DH lost his job...a spending question

[shaynaatl]

So DH was laid off at his job last month. To add salt to the wound, the company announced they are downsizing to a smaller office that is only two miles from our house! Ugh, that would have been a dream commute. DH says he is a little relieved though, as the company wasn’t doing well and it was making his role very stressful. His boss (who he loves) was also laid off.

He is getting severance until end of Nov. He has some work burnout so he is planning on taking some time off to relax and also spend more time with the kids. He says he would like to start working again next Spring. I’m good with this plan. He was a high performer with a lot of connections, so I think he will be fine in a job search.

Financially, we will take a hit as he was making 60% of the HHI. After severance is done, we would be dipping into e-fund about $5k per month under current budget (though some categories like gas and eating out will decrease). But we are fortunate in that we’ve been able to build a sizable e-fund ($200k).

I guess my question is- what would be your spending mentality while he is unemployed? Would you go bare bones? Or not stress about it due to the e-fund? I think our biggest dilemma is vacations. I have a ton of vacation time at work so this would be a great time to take trips, especially since he would have limited vaca time after starting a new job. But then again that would mean paying for vacations out of the e-fund. Thoughts?

[CrazyLucky]

One time I was forced to take two weeks off unpaid. DH and I used the time to go to Ireland. I realize it's not the same thing, but the point stands that sometimes you need to take advantage of an opportunity.
Does $200k represent six months or more of spending? (I hope so!) Since you think DH will be able to get a job quickly, and since you have a huge e-fund, I wouldn't hesitate to take one vacation using the e-fund. But more than one, I'd probably start to get nervous.

[sakura]

I’m not sure if this would work in his field, but when I quit my last job wanted to take some time off and not start right away. I interviewed before I quit and negotiated a start date 3 months out. It was nice not having the job search looming over my head. On the flip side, my husband quit due to burn out without anything lined up. He thought it would be easy to find something new, but it didn’t work out that way. His network was not very big here so that made it tougher than it probably will be for your husband.

[Susie]

Given the size of your e-fund I would probably spend pretty normally in terms of lifestyle/expenses, but I wouldn't book extra one-offs like $$$ vacations until he's working again.  If you have tons of vacation time, you can always do quality time with the kids that is closer to home, sort of a staycation.  There are always activities and places to go around here that I never go or do with my kids because of time... there's camping... that kind of thing.  

But that's me, and I don't have anywhere near a $200k e-fund -- and I have a serious shortage of time to do all the things I want to do.

[shaynaatl]

Oct 31, 2019 10:52:27 GMT -5 Cappy said:

I think it would depend on a few different things: Is this eFund in cash? If so that's a lot to have sitting in cash but good onya given the situation. If it's not in cash I'd be conservative in case that value drops as the economy continues to wane. I'd also consider things like who carried the insurance/changes in premiums, how long to actually bring home a paycheck after securing a new job. In my field it takes 3-4 months for the hire process and another month for a paycheck to get to you. It sounds like you have a great efund but I'd still be cautious. I hope his break is restorative!!

Yes it is in cash, we built up a big e-fund because we figured one of us may take some time off to stay at home with the kids. I'm loving my job right now (knock on wood) so I don't plan on voluntarily leaving. So really the e-fund was built for this type of situation. I just feel a little weird spending when we can't cash flow it. 

[noodleoo]

H and I went to Hawaii for 2 weeks when I was unemployed. We also have a large e-fund and no kids at the time. We had enough saved up to cover me being unemployed for a year, so it wasn't that risky. It was a great opportunity to take a long trip and I figure that's what savings are for. I found a new job pretty easily once I started looking again.

We did cut expenses a bit while I was unemployed though. We cut back on eating out, which was easy since I was home so I was able to cook more. I also tried not to buy anything we didn't really need for a while (like clothes, hobby stuff, etc). But we didn't cut cable or anything like that right away.

[ESF]

You have like four times the average American salary saved up. You'll be fine. Take the vacations and don't think twice.

[ESF]

Let me put it another way.

Unless you need two hundred thousand dollars because your monthly mortgage is over $10k a month and someone is on kidney dialysis, your e-fund is too damn large, and you should have been putting some of that money aside for vacations too.

So go enjoy vacation.

[covergirl82]

While I would generally be one to feel it would be good to be a little more thrifty in the event of a job loss, given your cash e-fund, I would say to go enjoy a nice vacation. Sounds like it might be good from a mental health perspective for your H given the burnout from the job recently lost.

[kanga1]

I would go on the vacation. My first thought would be to open up a credit card offering 0% for 12 or 18 months and put the vacation on the card so you wouldn't need to deplete your efund and could pay off the cc when DH starts getting a paycheck again.

[shaynaatl]

Thanks for the feedback all.

I just need to get over the spending thing…my whole life, my parents have instilled in me that vacations are a waste of money (we took exactly one family vacation my entire childhood).

Now need to decide whether to go just DH and I, or bring the kids too

[thebulldog]

I got laid off in February - I am well connect in my field etc etc and it still took more than 6 months to even get an offer. Obvs i have no idea what your H does but while i totally support taking time off just realize in the spring a job offer may still take a few months.

$200k is a shitload of an e-fund. I would create a monthly budget for it to still save some for down the line. if he was 60% HHI...you can burn through that fast

we went through our budget and with unemployment we could manage for awhile but once UE ran out we had budget that got slimmer and slimmer only dipping into efund for true issues. (we have an efund but not super huge but I am also adamant we can afford our mortgage on one salary becuase of this.)

that being said we used the time well - i went on a few work trips with DH. saw my family etc.

the job search process is not easy and can be very demoralizing.

[waverly]

We typically are bare bones with out spending while someone is unemployed. It helps reset our mindset. However we don’t have a 200k E-fund.

I would try to spend a lot less than usual especially in non-essential categories like eating out and shopping just to shop. I would still eat out occasionally and buy essentials. However with a 200k efund I would definitely take a vacation! I might make it a less expensive vacation. I prioritize vacations over other non-essentials.

[farmvillelover]

Is he pretty comparatively employable elsewhere? If so, I'd honestly let him enjoy this time and spend mindfully, not necessarily bare bones. My H took over a year off and he outearned me. But he needed and deserved that break. We went on vacations and he even went on vacation without us. There were some moments where I was testy with him but I had to get over it. We both saw it as his last hurrah before entering the workforce again, not many people get to do that. Be grateful (as you are, I'm sure) that your family is able to absorb this. Many cannot.

[oswin]

What I would do is allocate parts of that $200k to different things. So first think about the ideal case - spend $5k/month out of it until say May, so December, January, February, March, April - that's $25k. Then think about what might happen if he has trouble finding a job - or wants to hold out for a good job he really likes vs the first one that pays the bills. That could take a while, say 6 months, so set aside $30k. Now think about any other disaster that could happen that could require your emergency fund - say substantial damage to the house (tornado, wildfire, flood, etc), and set aside an amount for that. Let's make it a nice round number since you've got a lot anyway and say $50k. Ok, so all of that together is $105k. Take $5-10k and go on a nice vacation! Vacations are only a waste of money if you don't get any good memories out of them. If your goal is just to recharge, take a staycation or just some "date days" (i.e. the kids go to school as usual but you and your partner have a nice lunch, etc).

[mcsangel2]

I am a huge fan of vacations. In your situation, I would probably definitely take one really nice vacation, like to Europe, just with my husband. I'd leave the kids home. I might take another smaller, domestic, cheaper vacation with the kids. But also, I would look at the budget, and see if there's anyway you can trim that $5k draw down to say, $4k.

[flygirl]

I would worry the economy might change in the next 6 mo, but you have a very large e-fund. I think I’d take a moderate vacation and then slim down on some other expenses just in case it takes longer to find a job than he thinks.

[ribollita]

I’d definitely take a few vacations, first using up points as possible but enjoying the time together.

[shopgirl07]

Life is short and unpredictable. You’ve obviously been incredibly financially smart and responsible, time to take the vacations.

[puppylove64]

Oct 31, 2019 12:03:59 GMT -5 shaynaatl said:

Thanks for the feedback all.

I just need to get over the spending thing…my whole life, my parents have instilled in me that vacations are a waste of money (we took exactly one family vacation my entire childhood).

Now need to decide whether to go just DH and I, or bring the kids too

Do both! I think you earned it

[egeiger]

I think taking a vacation makes sense, but I would also be aware of the day to day spending first, make sure you aren't leaking money from casual spending. Tighten up, set a budget for the next 8 months, and make sure that, budget + vacation leaves you in a comfortable place.


A lot of organizations do hiring for the first of the year. He could interview now to start 1/1 or 2/1. Maybe that's a good compromise, to get 4-8 weeks off, a chance to travel around the holidays when the kids are already out of school and then still have comfort knowing the job is ready and waiting.

[wildrice]

It sounds like you have over 3 years of what you'd need to cover his lost income saved. I think that's more than enough to use some for vacations, assuming he's planning on going back to work sometime within the next couple of years.

I may not use this as the time to take your dream 5 star African safari, but I think you could take a couple of average priced vacations and still have plenty to cover you in a "what if" situation like your H isn't able to find a job as quickly as planned.

[keh2oblue]

I was laid off once, and it took close to 6 months to find a new job, interview, and start. I would encourage him to take a few week then maybe start loosely looking. In the mean time, your expenses can probably be cut back by default (eat at home, save on gas, maybe childcare?)

But I agree with most, I'd definitely go ahead and take that time off to plan a vacation!

[mccallister84]

I think it’s hard to go from a mindset of save, save, save to being okay with spending. I married someone who had a lot of money saved up. Once we paid for our wedding and bought our house he still had a lot of money saved. We just pulled from that for a vacation which gave him some angst. I asked what that money had been saved for. He told me his family and I was like welllll we’re it!

I think reframing it as “why did we save this money” can be helpful.

[scout8]

If it makes you feel better, we are in a somewhat similar situation and we are going to South Africa for three weeks. We are moving to a new city and neither of us have jobs lined up yet. We aren't really making much money right now as we are both real estate brokers and have let our business slow down since we will be moving soon. Given that we don't know what jobs we will have or what kind of vacation days we will get, we decided to go ahead and take the vacation while we have the time.

Outside of that, we are being somewhat frugal with our spending. We also have a size-able emergency fund, but we don't know how long we will be living out of it before we are employed again.

[gibbinator]

So if I'm mathing right, if you kept your current spending and he was making no income from Dec 1 until June 30, you would still have some $165,000 in savings that is separate from retirement .... I think you'll be fine to take a vacation