unemployed and freaked

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boglingforspares
Posts: 1
Joined: Mon Sep 28, 2020 7:25 pm

unemployed and freaked

Post by boglingforspares »

hi bogleheads,

long time lurker. first time poster. i need some help from y'all, and peer pressure to break a few bad habits.

i'm a 35 yr old, and i've been unemployed for the last six months. it's starting to wear on me. i am grateful to have picked up a few freelance gigs (i'm in the advertising world) but i still feel like i'm a few months away from securing the right long-term role for myself.

here's how my investment strat breaks down.

i've got 68% of my overall wealth in my retirement/brokerage, and i did some reading on the swensen method so i'm invested across those respective funds (VTSAX, VTMGX, VEMAX, VAIPX, VSIGX, VGSLX). some play money in M1 <1% of wealth. with my emergency fund, i have ~$21k in ally in a HYSA with the interest rate dropping fast.

i'm on the hook for healthcare for my SO and 2-year old, approx ~$2k/month. we're in a large metro and pay approx $3k/month for rent (i pay the entirety). with utilities i'm spending ~$6k across it all.

i'm also a silly, silly person and have 26% of my wealth in my Chase checking account earning literally nothing. i've been a rational boglehead for a few years now, but there's something i find comforting keeping my checking account above $XX amount, and that number keeps rising over the years. it's stupid.

my questions to the board:

- how should i be thinking about my emergency fund with interest rates dropping? i haven't tapped into it despite my employment status.

- i want to stay relatively liquid as my goal is to purchase a home in the next three years, with the intention to pay >20% on down payment. given our city, this would basically require a lot of my liquid capital. what should i do with my inordinately large checking account and still keep things liquid for a home buy in a bit? i think the answer is money market.

thank you for your patience in digesting this ramble. your help is appreciated.
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WoodSpinner
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Joined: Mon Feb 27, 2017 1:15 pm

Re: unemployed and freaked

Post by WoodSpinner »

OP,

My suggestion is that you focus on your job hunt — this is probably the most important and best return on your efforts.

Interest rates are very low at this point. Given your short timeframe you could shift to a HYSA or even a MYGA. Realistically it won’t move the needle much.

Best of luck to you!

WoodSpinner
Lee_WSP
Posts: 3295
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: unemployed and freaked

Post by Lee_WSP »

I wouldn't change anything in your situation until I find a new job.
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Nate79
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Location: Delaware

Re: unemployed and freaked

Post by Nate79 »

You asked all the wrong questions.
JBTX
Posts: 6994
Joined: Wed Jul 26, 2017 12:46 pm

Re: unemployed and freaked

Post by JBTX »

boglingforspares wrote: Mon Sep 28, 2020 8:01 pm hi bogleheads,

long time lurker. first time poster. i need some help from y'all, and peer pressure to break a few bad habits.

i'm a 35 yr old, and i've been unemployed for the last six months. it's starting to wear on me. i am grateful to have picked up a few freelance gigs (i'm in the advertising world) but i still feel like i'm a few months away from securing the right long-term role for myself.

here's how my investment strat breaks down.

i've got 68% of my overall wealth in my retirement/brokerage, and i did some reading on the swensen method so i'm invested across those respective funds (VTSAX, VTMGX, VEMAX, VAIPX, VSIGX, VGSLX). some play money in M1 <1% of wealth. with my emergency fund, i have ~$21k in ally in a HYSA with the interest rate dropping fast.

i'm on the hook for healthcare for my SO and 2-year old, approx ~$2k/month. we're in a large metro and pay approx $3k/month for rent (i pay the entirety). with utilities i'm spending ~$6k across it all.

i'm also a silly, silly person and have 26% of my wealth in my Chase checking account earning literally nothing. i've been a rational boglehead for a few years now, but there's something i find comforting keeping my checking account above $XX amount, and that number keeps rising over the years. it's stupid.

my questions to the board:

- how should i be thinking about my emergency fund with interest rates dropping? i haven't tapped into it despite my employment status.

- i want to stay relatively liquid as my goal is to purchase a home in the next three years, with the intention to pay >20% on down payment. given our city, this would basically require a lot of my liquid capital. what should i do with my inordinately large checking account and still keep things liquid for a home buy in a bit? i think the answer is money market.

thank you for your patience in digesting this ramble. your help is appreciated.
Try to stay positive. It is difficult. I was out of work for about 5 months at a fairly young age and at times I felt like I'd never get a job, but it worked out. Look for contract work, side projects, and invest in yourself in terms of new skill sets while you have downtime.

As 26%, not knowing your net worth it is hard to gauge. 26% of $100k isn't at all unreasonable. 26% of $1 million is excessive. I think it is reasonable to stay liquid during this transition phase and also your desire to buy a house down the road. I'd just move a chunk of it to an online savings acount where you at least get a little bit of interest. You could also choose to start building a stake in ibonds. You won't have access to your current year contribution, for 12 months, but after that you can always pull it out if you need it. There's a pretty inconsequential penalty if you pull it out before 5 years.
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market timer
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Re: unemployed and freaked

Post by market timer »

boglingforspares wrote: Mon Sep 28, 2020 8:01 pm i'm on the hook for healthcare for my SO and 2-year old, approx ~$2k/month. we're in a large metro and pay approx $3k/month for rent (i pay the entirety). with utilities i'm spending ~$6k across it all.
If I were in your position, I'd be looking for ways to reduce those costs from $6K/month to $1500/month.
cogito
Posts: 164
Joined: Fri Nov 30, 2018 2:12 am

Re: unemployed and freaked

Post by cogito »

Just a point of encouragement - for someone on the younger side with mouths to feed, you should not beat yourself up for keeping a large amount of cash on hand. On the contrary, you should be comforted that you have some financial cushion, which provides time to figure things out.
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Sandtrap
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Location: Hawaii No Ka Oi , N. Arizona

Re: unemployed and freaked

Post by Sandtrap »

1. Seek employment, reliable income stream. If not the dream job, then any job.
2. Debt and expense reduction, drastically and immediate.

Turn emotion and "freaked" into action.
Act. Act. Act.

j :happy
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CyclingDuo
Posts: 3685
Joined: Fri Jan 06, 2017 9:07 am

Re: unemployed and freaked

Post by CyclingDuo »

boglingforspares wrote: Mon Sep 28, 2020 8:01 pm hi bogleheads,

long time lurker. first time poster. i need some help from y'all, and peer pressure to break a few bad habits.

i'm a 35 yr old, and i've been unemployed for the last six months. it's starting to wear on me. i am grateful to have picked up a few freelance gigs (i'm in the advertising world) but i still feel like i'm a few months away from securing the right long-term role for myself.

here's how my investment strat breaks down.

i've got 68% of my overall wealth in my retirement/brokerage, and i did some reading on the swensen method so i'm invested across those respective funds (VTSAX, VTMGX, VEMAX, VAIPX, VSIGX, VGSLX). some play money in M1 <1% of wealth. with my emergency fund, i have ~$21k in ally in a HYSA with the interest rate dropping fast.

i'm on the hook for healthcare for my SO and 2-year old, approx ~$2k/month. we're in a large metro and pay approx $3k/month for rent (i pay the entirety). with utilities i'm spending ~$6k across it all.

i'm also a silly, silly person and have 26% of my wealth in my Chase checking account earning literally nothing. i've been a rational boglehead for a few years now, but there's something i find comforting keeping my checking account above $XX amount, and that number keeps rising over the years. it's stupid.

my questions to the board:

- how should i be thinking about my emergency fund with interest rates dropping? i haven't tapped into it despite my employment status.

- i want to stay relatively liquid as my goal is to purchase a home in the next three years, with the intention to pay >20% on down payment. given our city, this would basically require a lot of my liquid capital. what should i do with my inordinately large checking account and still keep things liquid for a home buy in a bit? i think the answer is money market.

thank you for your patience in digesting this ramble. your help is appreciated.
You need to find an income stream for you from work. Is your SO working and bringing in an income?

During recessions and coming out of one, a retooling and adjusting to what may be your new reality regarding the income stream you are able to produce is more important right now than all the questions you have. This may alter or delay some of your plans - such as a home purchase - depending on how quickly you can get replacement income and what level it is compared to what it was prior to your layoff. As mentioned above, without replacement income - what are your plans to downsize the expenses from $6K a month? Those are the questions you should be asking now...

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
Jack FFR1846
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Re: unemployed and freaked

Post by Jack FFR1846 »

You didn't say if your SO is working or not. I believe this is the most important thing in your life right now. Assuming you are pulling in unemployment insurance (I don't think you said if you are or not), your SO should be working to bring some cash into the household. As I've said in a number of other threads, Amazon, Wal Mart, Lowes, Home Depot are begging for workers. While many would not consider these to be career jobs, they can help to keep the household going while you look for a job in your career line.

Where to keep your money? Who cares? It doesn't matter. Bringing money into the household is far more important.
Bogle: Smart Beta is stupid
tashnewbie
Posts: 828
Joined: Thu Apr 23, 2020 12:44 pm

Re: unemployed and freaked

Post by tashnewbie »

Where have you been getting the $$$ to pay your expenses for the past 6 months ($36k)? A combination of unemployment benefits and money in the Chase account?

I'd leave the money in your Chase account alone until you find long-term employment. After that you can reassess your situation and determine if you should move that money somewhere else.

Good luck finding a new job!
barnaclebob
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Joined: Thu Aug 09, 2012 10:54 am

Re: unemployed and freaked

Post by barnaclebob »

market timer wrote: Mon Sep 28, 2020 10:49 pm
boglingforspares wrote: Mon Sep 28, 2020 8:01 pm i'm on the hook for healthcare for my SO and 2-year old, approx ~$2k/month. we're in a large metro and pay approx $3k/month for rent (i pay the entirety). with utilities i'm spending ~$6k across it all.
If I were in your position, I'd be looking for ways to reduce those costs from $6K/month to $1500/month.
So get rid of health care, cut rent by 66% and cut other expenses in half? How do you propose someone eliminates 75% of their expenses?
terran
Posts: 1710
Joined: Sat Jan 10, 2015 10:50 pm

Re: unemployed and freaked

Post by terran »

Have you looked at whether you can reduce your $2k/month health insurance bill given your current income? Maybe you'd be eligible for ACA subsidies? Even without subsidies $2k seems kind of high for a young couple and child on a marketplace plan, so I assume this is COBRA insurance from your old job? The Kaufman Foundation calculator estimates a national average of $1157 for two 35 year old adults and a 2 year old with an income too high for subsidies. That would go down if your MAGI was under 400% of the federal poverty level at $85,320 for a family of 3. You'd want to examine coverage vs needs, of course, but it could extend your runway somewhat.
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lthenderson
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Re: unemployed and freaked

Post by lthenderson »

Thinking of your emergency fund as a percentage of your net worth doesn't mean much. 30 years ago my emergency fund was more than my net worth. These days, it is about the same amount adjusted for inflation but comprises less than 1% of my net worth. In both cases, it was adequate for my expense levels at the time and took into account short term goals like house down payments.
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JoeRetire
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Re: unemployed and freaked

Post by JoeRetire »

boglingforspares wrote: Mon Sep 28, 2020 8:01 pmhow should i be thinking about my emergency fund with interest rates dropping? i haven't tapped into it despite my employment status.
Don't worry about interest rates when it comes to your emergency fund. That money is there to be used when you need it - not to gain interest.
i want to stay relatively liquid as my goal is to purchase a home in the next three years, with the intention to pay >20% on down payment. given our city, this would basically require a lot of my liquid capital. what should i do with my inordinately large checking account and still keep things liquid for a home buy in a bit? i think the answer is money market.
Yup. Don't do anything fancy with money you expect to need in the next three years.

When you go to make your down payment, consider paying just 20% rather than depleting all of your capital. In particular, don't deplete your emergency fund. Purchasing a home is not an emergency.

On the job front, at some point it becomes more advantageous to get on a payroll, than to wait for the perfect job to come along. It's not clear from your post how close you are to that point. If you truly are "unemployed and freaked", you may already have reached that point.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
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market timer
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Re: unemployed and freaked

Post by market timer »

barnaclebob wrote: Tue Sep 29, 2020 9:00 am
market timer wrote: Mon Sep 28, 2020 10:49 pm
boglingforspares wrote: Mon Sep 28, 2020 8:01 pm i'm on the hook for healthcare for my SO and 2-year old, approx ~$2k/month. we're in a large metro and pay approx $3k/month for rent (i pay the entirety). with utilities i'm spending ~$6k across it all.
If I were in your position, I'd be looking for ways to reduce those costs from $6K/month to $1500/month.
So get rid of health care, cut rent by 66% and cut other expenses in half? How do you propose someone eliminates 75% of their expenses?
Relocation + Obamacare
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