Dh is facing a layoff. He expects the company will start trimming the dead weight in the next 4-8 weeks. His productivity sits at 100-125%, while co-workers are at 20%. So he *should* be safe for the first round or two. He is also supervisory and very versatile on the machines they work on, he is one of the few guys that know more than 2 or 3 products. So again, an asset to have. But nothing is foolproof.
So here it is. I have a decent sized snowball. About $1300 a month. I'm feeling really anxious with this potential job loss.
I see it makes sense to get rid of as much as possible. But it feels more secure to me to put away a few months mortgage and food budget away. If i have that, my own income will cover everything else.
Do I change the plan? Do I build an EF to a higher standard? If dh gets laid off, he qualifies for EI, so we'd have more income, but there is a 6to 8 week delay. and his income would be at 60%. If he is lucky and can find a job sooner, he will not earn as much, we know this, and again, a delay in when his next check would be.
If i continue as is, yes we'll pay debt, reduce payment sizes, but have only 1/2 the mortgage and 1 month grocery in the bank with the current $1000. To me, I have some warning that this is a potential happening, to build an EF to a higher level, and allow us to be able to cover everything else easily should the layoff occur. i feel it would be somewhat irresponsible if I didn't do some planning here.
Personally, I would stop the snowball (make minimum payments, of course) and start building up your EF. You've had a "heads up", so put the money away so that you can make your payments until the EI kicks in.
I'd save some $$$ just in case your DH does get laid off.
I'd feel so much more secure knowing I had a temporary EF to fall back on just in case. And if everything pans out, you can always take some money out of your temporary EF and put a lump sum payment towards your debt.
My DH was laid off once when we were single income. We were able to last 18 months on 3 months severance (60%) and EI. But that was an extraordinary case. We were very frugal, and we had a lot of help from relatives and God (sometimes circumstances just make you believe).
Nothing beats having that EF cushion. Keep paying what you have to on the bills, but put extra to EF. That way you will be prepared.
I'd also be sure to have a good food stockpile in the house...enough to get to that first EI payment. That helped us.
Also double check the kids clothing needs for the next few months...perferably six months ahead... Are they in line for receiving new-to-them clothing as they need it? Or are you going to have to sew or buy stuff? We found clothing, food and shelter to be our big expenses in unemployment. Next was transportation...plot frugal shopping trips. If there is anything you can make instead of buy, and it's cheaper to do so. Do it. Don't forget to figure in your time to do the shopping!
I would start paying the minimum payments on everything and put all my extra cash into savings so you have something to fall back on of your DH gets laid off.
Most clothing I can make. Summer is easy. I do the thrift, freecycle and goodwill stores. I watch for clearance sales for what I can't get new.
I will be hoisting that EF fund up hard over the next few months, then go back to snowballing like crazy. Hopefully this just blows over and we're not hit in the storm. But I'd rather be save than sorry.
If i continue as is, yes we'll pay debt, reduce payment sizes, but have only 1/2 the mortgage and 1 month grocery in the bank with the current $1000. To me, I have some warning that this is a potential happening, to build an EF to a higher level, and allow us to be able to cover everything else easily should the layoff occur. i feel it would be somewhat irresponsible if I didn't do some planning here.
:grnwave: Thanks everyone. I hate that my momentum in paying things off is down to a crawl, but at least if dh is laid off, we aren't going backwards, we'll continue to pluck forward and have a nice cushion to boot!
I agree with making the BFE bigger to hedge against being laid off.
When, the layoffs pass and your family is in a secure place, that money will still be there, you can pay off some of the debt quickly or leave the BFE funded and get the snowball rolling again.
Sounds like you've got a plan, mommy4ever! I agree with everyone - its better to make minimum payments now and beef up the EF - that way you can still make minimum payments in the midst of the storm! If your snowball is that big, you should be at a relatively comfortable place with your EF in just a few months! Best of luck to you and your family!
I posted this exact scenario about a month ago, and I am also putting every dime into savings. We haven't heard anything further about my dh's job, but when I have about six months of dh's salary in the EF I'll continue on with the debt. Until then - they can wait.
You can do it! I totally understand, I hate debt with a passion, and would put 75% of our monthly income on it if I could! But you're doing great, and if/when the storm comes, you'll be glad for your decisions.
Another agree here. Save up more right now and then go back to the snowball. I wish we had had some warning when my DH lost his job. It took him quite a while to find something of comparable pay and that was before the economy took a nosedive.
Good luck to you! You will be fine I'm sure because you seem to have your eyes wide open and are willing to do what needs to be done.
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