Author Topic: I just lost my job - could this be a good thing? Or maybe I'm screwed :)  (Read 5813 times)

MissBunny

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Hi all - first timer here. Here is the nuts and bolts:

My husband and I are newlyweds and he just graduated from grad school last year (no student loan debt - thankfully). I made $40,000 per year and my husband makes $70,000. I am a freelance social media and web content developer. The plan was for me to go back to school because I want a new career in nutrition. School will be a total of about 7 years, but we figured it would take longer because I was working and planned on going back part time, and we refuse to take out student loans. So it was going to be a slow and steady course.

I just lost about 90% of my income from one of my big clients who is folding. We can live off of just my husband's income, but it will be very tight and leave us with, at most, $100 a month to stash away in savings. We have virtually nothing in savings as it is.

From that, we have found ourselves at a crossroads. Here is what we've come up with:

Scenario #1: I go back to working for someone else full time, making more money than I did as a freelancer, and bank 100% of my income so that in a few years I can quit and blast through school full time.

Scenario #2: I get a part time job to actually put something away in savings, and go to school part time.

Scenario #3: I can take advantage of a local program to help small businesses build themselves. It is a 12-week course and starts in two weeks. I take that, rebuild my business, and resume our original plan.

Expenses/Debts:

We have $4,000 in credit card debt at which we are chipping away and pay at least $100/month (and have not used the card in a year).

We have 2 car payments totaling $547/month. My husband paid his car down really fast prior to all of this, and if we sell his car we'd have enough left over to pay down half of what is left on the other car and be a one-car couple.

We have three rescue dogs and two rescue cats and it costs about $150/month to feed and care for them. (Giving them up is not an option)

We pay $2,000/month in rent (which is low for the San Francisco Bay Area) and it is our grandmother's house. We will be inheriting this house from her and it is fully paid off.

Our expenses for gas/electric, cell phone/internet, insurance, etc. comes to about $536/month (which seems astronomical to me. The cell phone/internet are vital for my business - we did get rid of cable, though)

I am admittedly terrible at financial planning and found this website on my quest to become more knowledgable about this. I just want to make smart decisions and make sure that my current under-employment negatively impacts us as little as possible. I'd like to see this actually be an opportunity for us. What would you much more financially-savvy people suggest?

Phoebe

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Re: I just lost my job - could this be a good thing? Or maybe I'm screwed :)
« Reply #1 on: February 04, 2013, 01:28:58 PM »
Personally I would do Scenario #1 since your lack of emergency fund makes me really nervous.  What if your car breaks down, one of your pets gets sick or one of you gets sick?  With only $100 left over each month a common financial hit could having racking up more debt.  I'd take the job that would give me the most money fast and build up a cushion just in case, heaven forbid, something happened.  Once that E-fun is in place you can re-evaluate.

Good luck!

anastrophe

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Re: I just lost my job - could this be a good thing? Or maybe I'm screwed :)
« Reply #2 on: February 04, 2013, 01:38:41 PM »
#1, build up your savings, and explore your interest in nutrition while you work. Volunteer or do some other activity that feeds your interest and buffs up your resume while you save up.

gecko10x

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Re: I just lost my job - could this be a good thing? Or maybe I'm screwed :)
« Reply #3 on: February 04, 2013, 01:52:31 PM »
I would probably consider selling his car, and using the proceeds to pay off the credit card and create an emergency fund. I assume this would free up roughly $400/mo in cash flow.

Paul der Krake

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Re: I just lost my job - could this be a good thing? Or maybe I'm screwed :)
« Reply #4 on: February 04, 2013, 02:01:23 PM »
Hey MissBunny,

It'd be great to have the exact numbers of your post-tax income(s), as wells as your expenses. You don't mention food or discretionary spending, which leads me to believe there may be more leaks in that department than you think.

Two cars in SF? What is this madness? Sell one, and pay that card off. Beans and cold showers until that debt is gone.

You mention a house, but no kids. How large is the house? Do you have empty rooms to sublet to a quiet student, or a relative?

7 years of school, albeit part-time, seems like a looooong investment. What are your prospects once that's done?

DoubleDown

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Re: I just lost my job - could this be a good thing? Or maybe I'm screwed :)
« Reply #5 on: February 04, 2013, 02:07:25 PM »
Hi, sorry to hear about your job loss, but let's be optimistic that it turns into a great opportunity for you!

Your husband's (gross?) income is close to $7,000/month, so his take home pay should be somewhere around $5,000 - $5,500/month, at least, correct?

Rent is $2,000/month, which leaves $3000 - $3500/month for everything else. Besides the expenses you've listed totaling about $1200/month (which can be seriously reduced, by the way), where is the rest going that you are left with only $100/month?!!

I'm sure there are married folks from the Bay Area who are living off $3000/month or less including their housing payment. You could easily be saving $1000 - $2000/month or more of just your husband's salary. Regardless of your employment situation, I would really look for ways to reduce your monthly spending. It will be a necessity to do this while you ride out your change in employment, and will also be a great change to make for your future as your earnings increase. If you look through some of Mr. Money Mustache's recommendations for increasing your efficiency and reducing your spending, I'm sure you'll find some areas you can incorporate into your own lives.

Good Luck!

savingtofreedom

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Re: I just lost my job - could this be a good thing? Or maybe I'm screwed :)
« Reply #6 on: February 04, 2013, 02:31:29 PM »
Hi MissBunny,

Sorry to hear about your job loss but I hope you can turn it into something more profitable.

I have shifted job courses multiple times and at one point was also interested in nutrition.  After investigating more into number of years schooling involved and the salary of nutritionists, average is  49,000 based on info from indeed.com, I decided it was unfortunately not worth the effort.  Not to dissuade your future career choice but it is a lot of schooling for a potentially low starting salary - I assume you  can specialize to make a higher income.

Do you have any interest in personal training?  You can become certified much quicker and working with clients while you are working a regular job. I believe there are additional nutrition courses/certifications you can take as well but you may be limited in what you can advise your clients.

Depending on what your long term goals are - debt reduction or early retirement, becoming a nutritionist may prolong both of the goals - kinda depends on what is more important to you. 

In your current field getting more technical I would assume you could look at getting higher rates for your hourly work.

Good Luck!!


MissBunny

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Re: I just lost my job - could this be a good thing? Or maybe I'm screwed :)
« Reply #7 on: February 04, 2013, 03:13:55 PM »
Wow! Thank you all for your replies. To a few of your points:

1) Savingtofreedom: I have an interest in alternative/natural health, so personal training, while a great career and suggestion, isn't want really puts a fire in my belly. But yes, it is something to consider school vs. job prospect-wise.
2) DoubleDown - great suggestions!! My hubby brings home about $4k/month and he pointed out that I foolishly forgot to add his leftover income (after bills), so we will have about $400 leftover for savings a month (not much better!).
3) Paul Der Krake - I should clarify - we live in the San Francisco Bay Area :) Not in SF. We live across the Golden Gate bridge, in San Rafael, and the hubby works directly in SF. But yes! We are looking to downsize to one car.

I really appreciate all of the wonderful feedback - it has been so clarifying!

SunshineGirl

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Re: I just lost my job - could this be a good thing? Or maybe I'm screwed :)
« Reply #8 on: February 04, 2013, 06:16:46 PM »
Why not become the social media guru for the alternative health industry in the Bay area? I have no idea what form it would take, but I'm sure you could figure out a way to make it profitable!

alandjackson

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Re: I just lost my job - could this be a good thing? Or maybe I'm screwed :)
« Reply #9 on: February 05, 2013, 09:51:58 AM »
With those debts (credit and car), it sounds like you should at least work to pay off those. After those are paid off you can re-evaluate how you like your new job and decide what to do then.

Basically you'd be paying for your past purchases before heading off on a new life path.

unpolloloco

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Re: I just lost my job - could this be a good thing? Or maybe I'm screwed :)
« Reply #10 on: February 05, 2013, 01:44:25 PM »
If you take the one-car household option, since it sounds like his car is worth less, why not sell yours?  Reduces your monthly payments to 0 immediately instead of a ways down the line.  You might have to front a bit of cash if you're upside down, but that immediate increase in monthly income will go a long ways.

MooreBonds

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Re: I just lost my job - could this be a good thing? Or maybe I'm screwed :)
« Reply #11 on: February 06, 2013, 10:23:12 PM »
Scenario #1: I go back to working for someone else full time, making more money than I did as a freelancer, and bank 100% of my income so that in a few years I can quit and blast through school full time.

Modified scenario to juice it up even more - many employers will reimburse you for college-level courses, although some only if it's relevant to their company. Look for any and all job openings at them. Remember that for every $1,000 in tuition they pay for, it's like getting $1,000 / [1- (your marginal total tax rate, including social security/medicare!) ] in higher wage income.

Or, even better, look at all of the universities/colleges in the area for jobs. Most schools will give employees FREE course credits for any course. And many will even give you even more free credits after so many years of full-time or part-time work - not to mention that many schools still give (relatively) generous benefits, including retirement plan matching.

Arbor33

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Re: I just lost my job - could this be a good thing? Or maybe I'm screwed :)
« Reply #12 on: February 08, 2013, 08:11:08 AM »
Our expenses for gas/electric, cell phone/internet, insurance, etc. comes to about $536/month (which seems astronomical to me. The cell phone/internet are vital for my business - we did get rid of cable, though)

This does seem pretty high. Consider switching cell phone carriers to something like Republic Wireless. I've been using their service since December and am only paying $24/month for unlimited talk/text/and data for one device. I'm not saying it's the way to go for you, but explore your options. There's a good thread here somewhere about MVNOs that could give you a good handle on the topic.

As far as your gas and electric goes, did you know that California is deregulated? Look into ESCOs in your area and see what type of savings they can offer you. I work with Ambit Energy and my customers get a guaranteed savings in New York of 7% for the first two months and at least 1% thereafter. I don't know the details in CA. If you compare different companies you're bound to find some sort of savings, trivial as it may seem. Switching suppliers makes no changes to the way you pay your bill or get your service so don't let that discourage you. If you find that Ambit has the cheaper rates, let me know and I'd be happy to sign you up with their service.

I have to side with option #1. The name of the game is freedom and that's achieved with money. The more you have to do the work for you, the more free you are. That being said, there's no reason not to consider doing some combination of #1 and #3. You can work until you have enough savings to tide you over through the 12 week course and then go back to working for yourself. Truly, you need to be comfortable based on your expenses and savings. I know that I wouldn't be comfortable if I was only banking $100 of savings monthly.

I also strongly urge you to become a one car couple. Cars suck health and wealth from you. Bike when possible and contribute to the betterment of both categories. With less monthly expenses, you can better attack that credit card debt!