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Preparing To Lose a Job

preparing for a career changeLosing a job has to be one of the most emotionally and financially difficult challenges someone can experience. I wish no one ever had to have such an upheaval, but no job is ever 100% safe. Technically, any one of us could lose a job. However, there are things you can do to prepare and make life easier if you find yourself on the other side of a pink slip.

We Might Lose a Job Soon

Long time readers might remember that Jim got a big promotion at the beginning of this school year. After completing a master’s degree in administration, he got a job implementing a new state law regarding teacher evaluations. The state decided that every teacher had to have a formal review to keep schools moving forward, however they gave few instructions on how to determine what constituted a good report. Jim’s position was created to figure it out and start the evaluations next year. Well, we found out this week that the state has decided to scrap most of the bill because it seems too hard and districts aren’t ready.

So, what this means is that most of what Jim has been doing since August is now moot. It may or may not be relevant at some point or the state may change it altogether. When his job contract ends in June, it’s pretty doubtful that his position will still exist.

Now, he has made some amazing connections during this past year. I believe most of the higher ups in the district and state that he has been working with really like him and think he has done a great job. It’s very possible that his experience could translate into another administrative job.

Worst cast scenario would be that he goes back into the classroom. He was pretty much guaranteed a teaching slot if this position was eliminated.  It’s sad to say that’s the worst possible outcome because he does enjoy teaching, but financially, that would be a huge cut in salary from what he is making now.

Are We Losing Sleep?

Jim and I are both disappointed that he might lose his job, but it’s more from the point of view that his career path might have to take a detour. Mentally, to go backwards on the pay and responsibility scale is tough. However, from a financial standpoint, we aren’t worried at all. If you work in a position that could be eliminated, there are several things you need to do to make sure you won’t lose sleep if the job disappears.

What To Do When Preparing For a Job Loss

-Keep An Emergency Fund. Make sure you have enough money in the bank so you won’t have to go into debt if you lose your job. I don’t have a magic number, but if you track your expenses and have a potential bare bones budget, you should know how much it would take to cover a month of expenses. Save up enough month’s worth to let you sleep at night.

-ALWAYS Spend Less Than You Earn. The only way to build up an emergency fund is to spend less than you earn. If cutting expenses doesn’t get you there, then you need to find a way to earn more money. When you get a raise, don’t up your lifestyle. It’s OK to buy organic instead of eating ramen, but don’t go crazy. Want to know how much of Jim’s raise we’ve spent this year? Zip, zero, none.

What we have done is increased our emergency fund, invested in 401k’s, HSA’s, IRA’s and ETF’s, and kept finding ways to save money. That’s why I’m not concerned if we have to take a pay cut or even pay loss for a while. I’d hate to have to slow down our current investment goals, but I know we don’t need Jim’s salary to eat or keep the house warm.

In fact, we barely spend any of his salary at all. I remember seeing a talk show a few years ago that suggested trying to live off one income to see what a job loss would be like. At the time, I though it was impossible because we had tons of debt and weren’t living within our means. Now, here we are, spending way less, saving way more, and being much happier. If we can do it, anyone can.

-Make Connections and Earn a Good Reputation. Jim has met a ton of people during the past few months. One of the things he also does is peer coaching where he helps new or struggling teachers. Many of the strugglers (surprise, surprise) have a terrible attitude. What would your impression be if you met someone for the first time and their first words are, “It f*%king sucks that I have to teach all day in this craphole classroom with no windows.”  Would you ever hire or recommend that person if you ended up in a position to do so?

You never know who might be listening. When Jim has been asked to help districts he isn’t assigned to or go to a late meeting, he has done it with smiles. Instead of complaining in public about the state’s recent 180, he has been telling people that this year was a good experience to see what would need to be done in the future. If he went around being sarcastic and doing the woe is me bit, I don’t think that would help his chances at all.

-Look At The Positives. While stressful, losing a job can be a good time to evaluate your goals and see if you are on the right path. If you practice all the above steps, you should be in a position to think about where you want to go with your career, and you have choices. Mom and Dad Money had a great post about that recently. When you live paycheck to paycheck, choices go down away and you have to take the first opportunity that comes along, even if it might be a job that makes you get out of bed dreading the day.

I’m not sure what the future will bring. We probably won’t know anything concrete for a few months. Uncertainty is never fun, but I feel like we are in a better position that we’ve ever been, and I am extremely thankful this didn’t happen a few years ago when we were in terrible financial shape. As it stands, I’d say we’re pretty lucky this time!

Are you prepared for a job loss? Do you spend or save raises?

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

41 comments

  1. Sorry to hear that about Jim, but it seems like you guys are very well-prepared for the worst case scenario. I save most of my raises by always upping my 401K contributions until I’m maxing that out.

  2. Sorry to hear about that guys! I know exactly how you feel about job displacement and the screwy school system – my wife is a teacher and has been displaced several times to the point where we wondered if she’d have a job to come back to. If that were to unfortunately happen, I wonder if you guys would be willing to strike out on your own with going full time on the house rental gig?

    • Right now, the rental property would not be a full time pursuit, but Jim has some other skills that we could potentially turn into a business (landscaping or mountain bike guiding come to mind) I also think there is a good chance he could teach at his old college. He has several connection there, or he could take a job in another district, although I really don’t want to move out of our town, and it would change my job prospects as well. We’ll just ride it out and see how it plays. I bet something will come up, and if not, we’ll deal with it then. I am so glad I’m not in education!

  3. That sucks for Jim, since it sounded like he was really enjoying his position. We’ve always tried to live on just my salary for the day-to-day stuff, and these days we’re living on even less than that as my salary has grown. So that means that Mr PoP’s basically all goes into savings somehow, which is pretty sweet!

    • Your balance sheet certainly reflects that. I only wish we’d done that from the beginning. We could probably be retired now!

  4. Sorry to hear about Jim and your family’s situation. It sounds like it’s a challenging job and it’s too bad the bill isn’t being implemented as planned. I do a lot with Obamacare but haven’t really thought about the job loss aspect (Obamacare is still under 50% of my job responsibilities, but still a good portion). Emergency funds are so important in these situations, as you referenced. It’s something my wife and I have actively been trying to increase.

    • I do wonder what will happen if the other party takes over during the next election cycle and throws Obamacare out. I guess any job related to what the government decided today is never really safe.

  5. Sorry to hear about the potential job loss, but it definitely looks like you’re taking it in strides and are well prepared for that outcome. I’ve lost my job in the past and it hurt big time, but we were living foolishly and know we’d be much better prepared today if that were to happen – which I guess for us would mean just getting new clients.

    • I’m not happy about the situation at all, but one positive is that it is a good exercise to see if we are prepared. I think we’d be in good shape even if he lost his job completely. Going back to his old salary would not impact us at all because that is what we’ve lived on for a long time.

  6. I agree that job security is not guaranteed. That’s why a person should always have a backup plan in case things go south. Sounds like you have that if Jim loses his job. He can always go back into the classroom. That is a positive.

    • He is actually an awesome teacher. It’s a shame they don’t get paid more, but I’m sure I don’t have to tell you that.

  7. Ironically, I’ve got a similar post coming out on Frugal Rules on Thursday! So sorry to hear about Jim’s possible job loss, but thankfully, you guys are super-prepared. This could open up a whole new fun line of opportunities for you guys!! And love what you said about keeping a good reputation and making connections. IMHO, those two things are SO important when it comes to a job hunt. Best of luck to you guys as Jim figures out what he wants to do next.

    • Thanks Laurie. We really are in such a different place now that it would take lots to derail us. A step back in pay just isn’t going to do it. Looking forward to Thursday.

  8. Sorry to hear about the change in direction, but it sounds like you guys are as prepared as possible AND looking at it as positively as possible. The reality is that because you’ve done such a good job preparing for the unknown, this kind of thing is frustrating but will likely end up being just a minor bump in the road, which is truly inspirational.

    • Your story was certainly that. I am pretty sure we’ll be just fine, and I’m so glad this wasn’t a few years ago.

  9. Awe sorry to hear that Jim may lose his job. 🙁 That’s great you made the decision to live like he was still on his teaching salary. I always warn people who want to leap into freelancing that they should try living off half their income. Of course most don’t listen and find themselves in trouble. It’s not to be a downer, but it just prepares you more. I WAS in a better position to lose my main client up until this week but I took a huge hit with my taxes so that means having to really dig deep with trying to save again. I’d rather do that then not be prepared for anything. I’ll keep my fingers crossed everything turns out OK!

    • I am so sorry about those taxes. I have been there before. Seems like all is peachy, then you have to pay lots more than you think. I’m not sure why it’s so hard to know that before hand, but I always seem to be surprised, either with more or less, but almost never what I expected.

  10. Sorry to hear that Jim’s career is taking a detour. Glad that you guys are prepared for it though. It definitely would be tough if I lose my job as I’m the primary breadwinner but we do have an emergency fund. I also try to increase my savings contribution whenever I get a raise so I don’t actually see it and spend it.

    • I think you and Jim are in similar situations in that he will probably stay in his current district, even with a pay cut because of the retirement benefits. I do think he will get another admin job. It just might not happen next year.

  11. Yikes, at least you have some time to prepare for the possible job loss. I might be just a tad upset of being offered a position that they then decided not to keep – but thus is the job market, job security is really non-existent. Having a good network of connections will hopefully help him (and your family as a whole) land on your feet and hit the ground running with a new position quickly!

    • We knew this was a possibility. He could have stayed in the classroom probably forever without the worry of losing a job or move up in the pay and responsibility scale with added uncertainty. I think it was the right decision and a year of administrative experience regardless of where he ends up next year.

  12. I’m so sorry to hear this, Kim =) Still, it’s awesome that you guys are somewhat prepared and will be okay. I’m sure that everything will work out!!!

    • I’m pretty sure it will. I think this year was a good learning experience, even if most of the work is probably not going to come to fruition. State government is about as bad as federal government for changing things overnight.

  13. I always try to save and make as many connections as possible. I also try to make sure that I have some sort of backup plan. I could fall back on my online work while I look for another position.

  14. That is the risk of contract work, I would be more worried about not having anything to do than the money part. I fill up my time pretty well with anything, and some activities even end up generating money but losing your job when you are used to working with a schedule, some rules.. can be really tough to bounce back. Thankfully you have a few months ahead to prepare for the next move.

    • The sad thing is that he will have to finish his contract and continue as he has been, even though it will all be pretty much for nothing unless they change the law again. I guess he can continue to network and make connections for down the road.

  15. I’m sorry to hear about this, Kim. I know both you and Jim were really excited for this opportunity. But it sounds like he still made a huge impact and I agree wholeheartedly his hard work and positive attitude will be remembered and land him another great job. My husband lost his job during the Great Recession and while it was hard on more of an emotional sense, we didn’t worry financially because we have always planned for emergencies like these. This is just the smallest of speed bumps for you and your family. Thankfully, Jim knows know so he can continue to network and be in a position to have something lined up by June.

    • Thanks, Shannon. I really think at some point, his dream job will open up, and he’ll get to be principal or something similar. Let’s hope it’s sooner rather than later, but if not, we luckily can afford to be patient.

  16. MomofTwoPreciousGirls

    This happened to me two years ago. I have been in my industry for 18 years, working 11 for one company and 7 for my current. I had finally gotten to the level I wanted to be at and less than a year later was displaced. It was emotionally devastating…financially not AS bad but not perfect. I did get severence and kept my insurance for 6 months but I could not find a similar level position. I ended up taking two steps down in career level and not only a 25k/ year cut, I’m making less than what I made when I started with company 7 years ago. The trade off is I do not have to battle ATL traffic everyday and I work five minutes from home and the kids’ schools. That has been priceless this year with the transition to kindergarten of my oldest who has ended being diagnosed with ADHD. When she or the school needs me I can be there quickly and easily.
    Doesn’t change the emotions of being built up, just to be torn down! At least he has some kind of heads up and can start the networking/prospecting process now! Good Luck!

    • Thanks so much. Luckily for us, this is more of a mental thing at this point. While nothing is ever certain, my jobs seem to be secure for the moment and we would be OK if he had to take a pay cut. It sound like your situation is ideal, even if the pay is not awesome. Sometimes, other perks outweigh money.

  17. Oh bummer. Whatever happens you sound well prepared and you’ll get through. Our recent job loss was a real surprise but we’re coping okay. Neither of us really get raises unfortunately.

    • We kind of knew it might not be the most long term job when he took the position, so we have been very careful with our money this year. That would be sad to never get a raise!

  18. Sorry to hear about Jim’s situation, however, it could be for the best. I quit my full-time job a little over a year ago and it is one of the best things that ever happened to me. I love what I do now and I wouldn’t trade it for anything in the world!

    • I think he’d always want to stay in education, but this could lead to an even better job, if not now, then in the future.

  19. I don’t know if you can ever be “prepared” to lose your job but thanks to my emergency fund I’d get by for some time I think. Equally, I’m always trying to keep my expenses low and in the case of job loss (as has happened to me in the past) I have been able to rapidly reduce my monthly expenses by minimizing my regular financial obligations. Of course, paying off debt is one of the best of these.

    As for the raises (the few I’ve had!) – I’m on a big-time saving spree at the moment so having had a surprise pay raise before Christmas it’s come in very handy at all. I’ve been able to save more than my rather ambitious plan because the pay raise has added straight on the top of my plan each month. There’s also another chance of a pay raise at the end of March so I’m keeping my fingers crossed for more good news 😉

  20. Such a great point about making connections along the way. This is something that took me awhile to understand just how important it is, and now I use LinkedIn a ton as it is the best way for me to connect in the virtual business world. Sorry to hear about the possible hit in income but it sounds like you guys have a great plan in place.

  21. I am sorry to hear about your husband potentially losing his job; it must be frustrating to work so hard on something that isn’t implemented.

    My fiance works in a trade field, so when the project is over, so is his employment. Building a high rise or a department store is a project that only lasts for a couple of years from start to finish (maximum), so we’ve had our fair share of lay offs. Luckily, he found a company that keeps him busy even in between projects, which is great for us, but those years that he didn’t have stable employment for years on end sure taught us to prepare for tough times. I couldn’t agree more with your points!

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