CyclingDuo wrote: ↑
Sat Feb 16, 2019 10:34 am
• Combed over our budget in the months after the layoff news and before the final paycheck to see what non-essentials could be cut. In other words, used the opportunity to do a reset on cash flow as if our household was moving from a dual income household to a single income household, or at the very least - a lower income than before. Was able to cut several hundred per month from our non-essentials with the potential to easily cut nearly $150-250 more per month if need be. Adjusted our lifestyle in terms of vacations, travel and eating out to reflect a drop in income as well (hunkered down a bit, but not totally).
Many have pointed out in this thread that their lifestyle is or already was dialed back expense management wise
before any potential or actual job loss scenario in their 50's cropped up. In other words, their high rate of savings and living a lifestyle that avoided creep was already well in place. In retrospect, we were not as dialed back expense wise
as we could have been going into the job loss.
This post is a bit about what we did as a couple over the past 20 months to uncover and tackle the expense management side of the cash flow equation in our household. We have reread this thread multiple times, had family budget meetings, taken the experiences and suggestions of others to help us continue to make improvements.
We thank all of you for that!!
If I had to make an update to my original post, I think it would be that the process of losing what one thought was a secure job, moving on and going through the transition - and all of the associated adjustments - is a process
that unfolds over time. At least it has been that way for our household even though I am already in month number 20 after having first received the news that I was being laid off from my old job due to retrenchment, "right sizing", etc... as a result of declining enrollment as colleges and universities no longer have any more millennials to rely on for enrollment.
As mentioned in my original post, the initial steps taken included most of what Pete the Planner suggested. Those steps were, in aggregate, step number one.
Finding replacement income and adapting to the new work routine from more than one job to produce an income stream became step number two.
After 13 months of work in one of the new replacement income jobs (the one outside of my teaching profession) that I was able to find, I received an annual bonus plus a 5% pay raise. I received a 7.6% pay raise for another replacement income job that I found within my teaching niche. I felt somewhat skeptical, or at least had a healthy level of trepidation during the prior 13 months about those positions with regard to me being able to hang on and maintain a job in my mid to latter 50's after reading all of the data that said those laid off once in their 50's are more susceptible to it happening again. Feedback from my managers and supervisors have been positive in the current jobs I have, so I am feeling less skeptical and have somewhat less trepidation now in my second year of replacement income. That's no guarantee it will all continue for the future, but it at least leaves me feeling less stressed about it all in the adjustment process than I have felt over the past 20 months. Let's call that step number three in terms of sequence for the process.
I continue on in year two of hanging on by my fingernails in terms of having found replacement income for my base pay, and our overall household income between the two of us has fortunately held on as well due to pay raises all around. What I lost in income annually via always having taught an overload in my prior position ($8-10K per academic year), my spouse picked up via a $10K raise in her salary. We both have side hustle income as well to keep us at our prior household income levels. As part of the hunkering down
process, trimming of lifestyle creep, new budget focus, and some expense management - we have learned to easily live on one salary while we continue to sock away the other salary into savings/investments. To do all of that in a comfortable manner, it took looking through a lens to pull all of the correct levers to make it work. We will call that step number four.
Step number four...
Through the past 20 months, our household has not stopped discussing our cash flow, budgeting, retirement and work options, plans for the future, etc... as we continued to track and tweak our monthly cash flow. Beyond the initial cuts we made in some non-essentials as part of the hunkering down process
suggestion from Pete the Planner https://petetheplanner.com/ep-299-losin ... -your-50s/
, the process of taking the time as a couple to continue to study our budget month in and month out to see what we were spending money on did result in more reductions. We will call that, in aggregate, step number four.
Step number four has been eye opening and very beneficial for a variety of reasons. It coincides with being empty nesters and dialing in the actual dollar amount we need to live on as a couple in our current home and lifestyle. This seemed to be difficult, if not outright illusive for us to do while the kids were living at home or still in college in terms of having an exact number for a household of two compared to a household of four. Now that the days of four in the house are past, and the final graduate school tuition bill was paid in January of this year along with the final student rent & board being paid in June of this year - the children are well on their own and our budget has been able to transition to reflect what we will be spending on an annual basis going forward. The process the job loss set into motion has helped us not only examine our budget during our final working years, but also has helped us to gauge what we will need in the beginning retirement years to cover our expenses. This confluence of events created a clearer picture than it was just a few years ago.
In spite of our rate of savings having already jumped up to 50% before the job loss news hit 20 months ago, we were guilty as a two income household of having settled into a routine that included lifestyle creep that did not delineate as well as it should have between wants and needs. We were caught up in enjoying contentment with our daily lives which was funded by our steady regular cash flow from our dual incomes to the point of not spending as much time or attention to the budgetary detail as we should have been spending to include a wider variety of scenarios (such as including a job loss). We may or may not be alone in that regard, but suffice it to say that whether or not the layoff was the full impetus to do a closer examination or not - the process and adjustment has led to decisions we have jointly made after looking closer at the details.
My original post said we were able to cut back on some of our non-essential expenses to begin the hunkering down
process following a job loss. That process has continued over the past 20 months as we adapted, adjusted and discussed financial matters as a couple. Spending the past 20 months reading many articles, forum threads, books, listening to podcasts, etc... provided plenty of suggestions, ideas, thoughts and steps to take to examine everything a bit more in detail. Not a bad thing to examine for anybody no matter what the job situation is as they spend their final working years before retirement.
Okay, so it's time to hang some of the dirty laundry on the line for examination to show things on the expense side of the balance sheet that we were able to trim.
The dirty laundry was sobering, to say the least!
Note why I use the word sobering
when it comes to booze alone...
$1000 per year ($83 per month) was cut from wine club memberships.
$6100 per year ($511 per month) was cut from our grocery bill (a chunk of that came from our love of wine).
$5600 per year ($466 per month) was cut from our restaurant and eating lunch out
at work bill.
$1200 per year ($100 per month) was cut from our phone bill.
$1100 per year ($91 per month) was cut from bicycle racing expenses.
$1200 per year ($100 per month) was reduced from our vacation fund as we reexamined our vacation wants.
We are big foodies and knew our grocery bill was high. We have learned we can still be big foodies without spending so much on expensive protein, wine and ingredients like we were before. That cut and the simple act of brown bag lunching it for both of us firmly helped us hone in on what was in the wants category and was in the needs category. After some consternation, discussion, and decisions - we got out of our boat floating down the River DeNial when it comes to eating and drinking.
Hopping out of that boat resulted in an additional $16,200 cut per year run rate in expense management that we initiated after our close examination and discussions as a couple. Those are the major cuts listed above, but we have room for some smaller cuts, improvements and tweaks as the process continues.
Some of the above savings is offset by an increase in commute miles on one vehicle due to the job changes. Triple AAA calculates my true cost for my commute vehicle at $7296 per year (gas, maintenance, insurance, depreciation). Gas, maintenance, insurance, and depreciation costs for that car were already included in our regular budget, so the actual addition of my new commute adds $2122 per year ($176 per month) to our expenses.
Going with the additional commuting expense of $2122 per year and subtracting that cost from the major savings via our expense management cuts, we have a net of an additional $14,100 more per year ($1175 per month) to use for additional monthly savings/investments/additional mortgage principal payments, travel, giving, etc... than we had 20 months ago before the job loss hit to factor into our current budget.
CyclingDuo wrote: ↑
Sat Feb 16, 2019 10:34 am
Actionable items wise, will continue to keep a lid on non-essential expenses, and sock away a higher percentage of savings than we originally were doing say two or three years ago when we thought both of our jobs were secure until a retirement date of our choosing. New eyes. New experience. New thoughts. New plans.
One has to take actionable steps on the financial side of the equation both in preparation for a possible layoff, as well as dealing with an actual layoff. And one has to take actionable steps as well when facing a job market in your 50's if continued employment is a goal.
We are feeling like we have addressed most of that in our current situation. Not sure things would have had the same outcome if they had taken place during a different economic environment, but looking ahead to the future - our planning is on task to consider softening conditions that could impact my ability to continue to bring in replacement income during the next few years.
(Although there is no beverage in the house....)