Keeping a stash of vacation days as unemployment "insurance"

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AndroAsc
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Keeping a stash of vacation days as unemployment "insurance"

Post by AndroAsc » Sat Mar 30, 2019 10:12 am

Recession is coming... if not now... soon, and I've been planning for this. Specifically looking at layoffs.

Now, I have the usual emergency fund. I'm now thinking whether or not keeping a stash of vacation days will help.

What do I mean? In some states and/or depending on company policy, unused vacation days will be paid out. So the idea is that if you maintain a near maximum vacation day throughout the year (this assumes your employer allows you to carry forward vacation from one year to another), depending on how much you have when you get laid off, it could be worth 1-5 weeks of income (depending on how much you can accumulate).

Now, if you have a high salary and low expenses, that could easily be another 3-6 mth of living expenses.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by RickBoglehead » Sat Mar 30, 2019 10:15 am

If one keeps 6 months of expenses, I would argue that mental health wins over money. Take vacation.

Also, if a company fails, you may not get paid at all. Unemployment is your small safety net.
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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by petulant » Sat Mar 30, 2019 10:44 am

This is something I do, though not entirely as a conscious plan. When I first started out, I didn't take many vacations since I wasn't burned out yet. I logged a little over a month in vacation leave pretty quickly. Since then, I've basically hovered around that spot between vacations and single days off to create three- and four-day weekends. I didn't realize until after it happened that I had created a nice unemployment perk in case I had to leave. In August I'll hit five years of service and will start accruing more vacation leave, which I hope to "bank" in this way so I can eventually build up to 2-3 months of leave.

Just hope you don't lose your job in November/December when you might have to pay a lot of extra taxes on the vacation leave payout!

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by sailaway » Sat Mar 30, 2019 10:46 am

If your company moves to flex time off and pays out vacation, what would your plan be?

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by cherijoh » Sat Mar 30, 2019 10:57 am

AndroAsc wrote:
Sat Mar 30, 2019 10:12 am
Recession is coming... if not now... soon, and I've been planning for this. Specifically looking at layoffs.

Now, I have the usual emergency fund. I'm now thinking whether or not keeping a stash of vacation days will help.

What do I mean? In some states and/or depending on company policy, unused vacation days will be paid out. So the idea is that if you maintain a near maximum vacation day throughout the year (this assumes your employer allows you to carry forward vacation from one year to another), depending on how much you have when you get laid off, it could be worth 1-5 weeks of income (depending on how much you can accumulate).

Now, if you have a high salary and low expenses, that could easily be another 3-6 mth of living expenses.
A former employer announced that they were shutting down our site and offered to relocate me or I could take a separation package. I opted for the latter. The announcement was made in October with the move to occur the next year. I did decide not to take any vacation before the site closure (I had five weeks). I assumed the end of my employment would occur around the end of 1Q, but I actually ended up leaving at the end of July!

But I wouldn't have saved vacation based simply on the possibility of a layoff. NOTE: my employer did not allow you to roll over vacation.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by mmmodem » Sat Mar 30, 2019 11:08 am

I think this is excellent above. I had accumulated 11 weeks of PTO after leaving my previous job. I was glad to have that cushion to find my next job. This isn't like taking no vacation. It's taking fewer vacations at the beginning of your career at the company. Once you're close to maxing out your vacation bank, you'll be taking vacations like the rest of your colleagues. All it takes is 3-4 years.

Unfortunately, my current job does not allow any vacation banking so I'll be forced to take regular vacations. :(

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by indexonlyplease » Sat Mar 30, 2019 11:11 am

And no vacation. That’s one of the reasons you work.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by OnLevel » Sat Mar 30, 2019 11:34 am

I do it. Currently have about 5 weeks worth of vacation. My goal is to get it to 8 weeks and maintain it around that. My only worry is that company switches to one of those fake "unlimited" vacation plans. I'm not sure what would happen to accrued PTO in that case. Do I lose it all?

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by Bacchus01 » Sat Mar 30, 2019 12:28 pm

In most states, for private employers, vacation is not a vested or “earned” benefit and can be taken away at any tome. Just because you have unused vacation does not mean your company will give it to you.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by HawkeyePierce » Sat Mar 30, 2019 12:34 pm

I'm still confused. Assuming someone has a six month emergency fund, why would they choose to also bank PTO rather than enjoying vacations along the way?

Even if I wanted more buffer, I'd rather increase my e-fund by a few more months than forgo any time off.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by columbia » Sat Mar 30, 2019 12:41 pm

I use about 100 hours a year, which means I’m usually carrying about 200 in reserve. 5 weeks pay after a job loss won’t keep me afloat for long, but it’s sure nice to have that as a part of an emergency plan.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by miamivice » Sat Mar 30, 2019 12:45 pm

HawkeyePierce wrote:
Sat Mar 30, 2019 12:34 pm
I'm still confused. Assuming someone has a six month emergency fund, why would they choose to also bank PTO rather than enjoying vacations along the way?

Even if I wanted more buffer, I'd rather increase my e-fund by a few more months than forgo any time off.
I'm also confused. Assuming someone has a large bank of vacation days, why would they choose to stockpile cash rather than using the cash to take vacations?

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by miamivice » Sat Mar 30, 2019 12:46 pm

I don't consider unused vacation days as part of my emergency fund, but do have a decent stockpile of vacation time. They get paid out at straight rate.

I do make a point to use my sick time, as it is use it or lose it at my megacorp.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by dm200 » Sat Mar 30, 2019 12:54 pm

Nice idea - but may not work out.

Some employers do not pay for unused vacation or PTO when laid off. My current job accrued PTO (paid time off) hours - to be used for both vacationor sick leave. At employment termination, they will pay for HALF the accrued hours. of course, half if better than nothing!! :D

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by midareff » Sat Mar 30, 2019 12:56 pm

My former employer, a muni government allowed us to stash 10 of 13 holidays annually + sick leave + vacation time (2 to 4 weeks depending on longevity). Whatever wasn't used during your career would be paid out at termination or retirement. Over a 30 year career it was not that difficult to accumulate an extra years to cash at retirement.

I would not consider any of this part of an emergency fund but as a recession or layoff buffer, yes.
Last edited by midareff on Sat Mar 30, 2019 12:57 pm, edited 1 time in total.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by SevenBridgesRoad » Sat Mar 30, 2019 12:57 pm

AndroAsc wrote:
Sat Mar 30, 2019 10:12 am
Recession is coming... if not now... soon, and I've been planning for this. Specifically looking at layoffs.

Now, I have the usual emergency fund. I'm now thinking whether or not keeping a stash of vacation days will help.

What do I mean? In some states and/or depending on company policy, unused vacation days will be paid out. So the idea is that if you maintain a near maximum vacation day throughout the year (this assumes your employer allows you to carry forward vacation from one year to another), depending on how much you have when you get laid off, it could be worth 1-5 weeks of income (depending on how much you can accumulate).

Now, if you have a high salary and low expenses, that could easily be another 3-6 mth of living expenses.
Time away from work is important. Take your vacation time. You’ll come back rested and ready to go, especially if you take a two-weeker. Instead of banking PTO as a safety net, save an additional 1-5 weeks take home pay.
Retired 2018 age 61 | "Not using an alarm is one of the great glories of my life." Robert Greene

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by blueman457 » Sat Mar 30, 2019 1:08 pm

I do keep a stash of vacation days only because I’m allowed to rollover days up to some maximum.

During the first two years of my current job, I didn’t take the maximum number of days off so that helped get my stash started.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by Triple digit golfer » Sat Mar 30, 2019 2:21 pm

I keep my PTO balance close to the max. I like to know that if I get let go, I have 3-4 weeks of pay coming. I will never, however, allow myself to lose PTO days.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by gclancer » Sat Mar 30, 2019 2:33 pm

mmmodem wrote:
Sat Mar 30, 2019 11:08 am
This isn't like taking no vacation. It's taking fewer vacations at the beginning of your career at the company. Once you're close to maxing out your vacation bank, you'll be taking vacations like the rest of your colleagues. All it takes is 3-4 years.
+1 I am about to hit my 4th year with my current employer and at the end of this year I’ll be carrying over the max PTO. Sort of like contributing to a retirement account, delayed gratification, but it feels good to know I’ll have plenty of days off going forward plus the bank of PTO in my back pocket.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by supersecretname » Sat Mar 30, 2019 2:42 pm

Yes I do this.

We can carry forward 500 hours and I get 4 weeks annually at this point (15 years). Doesn’t count sick time which is separate. I still take vacation, but 4 weeks is a lot of time to take. I usually take a week in the summer and a week in the winter or spring break.

Now that I’m maxed out I’ve been taking half-day fridays and other random days off.

It’s worth ~20k after taxes, so yes, I count it.
Last edited by supersecretname on Sat Mar 30, 2019 2:45 pm, edited 2 times in total.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by Drolen » Sat Mar 30, 2019 4:57 pm

I count it as well. To close the gap between my military pension and current spending levels I require ~$4000/mo. For Unemployment emergency funding I start adding like this.

1. How much Money does my employer owe me? Current paycheck plus accrued PTO. This comes out to about $12K or three months of expenses.
2. Current amount in my savings and separate travel account. $6K or two months expenses.
3. Vanguard Settlement ~$10K or three months expenses.
4. $25K CD at 9 term or 6 months expenses.

That's easily 1 year expenses readily available which helps me sleep at night.

While there are pros and cons of not taking leave such as family time and leisure, if a person has made this decision then why is it necessarily a bad choice.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by 28fe6 » Sat Mar 30, 2019 5:02 pm

A previous colleague worked for a company that went bankrupt suddenly. They did not get their vacation paid out. There was a lawsuit over it, but it didn't go anywhere. When I worked with him, he took a half-day every Friday and never accrued any vacation. In fact, I think he was always at the maximum allowed negative PTO.

Remember that your PTO balance is earning zero interest, making it an "expensive" emergency fund.

That said, I tend to accrue if I can. I just changed jobs and although I only had 2 weeks PTO it amounted to basically 1 extra paycheck that helped bridge the gap.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by yangtui » Sat Mar 30, 2019 5:14 pm

I need my vacation days to keep things running at 100%. Without a trip to look forward to I would probably lose my mind.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by AndroAsc » Sat Mar 30, 2019 5:54 pm

Wow... so it's not such a crazy idea? To summarize, here's the risks people raised:
1) Policy changes in paying out unused vacation days: Some have reported the payouts were cut on layoffs.
2) Risk of employer going bankrupt, probably more so for employees of startups.
3) Risk of employer switching to a different vacation plan that does not pay, e.g. "unlimited" vacation time.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by Blueskies123 » Sat Mar 30, 2019 6:06 pm

I did this, being laid off at 52 after 30 years with MediumCorp and stellar reviews/experience made me realize how fragile the world is. I slowly accumulated an extra 4 weeks of vacation over the next 10 years. I FIREd at 62 and got a nice little retirement bonus.
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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by ralph124cf » Sat Mar 30, 2019 6:16 pm

28fe6 wrote:
Sat Mar 30, 2019 5:02 pm
A previous colleague worked for a company that went bankrupt suddenly. They did not get their vacation paid out. There was a lawsuit over it, but it didn't go anywhere. When I worked with him, he took a half-day every Friday and never accrued any vacation. In fact, I think he was always at the maximum allowed negative PTO.

Remember that your PTO balance is earning zero interest, making it an "expensive" emergency fund.

That said, I tend to accrue if I can. I just changed jobs and although I only had 2 weeks PTO it amounted to basically 1 extra paycheck that helped bridge the gap.
In many ways your PTO value may be going up by more than inflation. The PTO is normally measured in work days or work hours, not dollars. If you get regular raises, a days pay toward the end of your career will have more dollars than at the earlier part of your career.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by wolf359 » Sat Mar 30, 2019 6:26 pm

I've done this in the past, especially when I was young and single. If you're cash poor, it's a version of unemployment insurance. I have always had a number of "Plan B's" in case of job loss, and this was one of them.

However, it does not work as well after you get married and especially after you have kids. When you have family responsibilities, when you take leave isn't always up to you. In addition, it's one thing to skip vacations when you're only affecting yourself. When your family is involved, it's more difficult.

I have gone through a layoff period before, and having an additional month of PTO was very helpful to my peace of mind. Nowadays I have a much larger buffer in investments and emergency fund, so a PTO buffer is not as necessary.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by Enterprise D » Sat Mar 30, 2019 6:43 pm

I also did this. However, I did not deprive myself & wife of time off. I “banked” about
3 days per year at the beginning and used the rest of vacation days in conjunction with federal holidays so it was possible to have a couple full weeks off. When I began to receive more vacation days I was able to save a week. Early in my career I also considered this as extra sick leave that might be needed to maintain income in case of a severe case of flu or other illness.

This worked for me, but I can see that others might value, or feel a need for, taking all of the vacation days. Of course, if you are not allowed to carry over leave days or if your employer goes broke,then you must use another strategy.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by MnD » Sat Mar 30, 2019 7:07 pm

ralph124cf wrote:
Sat Mar 30, 2019 6:16 pm
In many ways your PTO value may be going up by more than inflation. The PTO is normally measured in work days or work hours, not dollars. If you get regular raises, a days pay toward the end of your career will have more dollars than at the earlier part of your career.
Early career over about 6 years when I was in low pay grades of federal service I accumulated the maximum 240 hours carryover by taking one less week than what I earned annually. In the years after that I always used all the PTO I earned, but kept that 240 hours in the "bank". In 2018 I took only 1 week PTO and added the unused remainder to my PTO to bring my balance to 400 hours at retirement in late 2018 and prior to the carryover date when anything over 240 would be swept/lost. The 400 hours were paid out at the very top of the GS salary scale where I was when I retired. :beer

Over the years there were a always a segment of employees that couldn't understand why _anyone_ would have 240 hours of leave and not use it, even though the people that had banked those hours years ago were at the time taking exactly the same amount of vacation as those that never banked an hour extra.
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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by Jack FFR1846 » Sat Mar 30, 2019 8:08 pm

Won't work for me. My company zeros any unused vacation days on January 1st. Not paid out, not saved, they're gone.
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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by nisiprius » Sat Mar 30, 2019 8:12 pm

I would be really careful. I've worked at two companies that suddenly instituted policies limiting the number of accrued vacation days that could be carried over to the next year, and requiring that everything above that number had to be used within a year or would be lost. At one of them, a colleague was caught by that policy with ninety unused vacation days. I remember he took Fridays as vacation days for the rest of the year, but he must have also taken a long vacation, too. Not exactly a tragedy but awkward both for him and his employer.

Vacation days are not the same thing as money in the bank. I'm not a lawyer and certainly not a labor lawyer and I don't know what companies can or can't do legally.

If I remember correctly, the scenario of having to pay out salary for accrued unused vacation days when an employer leaves or is let go is exactly the reason why companies don't like to let vacation days accrue. It was explained to me at the time, at both companies, that the reason for the change in policy is that since unused vacation days can turn into money that has to be paid off, they were be carried on the company books just the same as cash debt, and that, for some reason, was creating problems in the way investors were reading their balance sheets... or something.

In short, by using vacation days as unemployment "insurance" you are doing something that employers would prefer that employees not do.
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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by InMyDreams » Sat Mar 30, 2019 8:19 pm

I've done this. Still sort-of do it.

I've felt that my employers were stable enough that my PTO would be paid in the event of sudden separation of service.

Also, in my business (healthcare at the bedside) it's also common in hard times to be shorted hours - sent home early, come in late, or cancelled altogether based on census. Sometimes it's nice to simply take the unexpected time off without pay, but sometimes it's important to pay bills :) PTO can be used to make up for lost hours.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by InMyDreams » Sat Mar 30, 2019 8:22 pm

nisiprius wrote:
Sat Mar 30, 2019 8:12 pm
Vacation days are not the same thing as money in the bank.
No, but if everything goes as it should, it goes up in value with pay raises.

Of course, I worked for an employer in a long ago recession that gave us a pay cut - just before I quit. That was sad.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by Random Musings » Sat Mar 30, 2019 9:07 pm

I always use all of my five weeks of vacation, and wish they would offer more. At a certain point, most people on this board will have enough emergency funds so banking vacation is not necessary. These days, a lot of companies act like it is the end of the world when people leave on vacations. Also, many people today don't use all of their vacation, or work on their vacation time to a point. IMHO, this is a sad trend. Hard to believe that a company, or the employee, can not survive without the other for a brief period of time. They can, but I think technology and the tether (or noose) that has come with it increases guilt in certain people if they try to cut the cord. The unlimited vacation scam that is now around most likely will drive down vacation time usage as well to shame more senior workers to use less vacation.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by EddyB » Sat Mar 30, 2019 9:33 pm

Bacchus01 wrote:
Sat Mar 30, 2019 12:28 pm
In most states, for private employers, vacation is not a vested or “earned” benefit and can be taken away at any tome. Just because you have unused vacation does not mean your company will give it to you.
Deleted

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by teen persuasion » Sun Mar 31, 2019 11:50 am

In a previous position DH was a teacher at a non-profit. He received PTO (not vacation - those were scheduled as part of the school year: Xmas vacation, mid-winter break, spring break, summer vacation (this one with no pay)) and sick time. PTO had a limit that you could bank; anything over that limit at end of fiscal year was cashed out then. Sick time could accrue unlimited.

As teachers hate to take sick days/PTO unless they are on death's door (more work to provide lesson plans for your sub, and catch up afterwards) and had scheduled vacation time, he rarely used much of either. Cashed out PTO was a nice boost to his meagre salary. Sick time was an insurance fund (in our eyes) in case of serious illness.

When he'd had enough of administrative bs and decided to leave, he researched payout policies for everything. PTO and unused sick time would be paid out at a minimum of 50% (don't remember all the details anymore - a portion may have been at 100%, perhaps the PTO). It was enough to replace the rest of his expected earnings for the calendar year (and we had the employer contribute 50% to his 401k, leaving just enough room to capture a match at a future employer, if possible) after leaving in June. We also had the employer pay it out over 5 pay periods, to limit the tax withholding hit, vs one large check. It occurred to me that he'd accrued the time at lower pay levels over the years, but it was paid out at his current hourly rate, as another poster mentioned.

A few months later he heard thru the grapevine that the employer instituted a new policy limiting unused sick time to some small fraction of what they'd just paid out to DH. Not a coincidence, I think.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by ImUrHuckleberry » Sun Mar 31, 2019 12:00 pm

I get 5 weeks annually plus 1 paid shutdown week and need every day off to preserve my sanity. (My job is great but it's very stressful.) No way I would save any vacation unless I was sure a layoff was planned.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by Dottie57 » Sun Mar 31, 2019 12:03 pm

sailaway wrote:
Sat Mar 30, 2019 10:46 am
If your company moves to flex time off and pays out vacation, what would your plan be?
Or If your company moves to flex time off and DOES NOT pay out vacation or sick time, what would your plan be? I lost my accrued sick time at megagcorp. PTO could not be acrued any more either. Circumstances do change.

Take your vacation. It does improvemental health.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by chenzi » Sun Mar 31, 2019 12:10 pm

My current employer has an "unlimited" vacation subject to manager approval (& ofcourse no one approves unlimited vacation).
Basically the story i heard is that few years back, the amount of "banked" vacation liability went up significantly, the employer just moved to "flex &unlimited" vacation time (without any accruals) and did not pay employees for their banked vacation :)
To top it off, the company closes for 7 days between 24th and 1st and any remaining vacations for hourly employees are automatically applied forcefully. If the employees do not have banked vacation, they still get the time off, so the message is just use vacations and dont expect to be paid for not using them.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by Briar Rabbit » Sun Mar 31, 2019 1:13 pm

My employer will allow you to put hours (dollar amount equivalent) into our 457 plan. The lucrative part comes in when you bank hours as a younger, lower paid employee and bank up to 1,000 hours before either taking time off or rolling into the 457 plan.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by whodidntante » Sun Mar 31, 2019 2:16 pm

OnLevel wrote:
Sat Mar 30, 2019 11:34 am
I do it. Currently have about 5 weeks worth of vacation. My goal is to get it to 8 weeks and maintain it around that. My only worry is that company switches to one of those fake "unlimited" vacation plans. I'm not sure what would happen to accrued PTO in that case. Do I lose it all?
I've seen that happen at one company (lose it all).

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by EnjoyIt » Sun Mar 31, 2019 2:17 pm

SevenBridgesRoad wrote:
Sat Mar 30, 2019 12:57 pm
AndroAsc wrote:
Sat Mar 30, 2019 10:12 am
Recession is coming... if not now... soon, and I've been planning for this. Specifically looking at layoffs.

Now, I have the usual emergency fund. I'm now thinking whether or not keeping a stash of vacation days will help.

What do I mean? In some states and/or depending on company policy, unused vacation days will be paid out. So the idea is that if you maintain a near maximum vacation day throughout the year (this assumes your employer allows you to carry forward vacation from one year to another), depending on how much you have when you get laid off, it could be worth 1-5 weeks of income (depending on how much you can accumulate).

Now, if you have a high salary and low expenses, that could easily be another 3-6 mth of living expenses.
Time away from work is important. Take your vacation time. You’ll come back rested and ready to go, especially if you take a two-weeker. Instead of banking PTO as a safety net, save an additional 1-5 weeks take home pay.
I would rather have x weeks of pay earning 2.4% in a money market fund as opposed to sitting at the employer earning nothing. Even better, I would rather have x weeks of pay in my taxable account at my 70/30 AA building me wealth over long term.

OP, if you need more than 6 months emergency fund, then have an emergency fund that is more than 6 months.
Please use your vacation days. Taking time off from work especially when taken in 2 week blocks will rejuvenate you. It very well may make you a better and harder working employee that will be up for better promotions and raises. Vacations will also decrease your stress level and lengthen when you start getting burned out at work allowing you to enjoy your job longer and make more money in the long run.

You want to save a 1-2 weeks of vacation time in case of an emergency needing time off from work, then that is fine, but to do it as an emergency fund I believe is counter productive.
whodidntante wrote:
Sun Mar 31, 2019 2:16 pm
OnLevel wrote:
Sat Mar 30, 2019 11:34 am
I do it. Currently have about 5 weeks worth of vacation. My goal is to get it to 8 weeks and maintain it around that. My only worry is that company switches to one of those fake "unlimited" vacation plans. I'm not sure what would happen to accrued PTO in that case. Do I lose it all?
I've seen that happen at one company (lose it all).
What a nice and sleazy way to cut future liabilities down immediately and make the company appear more profitable that year. (I guess that depends on how they do their accounting.)

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AndroAsc
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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by AndroAsc » Sun Mar 31, 2019 8:09 pm

My current employer only allows us to carry forward a year's worth of vacation from one year to another. So I will take half of my vacation time this year, half the next... and once that's done I can utilize my full vacation every year. It's really not that bad, and I enjoy my work.

Now my last employer, I had to take ZERO vacations for 3 years to get up to the max. Boy was I pissed and upset over that!!!

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by DonIce » Sun Mar 31, 2019 8:14 pm

I use all my vacation every year, often including taking extra unpaid time off. I'm not a financial outcome optimizing robot but a human being that has passions and hobbies outside of work.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by iamlucky13 » Mon Apr 01, 2019 4:45 am

mmmodem wrote:
Sat Mar 30, 2019 11:08 am
I think this is excellent above. I had accumulated 11 weeks of PTO after leaving my previous job. I was glad to have that cushion to find my next job. This isn't like taking no vacation. It's taking fewer vacations at the beginning of your career at the company. Once you're close to maxing out your vacation bank, you'll be taking vacations like the rest of your colleagues. All it takes is 3-4 years.

Unfortunately, my current job does not allow any vacation banking so I'll be forced to take regular vacations. :(
Been there. Tried that. At my last job, it would have taken almost a decade of taking only 1 week of vacation a year to hit my 8 week maximum accrual. My field is not as generous as yours.

I'd say how to approach this depends on how much vacation you get versus how much savings you have and whether you can safely expect a severance payment. What I've observed as typical in engineering, which is usually a non-seasonal field, is that vacation allowances are about half the annual amount that a relative in accounting has described as typical, where work often is seasonal and lack of vacations during the busy season can be made up for by lengthy vacations during the quiet season.

I averaged about a week of vacation taken a year for over 7 years, and had roughly 6 weeks accrued when I was laid off. Often it was used for extended family obligations, so less than a week a year was time spent focusing on things my wife and I wanted to do on our own.

However, I had an ample emergency fund that saw me through the layoff and job search without getting close to touching my investments.

I deeply regret not taking more vacations earlier in my career at that company. That later era when I could be taking vacations like the rest of my colleagues never came. I missed a lot of time doing activities with my wife and kids that can't be squeezed into weekends - A literal month of time versus how I should have done it.

Unfortunately, unemployment wasn't a vacation, either, much less one that made up for previous missed opportunities.

At the new job, my goal is to save half of the first 2 weeks, then roughly 1/4 of my accrual rate after that. I'm helped by the fact the new employer's accrual rates over the first 5 years are about 25% more generous than the last employer's. I want to slowly build up to a 2-4 week emergency fund. This isn't a financial emergency fund, but a sanity/family one: if anything unexpected comes up (family emergency, previously unplanned activity with friends, etc), I want to be able to able to take the time off without cancelling future plans.

As long as I'm above 2 weeks, I have no specific accrual goal. However, if I exceed 4 weeks before my accrual rate increase at 5 years of service, then I am thinking that should trigger a "required minimum distribution," payable to my family.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by supersecretname » Mon Apr 01, 2019 8:11 am

InMyDreams wrote:
Sat Mar 30, 2019 8:22 pm
nisiprius wrote:
Sat Mar 30, 2019 8:12 pm
Vacation days are not the same thing as money in the bank.
No, but if everything goes as it should, it goes up in value with pay raises.
My company recalculates carried forward vacation annually based on new salary. So, you'll lose a few hours, but $-wise its a wash with the raise.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by cresive » Mon Apr 01, 2019 8:16 am

AndroAsc wrote:
Sat Mar 30, 2019 10:12 am
Recession is coming... if not now... soon, and I've been planning for this. Specifically looking at layoffs.

Now, I have the usual emergency fund. I'm now thinking whether or not keeping a stash of vacation days will help.

What do I mean? In some states and/or depending on company policy, unused vacation days will be paid out. So the idea is that if you maintain a near maximum vacation day throughout the year (this assumes your employer allows you to carry forward vacation from one year to another), depending on how much you have when you get laid off, it could be worth 1-5 weeks of income (depending on how much you can accumulate).

Now, if you have a high salary and low expenses, that could easily be another 3-6 mth of living expenses.
Right or wrong, this plan does work. I had a job where I kept a large number of unused vacation days. I actually factored this source of money into my disaster plan--i.e. getting fired/laid off, etc. Fortunately, I never actually needed the days for a lay off, but having them was a nice peace of mind. I did get a hefty deferred compensation check when I let the job. Since I left for another job, I rolled the money into my IRA to help with retirement. I would have kept the money as an EF, but the deferred compensation management company had a high fee for managing the funds.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by Jags4186 » Mon Apr 01, 2019 8:20 am

AndroAsc wrote:
Sat Mar 30, 2019 10:12 am
Recession is coming... if not now... soon, and I've been planning for this. Specifically looking at layoffs.

Now, I have the usual emergency fund. I'm now thinking whether or not keeping a stash of vacation days will help.

What do I mean? In some states and/or depending on company policy, unused vacation days will be paid out. So the idea is that if you maintain a near maximum vacation day throughout the year (this assumes your employer allows you to carry forward vacation from one year to another), depending on how much you have when you get laid off, it could be worth 1-5 weeks of income (depending on how much you can accumulate).

Now, if you have a high salary and low expenses, that could easily be another 3-6 mth of living expenses.
Unless there is a law in your state that says unused vacation must be paid out then I would not bank on this. Companies can change policy. Companies change policies for the negative when financials aren’t good. What if your company changes policy that vacation can only be accrued up to X days, use whatever excess you have or lose it on Y date. What if your company changes policy to simply not paying out unused vacation days upon separation. What if 8 months after this policy change there are lay offs?

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by dm200 » Mon Apr 01, 2019 8:30 am

Jags4186 wrote:
Mon Apr 01, 2019 8:20 am
AndroAsc wrote:
Sat Mar 30, 2019 10:12 am
Recession is coming... if not now... soon, and I've been planning for this. Specifically looking at layoffs.
Now, I have the usual emergency fund. I'm now thinking whether or not keeping a stash of vacation days will help.
What do I mean? In some states and/or depending on company policy, unused vacation days will be paid out. So the idea is that if you maintain a near maximum vacation day throughout the year (this assumes your employer allows you to carry forward vacation from one year to another), depending on how much you have when you get laid off, it could be worth 1-5 weeks of income (depending on how much you can accumulate).
Now, if you have a high salary and low expenses, that could easily be another 3-6 mth of living expenses.
Unless there is a law in your state that says unused vacation must be paid out then I would not bank on this. Companies can change policy. Companies change policies for the negative when financials aren’t good. What if your company changes policy that vacation can only be accrued up to X days, use whatever excess you have or lose it on Y date. What if your company changes policy to simply not paying out unused vacation days upon separation. What if 8 months after this policy change there are lay offs?
I do think this plan would usually help - but whether you get paid for unused vacations days depends on both company policy and state law. I have always received pay for unused vacation. More employers are going to PTO (combined vacation and sick leave) - so such employers may not pay all (or any) of the PTO. My current employer had been paying fully for unused PTO, but the January 1 policy revision changed that to half hourly rate for unused PTO.

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Re: Keeping a stash of vacation days as unemployment "insurance"

Post by jhfenton » Mon Apr 01, 2019 8:32 am

AndroAsc wrote:
Sat Mar 30, 2019 10:12 am
Recession is coming... if not now... soon, and I've been planning for this. Specifically looking at layoffs.

Now, I have the usual emergency fund. I'm now thinking whether or not keeping a stash of vacation days will help.

What do I mean? In some states and/or depending on company policy, unused vacation days will be paid out. So the idea is that if you maintain a near maximum vacation day throughout the year (this assumes your employer allows you to carry forward vacation from one year to another), depending on how much you have when you get laid off, it could be worth 1-5 weeks of income (depending on how much you can accumulate).

Now, if you have a high salary and low expenses, that could easily be another 3-6 mth of living expenses.
1. We don't know that a recession is coming anytime soon.

2. I would love to bank vacation days, but my employer will not allow any carry over of PTO hours. Most years I end up taking off every Friday in November and December and every day between Christmas and New Year's Day in order to exhaust my PTO hours.

3. Unless my vacation days were protected by a collective bargaining agreement or state law, I would not count on them being there if I were laid off. That is exactly when they are most likely to be eliminated.

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