The Time Off Juggling Act

I’m taking a day off of work today.  Part of our time off is accrued on a paycheck to paycheck period.  You get a certain amount per paycheck that goes into this ‘bank’.  It’s capped off at a certain limit, and if you hit that cap, you stop accumulating time until you use part of it.

There is an advantage to keeping the balance of this bank high.  The reason is that, with our company, this bank is paid out in full in the event that you lose your job.  This is in addition to any severance or anything else.

I’m feeling very secure in my job, but still, in this day in age, who knows?  So I strive to keep my balance of unused time as high as possible just so I know that, in the event of dire circumstances, I’ll have a little bit of an extra cushion.  Still, it’s one thing that I have to keep an eye on to make sure that I’m taking full advantage of this.

After all, my employer is including this as part of our compensation package, so why not maximize it to the fullest potential and make sure not to lose any time?

Off to enjoy the day and get some things done around the house!

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Financial Moves In The Event Of A Job Loss

With the economy the way it is, I think it’s a good idea to have preparations in the event of a job loss.
My job is what I would consider relatively safe. I recently transferred into a just created position that is fully funded for the foreseeable future. ‘Baseline’ positions, as they are known here, are considered the best type to be in, because the customer funds them for a year at a time, and generally funds them in blocks versus individually.
Still, even though I don’t feel insecurity, I’ve learned that it’s always best to be prepared.
So, I have somewhat of a contingency financial plan in the event that I suddenly found myself unemployed. This would require a lot of changes since my wife is (by our choice) staying home full time.

The Plan

Unemployment Benefits / Health Care

I would expect that any state unemployment benefits that I would receive would be eaten up by health care premiums, whether it be COBRA or a privately funded insurance policy.
Paying the Bills
We have an emergency fund specifically for events like this. The money isn’t earmarked for anything else. We would use this to pay essential bills. It is funded for about 4 months.
If unemployment were to continue for longer than that time, we would look into one of several options. First, we could sell some investments. We have non-retirement investment holdings that I could sell that would sustain us for another 6 months or longer. Second, we could re-evaluate some of our other cash holdings. We have additional dollars alongside our emergency fund that are earmarked for things like a new car, home repairs, etc. that could be re-allocated if necessary.
Concentrate on the Job Search
Due to having a fully funded emergency fund, I wouldn’t be panicked, as I know that we would be able to pay the bills for quite a good long time without running into financial difficulties.
This would allow me to focus on finding a new job.
Reducing Expenses
There are definitely some expenses I would look to cut as a method to reduce our cash outlays. Even though we have a fully funded emergency fund, the fact remains that with a job loss, it would no longer be fully funded after I found new work, and would need to be re-built. I would employ the following strategies to make sure that our cash lasts as long as possible and to ensure that we could get back on track as quickly as possible once I found new work:

  • Postpone student loan payment 1 – We have two student loan payments, once of which is paid ahead. We currently make at least the minimum payments, but we could suspend those if need be with no penalty for at least four years. I’m hoping that I would get a new job by then!
  • Eliminate Netflix – We’re currently on the barebones plan for $4.99 a month, but I’d still suspend that.
  • Eliminate eating out – We spend probably about $80 – $100 a month getting pizza, takeout, or going out occasionally. We would have to buy more groceries, but this would allow us to reduce this amount by a decent amount.
  • Unlevel some of our spending – I currently put aside an equal amount every month so that our monthly spending is fairly even. But, this has increased the amount of cash that is on hand. So, for example, instead of putting aside $35 per month for the cat’s vet bill, I would suspend doing that, although I would have to ‘catch up’ later on. There are other categories that would help us in this regard.
  • Let the lawn go brown – I admit I like having green grass. I don’t water nearly as much as some of our neighbors, but the sprinkler system would be turned off if I lost my job.
  • Reduce or eliminate the A/C – The design of our house and landscaping makes it where we run the air conditioning on most days when it goes over 82 degrees. I would increase this threshold as well as re-adjust the thermostat to reduce the energy use.
  • Cut back grocery spending – If the job loss was short term, we could get by pretty well by eating down a lot of the food we have in the pantry or freezer. I’m a big believer in stocking up just so long as you don’t waste food, but this would give a cushion for cutting back grocery bills as we could go through our existing food stockpile which would cut grocery bills down for a bit.

There are definitely other things that we could look at but I think that these would keep us afloat for a long time and let me concentrate on finding work.
In future posts, I will share some experiences in the past that gave me some of this knowledge. I’ve actually had to employ some of these in the past, but under different personal and financial circumstances.
What plans do you have in place that I missed discussing? I’m always up for ideas!

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My Wife Turned In Her Resignation Letter

Yesterday, my wife turned in her letter of resignation. She will be working until Friday, March 20th.

After that, she will be getting ready to have our first baby, and after the baby is born, she will be staying at home to take care of the baby.

We have been preparing financially for this for quite some time, but it’s still a big and a scary step!

Here are some of the financial preparations we’ve made in the meantime:

  • Talked about it a LONG time ago – We had talked about this even before we got married, and were in agreement that once we started our family, Mrs. Beagle would stay at home. Her job is not that high paying, and this made it easier, because the cost of child care would have made the net take home pay almost nothing.
  • Talked about it again and again – After we found out we were pregnant, and then along the way with the economic downturn, we’ve talked about it again. Even though things aren’t as rosy as they were, we still feel comfortable with the decision.
  • Paid down debt – We’ve focused on paying down debt since getting married in September 2007, and even before. We paid off a car loan, and have paid over one-third of outstanding student loans in a year and a half. It would have been nice to been a little further along (the goal had been for 60% of the student loans to be gone, but we’ll be about 15% short), but we’re still in good shape.
  • Bumped up savings – I’ve leveled out some of our monthly expenses, and also bumped up some savings just so we have a good cushion and have savings for long term purchases, such as home repairs, auto repairs, and replacement automobiles.
  • Saved for baby needs – We had started putting aside money for things that we needed even before trying to get pregnant. So, when it came time for baby furniture, we had some money stashed away. Our parents are generously throwing us showers, so hopefully the cost of actually equipping the baby with everything won’t be too shocking, but I have some money allocated from our upcoming tax refund just in case

One thing I still need to spend some time on is saving for the college education of our baby. We’ve decided that we will start saving once the baby is born, and this will carry through for future babies that we might have as well. I know that we’ll be putting money aside for this purpose, but I need to get my ducks in a row as far as knowing the best 529 plan and how to get started.

Even with that, I think we’re in good shape and we’re looking forward to this next (and many upcoming) chapter.

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Answering A Reader: Our Own Child Care

In a comment to my last post, reader Dog Ate My Finances (love the name, by the way), asked why my wife doesn’t start her own child care to make up for the difference in pay that we’ll be taking once she leaves her job to have our baby.
There are some financial reasons and some non-financial reasons for not doing so. I’ll start with the financial reasons:

  • The local economy in Michigan is not that good. Many parents are pulling their kids out of day care as they are losing their jobs, so the market is very tight. As such, there would be no guarantee that it would even take off.
  • The costs involved are not something we’re interested in. To open a home day care would require significant costs for certification, licensing, as well as changes I’m sure that we’d have to make around the house. Not to mention insurance that would have to be taken out. While I wouldn’t mind someday taking the venture into a start-up, this isn’t a risk that we really want to take.

This leads me to the non-financial reasons of why this idea wouldn’t fly around here. The biggest is that my wife simply has no desire to continue in that role in a long term fashion. Right now, her and I are both excited for her to have the opportunity to focus on our baby.
Her background in college was in Child Development. She had hoped to do something to the level where she could work within a health system or some other parallel position, and work with children who needed special assistance or had developmental needs. She didn’t have her teaching certificate, although this is something that she briefly considered, so classroom instruction was out of the question.
But to get the type of jobs that I described, at least here in Michigan, she would have needed a Masters Degree. She didn’t want to simply accumulate loans, so before she made that jump, she wanted to work for awhile, and see if she even was interested in pursuing that. Which would give her time to pay down some of the student loan debt she accumulated in her undergraduate studies. The job that was most available was working in child care facilities. These decisions were made solely by her as her and i were just dating at the time.
While she enjoys the interactions with children and is great at what she does, the bottom line is that she doesn’t have the passion to commit to it for a career. Now, before anybody says that taking care of our children is parallel, let me just say that there’s a huge difference in taking care of our children versus taking care of somebody else’s. She has a passion and a fire for one and not the other. I’ll let you guess which one!
And, honestly, once we started talking about when we wanted to start our family, we came to the conclusion that the timing wouldn’t make it so that going back for her Master’s was a good idea, at least not yet. Why? Because either way, we wanted my wife to take some time to focus on our family. This was something we discussed before we were even engaged, so we’ve been on the same page with this for a long time. Going back to school now would simply have added debt that we knew we wouldn’t have time to pay off before we started our family.
So, while there are financial reasons involved, the non-financial aspects hopefully fill in the rest of the picture.

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