This post brought to you by the phrase "Mom, no."
Burying my head in my hands on this one.
"Mom, no."
Parents are allowed to worry. But there's a line between when they are rightfully worried and when they're spewing silliness---and my mom definitely crossed the line last week. She comes from the boomer mindset of "You loyally work at a company, they give you a pension, you retire, and all goes well." It was a whole thing for her when I left my first company (for over $30k more per year to do the same job). Now I've been laid off from the "new" company (is six years even still new?), any her response is "You never should have left the old one." How is this helpful?!
First, my old company could have laid me off, too. They went through two rounds of layoffs about four years ago, and one of my friends made the list. Who's to say that wouldn't have been me? You just never know.
Second, this is capitalism. Company loyalty is dead. Corporations don't care---the bottom line matters more than humans, and it's been that way a while.
Most importantly, that +$30k/year made saving so ridiculously easy. Over six years, it was at least a $200k difference between base and bonus, plus more time in the market for the money. And in this market? Over the last year, it has grown. I'd need to work an extra three years at my old job to make it up, maybe even more thanks to market timing. I could be unemployed for the next three years and still break even to where I would have been. How can that possibly be a mistake?!
Anyway, it was a whole thing, and I definitely used the words "calm down." The whole line of thinking didn't help anyone. We played this game before.
Panicked Friends
I have a new retail job. I've been telling friends. And this is strange and scary when your bestie's been working fancy six-figure corporate jobs supporting directors and the C-suite for years and now has taken a giant pay cut, making less per day than she earns from investments in the stock market. Because what does that mean for you and your life if you are laid off? I get it. I totally get the projection and the underlying fears. But I'm not having fun explaining or rationalizing my choices at the moment.
Taking the job means extending my severance money (especially with a great discount on most of our groceries), reducing the need for any substantial cuts should the layoff extend past a year. It's letting my investments grow longer. It's getting me out of the house. I'd also like to think that no job is beneath me. Plus, let's be so for real: if I hate it, I can always quit. Nothing in life is permanent.
Speaking of impermanence, a couple more friends and acquaintances were laid off last week. There's chatter of the present being worse than 2008...
First Week Working
I wasn't expecting how good it felt to be out doing something again. My new team is high-energy, the team leads are dedicated to their areas and legitimately care about their roles as leaders, and they work just as hard on the floor as the rest of the team. It's a good environment to settle into while I'm navigating a period of change, and I'm grateful to the HR lead for going to bat for me, a hire "who makes no sense but seems like a good kid."
My job is unpacking boxes and placing items on shelves, then breaking down the cardboard and throwing it in the baler. That's it. And it's lovely. Every box feels like Christmas morning, since I have no idea what's in any of the packages. (My ADHD is being fed.) After 13 years of office work (remote the last six), it's a huge change to be doing something physical all day at somewhere that's not my house. After work, I'm tired---in a good way.
The job eased the whole waiting-on-the-application-responses dramatically, since it's something else to focus on. With the additional structure added to my week, the time I spent applying for new roles was more intentional and thoughtful. Current count: 115 applications submitted, 8 interviews and 92 rejected/closed as "No Contact." Unfortunately, it's a rough market.
Meanwhile, at our dinner table... "I've been so impressed with the supply chain. The way---" "Am I really about to listen to you talk about supply chain management through dinner?" ... Oops!
New 401(k)
Based on the current hiring climate, I think there's a real possibility I won't have a new job that utilizes my skillset until January or February at the earliest. I'm eligible to contribute to my new 401(k) after 90 days of employment, and there's a full 5% match---contributed with every paycheck---that vests immediately. I registered for my 401(k) now and it will automatically kick in once I hit 90 days. Never turn down free money!
I will not be maxing it out. However, I'm contributing 10%, and with the 5% match, that's 15% pre-tax. Right now, that's enough. That's the season I'm in, and that's okay. You can't squeeze juice from a stone. (Translation: More income needed.)
Decisions, decisions...
After so long in the financial services with a high quantity of actively-managed 401(k) options, I was surprised by the small quantity of choices in the new plan. That said, I love how simple it is.
- Money market (with a .16% Net Expense Ratio)
- Intermediate-term Bonds, mirroring the Bloomberg U.S. Intermediate Government/Credit Bond Index (with a .107% Net Expense Ratio)
- Inflation Protected Bond Index Fund, mirroring the TIPS index (with a .11% Net Expense Ratio)
- US Large Cap, mirroring the S&P 500 (.089% Net Expense Ratio)
- US Small Cap, mirroring the Russell Small Cap Completeness Index (.11% Net Expense Ratio)
- International Developed Markets, mirroring the MSCI EAFE Index (.125% Net Expense Ratio)
- International Emerging Markets, mirroring the MSCI Emerging Markets Index (.155% Net Expense Ratio)
- And target date funds, jumping every five years from 2030 to 2070 (all with a .135% Net Expense Ratio)
My alignment for the rest of my portfolio is 100% stocks, with 70% domestic and 30% foreign. I considered replicating my current allocation, but a part of me wants to leave it in the target date fund---the start of a long-term experiment.
Yes, the current $0 balance is a blow to my ego.
Regrets
We started out with "this game isn't productive" and are coming full circle. The irony of it all isn't lost on me.
As a goal-oriented individual, I have a hard time saving for the sake of saving. There's already going to be millions in my retirement funds without adding even a penny more (thanks to time in the market), to the point that I don't really know what to do with it all. The work-around for my brain is the "maxing out" part, where I get the dopamine hit when I hit that number and hit that goal. I think "paying off the house faster" would have been a better plan than "arbitrarily save in my brokerage," despite the 2.25% interest rate, because it is a tangible goal that I'd have actively worked toward.
And this is where personal finance becomes personal. Because I know, for a fact, that I am better off investing in the market than paying off the low-interest mortgage. Every single model says so. But when it came down to it, my behavior was to spend the money instead of saving for future-who-knows-what. Not to say that it was "bad" spending---I did pay more toward the loan, paid off the old truck and (unfortunately) got a new truck that's paid off, founded a nonprofit that did a whole lot of good for my community, wrote and published two books, traveled a bit, we replaced our roof and A/C system, among many other things---but some of it was definitely not intentional, and I probably could have deployed the money in a more thoughtful way. This is why it's critical to have goals and a plan to work toward.
If I had been more intentional, I think our mortgage would have about $30k less owed right now. Maybe that's generous. Or maybe it's not generous enough, because when I have a goal, I hustle for it. But this is a bit of a regret, especially since a recast (paying a lump sum, then having the loan terms adjusted to account for the same payoff date with lower monthly payments) would assist with the cash flow during my layoff. A recast with $10,000 of my severance (the required minimum dollars based on my loan terms) won't do much, barely $100 a month, and that's a lot of cash to tie up for such little gain in this situation. But a recast with $10,000 after I'd already reduced $30k? That would have lowered the payments by over $400/month, which makes a difference when you're running in the margins.
That said, none of this would be a thought, had I not been laid off. It's a blessing in disguise, being forced to reevaluate everything with a new lens.
The moral of the story: Don't hesitate to pay off that loan, no matter the interest rate.