacation time is wonderful, I never use all of my days so that I’ll have them in case of a major illness.
*Buying my house was a major dream of mine, but if I become sick or unemployed for over a year, I’ll either put my home on the market or rent it out so that I can downsize as much as possible.
*Creditors are reducing limits these days and I’ve been using my cards responsibly so that they don’t have any reason to cut down on my limits. As much as I hate being in debt, I know that having a card as a backup might come in handy.
*I'll consider going back to teaching. I left that profession because the lifestyle made me very unhappy, but it is a field in which jobs are always being created and cannot be outsourced or replaced with technology.
What kinds of emergency plans do you have in place?