NT has a very good job, at a company that until recently has seemed recession-proof. (I don't think any industry is recession-proof now, except fast food, chocolate and movies.)
Then they had a small round of layoffs early in the year, and they've been warning about possible furloughs (mandatory unpaid leave) if they don't reach certain projections. They should know sometime in May just how severe it will be.
Right now it appears likely that each employee will be required to take two weeks' furlough. It isn't clear how this will be applied, but there may be some flexibility about taking it all at once or in dribs and drabs.
Just to be somewhat prepared, even though we can't plan for anything specific, I calculated how it would affect our income and budget if NT had to take one week or two weeks of furlough in a given month.
Since he gets paid twice a month, I multiplied the net pay by 24 and then divided by 52 to determine his weekly net pay: $620. If he is able to space out the furlough and just take one week per month, the budgetary choices seem easy to me: cut out two of our discretionary spending categories, rental car and misc. entertainment, which are $100 each, and cut our saving in half (we currently put $860 per month into short-term savings).
If he is forced to take two weeks in a month, losing $1240, the cuts get a bit more painful; we'd have to cut the two discretionary categories, plus all our saving, and we'd need to cut $180 of our spending money for that month, or $60 per person. We'd feel it, sure, but it wouldn't be the end of the world; we wouldn't have to cut the medical or grocery/household budgets, or stop retirement contributions, or anything very harmful.
So overall, I don't think our lives will change very much if NT's company decides on furloughs. That's assuming nothing bad happens to my job, of course. But until I get direct signs my job is in danger, I'm not going to worry--although I am prepared! I keep our emergency budget up-to-date and know what measures we'd need to take if all three of us became unemployed, and how long we could last that way under various scenarios.
Far from making me despair, these preparations keep me calm and feeling in control in this volatile world.
Preparing for an uncertain future
April 29th, 2009 at 04:24 pm
April 29th, 2009 at 04:32 pm 1241022734
April 29th, 2009 at 04:41 pm 1241023283
The only comfort I get from this is that if we pay off all our debt before we retire and remain debt-free, we'll be able to live on 50% of our income (adjusted for inflation)--that makes it easier to save enough for retirement!
April 29th, 2009 at 07:20 pm 1241032824
April 29th, 2009 at 07:27 pm 1241033252
April 29th, 2009 at 08:08 pm 1241035702
Joan...wow, that is such a nice message. My first instinct is to go into self-deprecating mode, but I'll resist. So just...thanks!
April 29th, 2009 at 11:27 pm 1241047638
April 29th, 2009 at 11:39 pm 1241048340
I'm off on two 2-day vacations over this weekend and I am going to enjoy the hell out of them... 30th b-day Sat.
I kinda feel like you in that until I sense direct danger to my job, I'm not gonna go into spartan mode. Life is for living. I am healthy....and employed. I have it good.
I hope to an EF of 6 mths take-home pay by end of 2011.
Unlike you, I have only myself to look out for - so that makes it easier. My only major luxury is the fact that I live alone in a 2 bed apartment - I'm enjoying the alone time at the moment (most of the time !!)...
Anyways.. I'm gonna follow your lead and do up a budget based on me losing my job and living on social welfare... you know.. just in case... ek !!
I guess I can always rent out the second room....
Best Regards
April 29th, 2009 at 11:44 pm 1241048669
If they are like unpaid vacation days, could NT find something to do during those times to bring in money? Even if only small amounts, it could help your budget.
April 30th, 2009 at 01:28 pm 1241098109
Your family has done such a great job so far.
April 30th, 2009 at 02:28 pm 1241101727
Apprentice, I'll be interested to see your emergency budget should you choose to post it. Believe me, it left me a lot less shaky once I knew what I would do in an absolute financial catastrophe.
frugaltexan, they are like unpaid vacations. We have discussed the possibility of him re-upping with his temp agency that got him this great job; he always got high marks so they might be willing to find him a two-week or smaller assignment...what would really make him happy is some sort of cat-sitting (or cat-petting or cat-entertaining) gig, but I don't know what the chances are. :P
Thanks merch! Your calmness and determination definitely has rubbed off on me; I have gotten even more so since watching your successful journey.