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Budget for potential layoff

June 8th, 2012 at 06:51 pm

I thought I'd lay it all out on the line. There isn't any word yet on Dh getting laid off, but given the climate in the company now, I want to prepare. Seems like it's only a matter of time.

Here is what we're brining in and sending out every month.

Income: $5496/month

Mortgage 1700
preschool 790
Car 220
Cable/phone/internet $157 (cut cable, new bill unknown, probably about $100)
Electricity 150
Gas 100
YWCA $80
Netflix $10

EF savings $300
529s $400

My freelance income is sporadic, and that income, which averages to about $1000 a month is generally used to pay extra to the mortgage and car loans, and fund the IRA and Roth IRAs.

Plan: budget of $250/ week for groceries, gas and entertainment/incidentals. Family of four, two little kids who eat a lot. (I'll try to stay closer to $200.)

Plan is to sock any extra into savings and to snowball the debts.

Any other suggestions?

10 Responses to “Budget for potential layoff”

  1. ceejay74 Says:

    Looks pretty good. If your husband gets 50% unemployment pay (I know that's simplifying things a bit) and you temporarily 529 & EF savings, and you make $1000 per month, you're only $400 short-- and that's if you spend the full $1000 per month on grocery/household. Of course, COBRA or other health coverage will eat into that.

    You could get by for a very long time and not eat very much into savings at that rate!

  2. baselle Says:

    Its perhaps me, but I'd divert the freelance income into saving rather than paying extra to mortgage/car, unless you are close to knocking out a goal. For example if the extra payments put you close to paying off a second mortgage or close to having enough equity to refinance, then I'd continue with the extra, but if not, I'd add to the EF. I'd also concentrate more on the Roth, because with a Roth you can always pull out what you put in ... it can serve as an additional EF.

  3. patientsaver Says:

    I agree with Baselle. You don't know how long the unemployment could last, and it could be for a very long time. (take it from me). When income is interrupted, hard, cold cash takes on new value.

    Also, preschool at $790 a month is a huge expense for you. Is it absolutely essential if both you and hubs are home? Think of the money saved if you didn't have that expense.

  4. Monkey Mama Says:

    I actually would look at what unemployment is so you can plan around it. 50% would be pretty generous for unemployment - I think it caps out at about $2000/month where I live? Anyway, just to say you will want to know what you actually have to work with, if you haven't looked it up already.

  5. ThriftoRama Says:

    All good thoughts, guys.
    The preschool bill doesn't start until September. The sticky bit is we pay this A. for the kids, because quality preschool is great for them, and B. so I can work and have a kid break.

    We signed a contract in February, and there isn't really a way to withdraw. We'd still owe the school money. It'd be sticky. This will be the last year this expense will be so big. The oldes goes to (free!) kindergarten next fall, and the bill will fall to about $300/month for the youngest. That will be a relief.

    I'm hoping we won't have to deal with a layoff, but I'd feel better having a plan already in force. I may suspend extra payments to the mortgage, but I would like to still try to pay off the car. It will save us one bill a month PLUS the extra we have to pay for full coverage car insurance.

    As for electricity, it might be lower than $150, maybe around $100. I've barely had to run the air since we had our house insulated. Yay insulation!
    We will also have to pay our quarterly water bill and car insurance for two cars sometime in early July, but those expenses are not regular, monthly bills and have therefore been excluded from my calculation.

  6. ThriftoRama Says:

    Max unemployment benefits for our state is $539/wk.

  7. creditcardfree Says:

    You might consider what things your husband might need if he needs to job search. A new suit? More frequent haircuts, newspaper subscription, postage, cash for meetings at coffee shops or lunch venues.

    I'd at least inquire with preschool about getting out of the contract. Maybe there would be scholarships or ability to pay the tuition over a longer period of time. Or if you had to pull the kids out, they might let you out of contract once they find kids to replace yours....epecially if the place has a waiting list. I'm not saying you need to get out of it, because I see the value when two people are working to find a job and make an income. It is just good to have the information.

  8. baselle Says:

    Final thing - just in case the EF is in a super duper low interest rate account, definitely research where and in what situations you can get something higher. ING is still paying 0.80% even for its very fluid checking account. The credit union I now belong to pays 6% on the first $500. I've been holding my checking and savings around $500, and moving the extra to ING. It adds up to about $30/yr, but its $30 I don't have to save.

  9. baselle Says:

    Yet another thought - switching the 529 plan to I-bonds. I'd research a strategy in which I would drop the 529 contributions to as low as you can get away with, and see whether putting the difference in I-bonds in your name(s) will help you. Since you can use the I-bonds for tuition, they can help with the college goal, but after 1 year (11 months if you buy them at the very end of the month) they can be sold, so you could use that as another alternate EF. Their interest rate changes every six months but is currently 2.2%.

  10. ThriftoRama Says:

    All great ideas!

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