There is no doubt in my mind that the economy is slowly recovering, especially in the metro Detroit area. Yes, we have received a lot of bad publicity over the recent years, but the automakers are rebounding, corporations are expanding, and the housing market is beginning to right itself. That doesn’t mean that we didn’t have a dreadful experience in 2009, probably more so than the rest of the country. I actually weathered the storm quite nicely that year, I spent carelessly on entertainment, drove an expensive luxury car (actually I still do), and I was house hunting, all at the same time as paying high rent in a desirable area. It was in 2010 that I experienced the economic decline in my area. I had just made the biggest purchase of my life, a house, and not more than two months later I was laid off. I thought with an MBA and the way my career had been blossoming since graduation, there was no way I had to worry like so many others were. I couldn’t have been more wrong. I will never make that mistake again, it was an experience I will never forget, and I’d like to give you a few pointers in case you ever find yourself in a similar situation.
All the experts tell you to sock away 6 months of salary for an emergency such as this. Most personal finance bloggers I know recommend that you put away a year of salary. I recommend that you get this number as high as possible! There shouldn’t be a limit, and in fact, if you only have a years worth of your salary saved up then you should probably forgo larger expenses like a house and a new car. You have plenty of time to achieve your dreams, don’t turn them into nightmares.
Be happy with what you have. I will admit that advancing in your career takes a lot of ambition, and in part it involves never being fully satisfied with what you are doing, wanting more builds drive. However, being too greedy, wanting too much too quickly, can all be detrimental to your goals. Granted I was working more hours than the average person could fathom, but I left a stable position at a stable company to go this employer that laid me off after a mere 11 months. While it had nothing to do with performance, the company simply wasn’t doing as well as expected. Sometimes you just need to find contentment with what you already have.
Make sure you thoroughly review, and never dismiss a severance package. A severance package, or compromise agreement in the United Kingdom, is essentially a payment from your employer that compensates you for leaving the company and forgoing all further claim to any future monies or liabilities to the business. I was generously given several months of salary and continued benefits for a signature that eliminated any further claim to my employer. Thankfully, I was able to find a suitable job with a great company before my severance ran out, but many others may not be as fortunate.
Spend less than you earn. Yeah this kind of goes along with my first piece of advice, but it seems to deserve a paragraph of its own. This is the most basic, yet important piece of advice that I can give to my readers. Regardless, this is the probably the most overshadowed by far. As long as you spend less than you earn for a considerable amount of your career, you won’t find yourself in the financial bind that so many others do when they are laid off.