Is a Layoff in Your Future? 5 Steps to Take With Your Family

Gather the family around the campfire and prepare for the conversation of your life. Now is the time to let go of any family taboos around discussing money.  This is especially true if you have children living at home. You can adjust your talking points, depending on the ages of your children, but you need to be united on this.

I’ve been answering questions over at www.nerdwallet.com for the last three weeks. This post is from an article by me published in their Advisor Voices section last Friday.

Before we get to the 5 things, two suggestions for framing:

• Be truthful-mom or dad is going to lose her/his job and we have to prepare for that soon.
• Be reassuring – mom or dad will be getting a new job after that, and we need your help now to get there.

You could also set up the discussion and introduce some crucial concepts like this:

“In our family, we have needs and we have wants. Our needs include food for everyone (we won’t forget our pets!), a roof over our heads (explain the difference between rent and a mortgage to older kids, be more abstract with younger ones), paying for the heat, lights, phone service, child or after school care that allows parents to go to work outside the home, and transportation to get family members where they need to go. We will keep our health insurance so everyone can stay well and get their teeth cleaned.”

Wants will be different from family to family and be ready to give examples at the campfire. High-speed Internet may be a legitimate need for business purposes, but several ESPN channels are going to be in the want column, unless you’re a sportswriter. Adults and kids can make changes in different ways.

New family activity-making the dollar go further together.

As Benjamin Franklin might have said, the following three activities revolve around being healthy, wealthy and wise.  I’m adding two more intangibles: go actively towards the next destination, instead of away from what you’re doing now, and be sure to use your own roadmap.

 

Health: Know what you’re up against!  Is health insurance part of your severance agreement? Do you have severance? Tip: If your last day of work is early in the month, your group coverage usually extends through that month.  So a last day at work of May 1^st is better than April 30. Post-layoff choices could include COBRA, a group plan through your professional organization or union, a family policy from your state’s exchange (using the Affordable Care Act) or going without coverage. Going without health coverage could derail your family finances in a hurry if an emergency comes up. If a large layoff is rumored or several months out, immediately catch up on any work-related reimbursements for transportation, child care, parking or flexible spending accounts (FSA).

Tip: Make those routine appointments ASAP.

Wealth: Do you have at least nine months of income or expenses set aside? A year or even 15 months of expenses would be better, or a working spouse who can supply the income and benefits to cover you or your family as you move forward. List all loans, debts and upcoming fees and rank by amount and interest rates. Two schools of thought on retirement deferrals: Keep making the smallest contribution to get the company match—the thought being that it might be awhile before you can resume contributions; or cancel your salary deferral to boost your emergency fund or pay off debt. Paying off debt will need some serious family discussion. What makes you feel more secure—a larger rainy day fund or less debt?  Can you stop adding to any debts, and cut credit card use while you prepare? If so, move forward with that.

Tip: Automate all minimum payments so that your credit history is not harmed.

Wisdom: How well prepared are you to meet the intellectual and emotional challenges of being laid off and seeking new employment? Who will be on your kitchen cabinet, helping to advise you as you move forward? What about that LinkedIn profile? What about certifications, or continuing education? Can you use a tuition reimbursement benefit? Who will be part of your new work community? (Check out local co-working spaces for some ideas).

Tip: Create a family gratitude list, so you can keep in mind the non-material riches you already have.

Embracing the Hunt What are your strengths? Create a list of what your preferences are in a career, (often harder than the deal breakers) to leverage those in the next position. Do you have a side job that is begging to sit at the grown-ups table? A friend of mine is tired of teaching, but she is a talented quilt designer.  Perhaps that is her next career.

Tip: A good career counselor can save you lots of time.

Roadmap Draw your own! I cannot stress this enough. A map made for someone else is seductive.  But your brother-in-law’s map may not work for you.

As George Harrison sang, “If you don’t know where you are going, any road will get you there.”

Your next job has to come from what is best for you, so that when you are stuck at the side of the road, whether in Tacoma, Toronto, or Timbuktu, you have created a map to the best destination for you and your family.

Related Links

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Resist this Faux Fall Color: Pink!

A shopping  item from The Detroit Free Press ran in my local paper this weekend, touting the inevitable pinkwashing that goes on during October – Breast Cancer Awareness Month. As a survivor myself, I fully support awareness, mammograms and health insurance that covers annual exams for women. However, like a good annual physical, it pays to cover all the bases-including faux philanthropy by corporations.

The title was ‘pink’ products that really give back. It began with a brief note to check out any charity recipients of product sales on charitynavigator.com, then went on to highlight 5 products to that “caught the writer’s eye.”

I want to single out one of the suggestions in particular-for True Religion Halle Super Skinny Breast Cancer Awareness Jeans retailing for $198 a pair. Again, quoting from the “article”/marketing puff piece, “The company will donate 10 percent from the sale of each pair of these skinnys to Susan G Komen for the Cure, with a minimum donation of $35,000.” That means they are willing to give 10 percent of the proceeds from 1,767 pairs of jeans to Susan G Komen, a company still reeling from branding problems of its’ own. How many hours of sales is that?

$35,000 is a shockingly low number for a donation from a corporation with $467 million in sales last year (2012). In July 2013 True Religion was acquired by a hedge fund,  aka a ‘private equity fund’, called TowerBrook this year for $824 million. (The stock had traded under the symbol TRLG until the merger.)

A donation of .0042% of the sales price-824 million dollars! Very generous indeed, True Religion!

(As 82% of the funds at Susan G Komen go to the “cure”, the real number going to “support breast cancer” is $28,700.)

Note: To my knowledge, I have never owned any shares of TRLG in the past, as individual shares or in a mutual fund. I am not now invested in any private equity funds.

Related articles

• Pink envelopes Metropolitan Park during Susan G. Komen Race for the Cure Saturday (jacksonville.com)
• WTF Internet? A tweeting bra is not helping cure breast cancer (digitaltrends.com)
• The PinkSploitation of Breast Cancer Awareness Month (upperstclair.patch.com)
• True Religion Breast Cancer Awareness Jeans – The Halle in Pink Ribbon (denimblog.com)

 

Learning about personal finance can be “informal”

“Across our lifespan, humans spend more than 80% of their 16 waking hours in “informal” learning environments outside “formal” classroom walls.”

(University of Washington College of Ed. publication Research That Matters, Volume 10)

So why are some of us stuck in our learning patterns about money?  Or School’s Out Forever?  Apparently we have ample hours after our “formal education” is over to pick up new material, concepts and even practical things like improving your financial infrastructure.

Have you ever heard a friend or colleague say things like the following:

• Math and I don’t get along
• My wife/husband takes care of that
• The economy doesn’t affect me (yes, I heard that once)

My all time favorite is, “I don’t do live math”. (heard during a public radio pledge drive)

Perhaps some of this goes back to the way we all learned about math in school, whether we learned “good” or ‘bad” money lessons at home, or if our education has all come from ‘the school of bad experiences”. Granted, some of us had truly bad math instruction, and some of us just didn’t see the relevance to math, personal finance and economics at the time we first saw with the material. Some people learn about stocks at age 15, but it doesn’t mean that you can’t pick up new concepts at any age.

My reason for beginning my blog with this research is to give yourself permission to begin anew with your learning. You can also give yourself permission to approach your personal finances in a way that is different from “keeping up with the Joneses”, the way other members of your family learn, and the way you learned math from “Mrs./Mr. Smith” in high school. In other words, allow yourself to embrace new informal learning opportunities!

As you follow this blog, you will learn and even change your perceptions about personal finance for the better. I will help you understand that small, consistent, sustainable changes matter. You don’t have to hit a home run. You don’t need to have that ultimate, sexy cocktail party story about your fabulous investment that made you so rich. You do need to remember that “right-size” changes, are what are best for you.

When we learn new things, as youth or adults, remember this advice from UW Professor Walter Parker:

“We have to help [learners] develop the sense that, “If things are tough, it just means I am a novice, it doesn’t mean I don’t have the competency for this work.”