At 8am yesterday, that dreaded 15-minute "Touch Base" hit my calendar. The one with my manager, and their manager. I spent my two-hour warning pulling all the important stuff "just in case." No one was surprised when my system access was turned off shortly after the meeting's conclusion (because of that pesky risk of corporate sabotage).
What is a layoff? It's simply a reduction in workforce. It can be temporary or permanent. Often, it's driven by restructuring or financial difficulties, but there are all sorts of reasons. The key is it's unrelated to employee performance.
Feelings
Seeing that meeting pop up on my calendar was simultaneously the best and worst thing. It wasn't a shock, as there were multiple waves of layoffs (over six?) that happened before mine. People I supported in my role were also laid off, making my role redundant.
As a full-time remote associate earning six figures, the job was cush and gave me a huge amount of work-life balance. But my favorite pieces of my role had been gradually stripped away over the last three years, and I no longer felt fulfilled in the work itself. I had been wanting to find a new role for a while (and I'd spoken to my manager about it), but thanks to the hurricane, I felt "stuck." What if we needed financing to rebuild? Banks want to see steady employment. And starting a new job in the midst of a whole-house reconstruction? Sounded like a recipe for disaster, especially if the role wasn't work-from-home.
Timing-wise, the layoff is perfect---the house is mostly put back together, so it's no longer a reason to stay. I'm burnt out after seven months as laborer and general contractor and worker bee, and I needed a break anyway. Ultimately, the layoff was the push I needed; and I'm excited for down time.
But it's still a change, and change can be scary.
Step 0: The Alert & the Clean-up
With my two hours before the meeting, I pulled:
- My most recent paystub
- Vacation/PTO balance
- 401k statement and account information, including the phone number to call
- HSA account information
- My personal cash flow spreadsheet, which is now on Google sheets... (oops? No worries, it needed immediate updating anyway)
- I basically wanted to make sure I had everything I needed in the event of my system access being shut off---which it was
Immediately after the meeting, I:
- Called the 401(k) provider, asked how to rollover, and supplied the necessary information to make sure we can execute immediately after I'm formally terminated
- Forwarded to colleagues any work that needed to be taken over
- Changed permissions on sheets and sites I was managing
- Deleted all files and emails that were no longer needed
And my access was shut off a couple hours later. There was nothing to teach or explain, as I set up a procedures library ages ago and was extremely giving with knowledge sharing throughout my tenure.
And that was that.
Step 1: Getting the Financial Picture Together
Severance, a.k.a. "My Golden Parachute"
They basically offered six months' salary to not work, which feels like a bank robbery. Since I've been maxing out my 401k, my HSA, and my Roth IRA, the severance money is actually able to stretch further, even without a reduction in my normal spending. That's a hidden superpower of saving and minding the gap---when the income stops, there's less to replace.
Potential areas for negotiation:
- Staying on as a non-working employee, potentially by using PTO
- Salary, bonuses, and other benefits like PTO/vacation payout, retirement, healthcare, etc. (Confirm how and when it will be paid out.)
- If the layoff occurs near year-end, consider negotiating for payout in the following tax year.
- Any non-compete or confidentiality agreements, especially if they'll impact the next job
- Keeping technology (like a laptop, phone, etc.)
Large corporations may have structures in place with no room for negotiation, but it never hurts to ask.
401(k)
Through July, I'd invested about $900 per paycheck, aiming to max out for the year---that means $7,500 to go. Being on "garden leave" (a non-working associate still on payroll) for two months, I'm still able to contribute, so I upped the dollars to the max allowed per paycheck. This was made possible entirely by a six-figure salary.
I was on the fence about whether to increase or cease contributions. If ever there was a time to stockpile cash, an impending layoff would be it. However, maxing out the 401(k) will reduce our annual tax burden, and I can still withdraw the money (with a 10% penalty) if it actually comes to that. Ultimately, I figured that between our emergency fund, the severance, and the potential to find a new job before our cash reserves ran out, plus a lower marginal tax bracket in 2026 (that offsets the penalty anyway) if I still haven't found a new job, it was worth the risk.
As soon as I'm formally terminated, I will roll over the account to my Fidelity IRA. This is a no brainer, in part because my account is accessed through my employer login (which was shut off), and it's hard to do anything outside the employer's network. Additionally, the account fees (no longer covered by the employer) aren't worth it for a simple S&P 500 fund. I have no interest leaving it behind.
I do lament that I had finally, finally grown the balance, finally "felt like an adult" and a respectable money blogger when I looked at the account, and now I'll be starting over again. Alas. I know it's silly, I know I still have the money, but feelings.
HSA
My HSA allowed Trustee-to-Trustee transfers, whether terminated or not. I transferred the entire amount immediately to my HSA at Fidelity, then invested it with the rest. I will do a second transfer for the residual at the end of the two months. My Fidelity HSA is at $55k now, which feels like a very safe "insurance" should something happen. That said, market volatility is a thing.
Health Insurance
My fabulous friend Jen signed up for Liberty HealthShare when she was laid off. After researching, I found that was the right choice for me, too. I'm fortunate to be young and healthy, and the HealthShare probably will cover anything major that comes up. (If not, I have the HSA.) I signed up immediately, despite still being insured during my garden leave. I felt better knowing that piece of the puzzle was settled.
Side vent: I'm gonna be so for real right now---our health insurance was crap. It was cheaper to pay cash prices at the doctor, every. Single. TIME. I thought insurance companies were supposed to negotiate deals?! Meanwhile, I'm paying a monthly premium to negotiate costs myself and just pay at the doctor with cash that doesn't count toward annual spend because I'm not paying the inflated price?! I can't. I just cannot. I CANNOT. Good riddance to bad rubbish! *Insert plug for universal healthcare, which should be a basic human right.* #DoBetterUSA
I did waffle on this one---because a new job would likely offer health insurance---but I didn't know how quickly I would find something new. I did know COBRA was expensive, but also generally worthless for me, since it was an extension of the current plan. And due to our high income, the ACA health exchange wasn't a good option. If insurance is offered through whatever new job I find, I will carefully compare any available plans with the HealthShare before signing up.
Now is the time to use up any of the benefits left---including vision and dental, if you have those. I went without, as the cash price (surprise, surprise) is cheaper. Also, it might be time to review life insurance, accident insurance, etc.
Monthly Spend
My "Expenses" spreadsheet has a list of all the usual items in our monthly household spend. I made sure everything was up-to-date (and added the HealthShare costs). Then I adjusted the cash flow spreadsheet, also adding severance and removing the monthly income from my employer. I expanded it through the end of next year, for peace of mind, so I could make sure we were covered.
Cash Reserves
We've been hustling to repair the house after the flood, and it's really expensive despite doing so much work myself. We already put deposits down for the last few things, and that money is owed. Cash got low, not in the good way...
It is what it is, we are where we are.
Step 2: Evaluating Additional Income & Cash
My husband is still working; and he's making adjustments for his spending, too. We were a 60/40 split on household expenses with separate spending accounts, but that percentage will likely change with whatever new job I find. We're keeping same split for my garden leave, though. #partnership
Investments: Roth IRA contributions (always tax-free), taxable investments (a capital gains tax), a traditional IRA (with tax and penalty). Anything can be tapped if needed.
House: If things were to become mission-critical, we can potentially rent out the house while we rent something much cheaper, and we'd actually make money from it. It's not ideal, but it is what it is.
Step 3: Cancelled!
Lifestyle inflation is real, and it often goes unnoticed. An extra $20 here, an extra $50 there, was hardly felt on our large income. But now, we've lost 60% of the household income. And on the one hand, severance covers it for six+ months without changes; on the other, the job market is... well, something else. We'd much rather cut now when it's easier, than cut later when it's necessary.
- I had two gym memberships, an expensive one I used ($149) and a cheap one I didn't ($23). I cancelled the cheap one, but I held on to the one I used. If we legitimately need to, we can cut it, but keeping up with physical health is a high priority.
- Monthly pedicure ($40) and massage ($90). Self-care is important, but right now, we need to tighten up on the luxuries.
- Starbucks ($50---yes, it's a monthly line item) is on temporary hiatus. I do still have some money on my gift card, so it's not entirely off the table.
- We cancelled almost every video subscription service (Netflix, Disney+, HBO, and a couple others)---and to be honest, I didn't even know we had so many. My husband has been covering since he's mainly the one using them.
- I reviewed all the books I'd preordered and cancelled most of them. While I want to support my favorite form of art, I can always check books out from the library, which still supports authors.
- My bookbox subscriptions are on the chopping block. I haven't pulled the trigger yet, but I've highlighted each renewal in red on the cash flow spreadsheet.
Ultimately, we saved a couple hundred a month. It's not a ton, but none of these are hard cuts---they're luxuries we can easily do without for now. And making these cuts up front means the money lasts longer.
Step 4: Thoughtfully Modifying
If there are cheaper alternatives that can help save in the long run, now's a great time for them.
- We let our housekeeper know I was laid off. We'll definitely keep him on through the end of the year, but we'll need to reevaluate as the situation progresses. On the surface, it seems like an easy cut (since I have plenty of time at home to clean), but we are his employers and he relies on the income. Keeping him on is a priority, if we're able.
- Date nights. We'll still go out (it's important to invest in our marriage), but we need to pick cheaper places for the time being.
- Shopping Walmart for staples (Saving an easy $100/month): Soups and other canned goods, snacks, pasta, protein... I went during a weekday, and it was actually quiet. We are sticking with Publix for our produce, but we're forgoing the convenience for shelf-stable items.
- I reached out to our insurance agent to check if we can get cheaper house insurance after our Hurricane remodel; now I have a to-do list of tasks and information to gather.
- YCMA (Actually adding +$86/month): I'm going to yoga at lunch once a week with a friend, and my husband wants to start pickleball. The membership covers both of us, and the price is on par with a date night. We can always cancel in a couple months if we aren't using. (We may actually cancel when I start working again, depending on my new schedule.)
We'll continue to review monthly, and we'll definitely make deeper cuts if I remain unemployed.
Step 5: Starting the Hunt
I polished up my resume, made a list of some local companies I'd possibly want to work for within a reasonable commuting distance, and went directly to their corporate website to put in applications. I focused on one role at each, specifically the one I was most excited about.
While I'm not going hard right away, I did want to get the ball rolling. Having an application in the system means recruiters may call, even if it's not for the role I applied for.
My hope is that something will click, but we'll see what happens. In the meantime, I'm not in a rush---we have a solid cushion, built over the last decade.
More to come...