The badass way of handling a layoff

[Gone_Hiking]

THE SOB STORY
On November 30th 2016, I was given a 60-day layoff notice.  I would be jobless on January 31, 2017.  My then-employer, a major pharmaceutical company, offered generous separation terms.  Between the unused vacation, severance pay, a bonus, and an additional contribution into my 401(k) I was going to get some 29 weeks of salary.   This was not an unusual arrangement: some long-term employees were receiving a year of severance pay.  To some, this would be an invitation to a 6-month sabbatical.  But not for this cookie.

THE ACTION
December 2 - after assessing our stache and admitting that we haven't enough saved for me not to look for another job, I start job search in the earnest.

Mid-January - I am connecting local startups that need people with colleagues who are losing jobs.  I also land on the contact list for a local startup incubator and become involved with startup mentoring.

Late January - I receive a job offer from a local mid-size company.  While the job description sounds attractive, the salary needs a bump to be acceptable.  I counter-offer and the second salary offer is 23% higher.  Not as generous as my previous assignment, but I can live with that. 

Mid-February - start of the new job

Mid-March - the severance pay and 401(k) contribution show up.  Some of the severance pay goes to our brokerage account, and some to pay down the mortgage

March 31 - I move all of the money from 401(k) to my IRA, rebalance, and move bank savings to an account with higher interest rate

THE RESULTS
November 2016
Income - $207,000 per year
Savings rate 46.6%
Projected mortgage interest until payoff - $7,600
Size of stache: $711,000
Capital gains, dividends, and interest income -  $12,500 per year
Number of local startups I'm aware of - 0

April 2017
Income - $160,000 per year
Savings rate 43.3%
Projected mortgage interest until payoff - $4,700
Size of stache: $850,000
Capital gains, dividends, and interest income - $22,500 per year
Number of local startups I'm aware of - 53 and counting

[Bateaux]

Well done.  You're pretty much layoff proof now.  Some of those poor fools are no doubt going to suffer deeply.

[Laserjet3051]

Great job! What role did you perform in the major pharma company?

[nouveauRiche]

Way to turn a layoff into a windfall! 

[Gone_Hiking]

Thanks, all for your kind words.  I'm just happy to share and perhaps give someone hope in the face of a difficult experience.

Great job! What role did you perform in the major pharma company?

I was a project manager. The parent company wanted more PM contractors.

[wienerdog]

How did your dividends and interest go from $12.5k to $22.5k but your stash only grew by ~20%?

[marty998]

How did your dividends and interest go from $12.5k to $22.5k but your stash only grew by ~20%?

Guessing because most of it wasn't earning much to start with. OP said they've moved cash holdings to higher interest rates which would make a significant difference assuming a high cash balance.

[wienerdog]

How did your dividends and interest go from $12.5k to $22.5k but your stash only grew by ~20%?

Guessing because most of it wasn't earning much to start with. OP said they've moved cash holdings to higher interest rates which would make a significant difference assuming a high cash balance.

Oh I read it as just moved current cash to a different cash type account to collect more interest.  I didn't read it as moving cash to other funds.

[force majeure]

I would start by replying at the exit interview...

"This is fantastic news. I was going to hand in my notice anyway, as I am now financially independent and have more passive income than I need. This extra money will onto the pile. Thanks again. When do I get paid?"

[Gone_Hiking]

How did your dividends and interest go from $12.5k to $22.5k but your stash only grew by ~20%?

To the curious, here are the details.

In 2016, our passive income included:
$5600 (4.1%) from DH's IRA
$4300 (2.5%) from my IRA
$2600 (1.8%) from the brokerage account
$150 interest from the bank

The biggest difference was moving $153K from my 401(K) to my IRA and buying a couple of index funds.  The 401(K) included mostly Blackrock mutual funds custom created for my previous employer.  While the fees were low, I had no visibility to dividends or capital gains generated by the funds.   As I mentioned before, I rebalanced funds in the account to improve the dividend yield.  In addition, I added some $30K to the brokerage account and purchased more shares of a bond fund yielding some 3.3%.

As of April 2017, the yearly income looked like this:
$5600 (4.1%) from DH's IRA - I kept this the same to keep the calculation simple
$11,000 (3.2%) from my IRA
$5500 (2.5%) from the brokerage account
$650 interest from the bank

I hope this explains the passive income growth - just a few changes and so much difference!

[clarkfan1979]

Well done.

One of my good friends has a similar story. He got 9 months severance and got a new job in 2 weeks. I'm guessing the 9 months severance was around $70,000 to $100,000.

Another friend only got 3 months severance, but doubled his salary with his new job. He kept on telling me, "Getting fired was the best thing that every happened to me."

[2bdbest]

Congratulations!!
Me too reached the 6 digit figure this year. VERY exciting :-)
About the dividends with Blackrock ..my DH 457 company is removing Vanguard and adding BlackRock CIT's so we would not be able to see dividends either..sucks but what can we do?!

Quick question, how did you go about finding startup companies in your area? Im thinking of moving jobs for income increase and have been thinking about startup companies, but not sure how to search for them and find them.

[Gone_Hiking]

Hi 2bdbest,  I'm glad that you have asked.  Sorry to hear that your DH now has a Blackrock predicament.

I had two primary sources for my information: technology startup organizations and a two contacts in Toastmasters International who are serial enterpreneurs.
 
I had been active with Toastmasters for the last four years.  Acquiring second leads from the Toastmasters contacts was easy, as these were the people I already knew and were more than willing to help.

 With the layoff notice at the end of November, I found out that the local startup organization had a holiday mixer. So I went, talked to a few people, asked about their background.  I only stayed for about an hour, but I had four contacts after that day.  One of those people connected me to the technology transfer office at the university, which, in turn, led to becoming a volunteer mentor for the January/February cohort of university startups.  Another one of those people is active in the bio startup scene and led me to a few startup owners who, as it turned out, needed people.  That's when I started connecting my colleagues who were losing jobs with the business owners.

I hope this is helpful.