I promised on Thursday that I’d write a post about the financial side of my layoff. Let’s start with the fact that while I did propose that my boss eliminate my position last September, I did not engineer my layoff. I am not going to “retire” early. Nor am I using this as an opportunity to start writing/blogging full time.
Not that I couldn’t do those things. Well, I couldn’t retire early. No way do we have enough savings for that, but I could conceivably try to start writing/blogging full time. But I’m not going to.
Let’s start with the actual finances.
My company provides a pretty good severance package. I am the top tier, and will get 3 weeks of pay for every year at the organization. (This is capped at 12 years/36 weeks.) I have been there 8 years, so will get 24 weeks- almost 6 months –worth of severance pay. It will be paid out every 2 weeks over that 24 weeks, just as if it were a paycheck.
It will be larger than my current paycheck because benefits and retirement will not be coming out. In addition, my company will pay COBRA costs for myself and my dependents (ie C) for up to 12 months.
If I were just getting 24 weeks of severance, at my current take home amount, it would last us about 40 weeks, without making any changes to our budget (as long as no big expenses hit). I come to this figure because we currently put about 2/5 of my take home pay in the savings account every month.
Given that my biweekly severance amounts will be larger than my paychecks and that we will cut back on our expenses, we could almost certainly make a year without either C or I working, without much hardship.
And I haven’t even mentioned the 6 weeks’ worth of PTO I have saved up that will be paid out in a lump sum with my final paycheck.
To add to what I am getting from my company, in Washington state, severance does not affect unemployment. I will almost certainly be able to collect the maximum benefit of $604/week, adding another $1,200 every two weeks (or slightly more than 50% of my current take home pay).
My calculations say that between severance, vacation payout, and unemployment, we could live on our current budget for 97 weeks, with the caveat that C would have to take out student loans for school. And that’s without cutting anything from the budget or even putting my undergrad student loans in forbearance.
Financially, we’re good. I do not need to jump at the first job that comes my way; I can wait for the right opportunity, one that is hopefully also a step up. But I do plan on getting another job.
Why? I am currently the sole earner for our family. We are in the adoption process. I LIKE the security that comes from a paycheck. Benefits, like medical, dental, and retirement match matter to me. We’re not saving for retirement on the above plan, and it’s good for less than 2 years. That’s not good enough for me.
In addition, I also like going into work. I like the interaction with people and enjoy the challenges. I am not, by nature, an entrepreneurial person. I know that may seem rare for a personal finance blogger, but it is who I am.
My blogs are not intended to be a source of any income for us, let alone the primary source of income.
If I were to write the next Harry Potter books, perhaps I would be willing to quit working to spend my time writing fiction and managing my intellectual property, but I’m honest enough with myself to not think of that as a reasonable likelihood.
What this means is that I firmly believe we will come out of my layoff significantly financially ahead. Exactly how much ahead will depend on how quickly I get a new position and at what pay rate.
Our plans for the extra money are somewhat up in the air. We will certainly pay off my undergraduate student loans first, leaving us with only mortgage debt. We will be able to replace all of our windows and get the whole house plumbing we need done without a concern.
After that, options include doing either minor or major renovations on our current home, or saving the money to be a down payment on a larger house. It could pay for a few years of private school for a child. Or, it could all go into retirement savings.
One thing we do want to do, is, once the adoption is finalized, plan a “dream” family vacation, with input from the child (especially if we adopt an older child).
A dream vacation could take us back to Ireland…
So that’s where we are. We’re not stressed about my impending joblessness. In fact, I’m a little excited about the opportunities.
