Salary, Negotiating, and Interviews
Money Management
Cash and Burn Rate Spreadsheet
About Asking for a Raise
Costly Mistakes
Job Hopping Means More Money
Negotiating Your Salary
Retiring is a Large Source of Money
The Art of Negotiating
You Can Ask for More Pay
Financial Management Software
Online Time Card


Money Management

Financial Strategies

Apparently, it's not enough to be able to write a resume well and locate another job. How you deploy your other assets, such as cash, are even more important than previously thought. There's a lot of unemployment going around these days. The Job Fairies haven't been immune. Sure, we negotiate good deals and get jobs quickly, but when there aren't any jobs to be had, we have to wait it out with everyone else. The Nightshade Fairy has worked for three different dot-coms. They've all gone out of business through no fault of her own. Shocking Pink and Green have each been laid off within the past year. How well you've prepared for circumstances like these is what separates the Fairies from the miserable.

Start Now

You may not think you are in any danger of being laid off or your company going out of business. That's good, but no excuse for not preparing. We've included a cash and burn rate spreadsheet so you can see what your spending and saving should be over a year's time. You input your monthly expenses (using negative numbers, which will show up in red) and your expected cash coming in (these should appear in black, using regular numbers). You then copy these numbers out over a year's time, and see what kind of money you will have left over, if any. If so, that's good. Restrict your spending while there's time, and save your money. If not, you have a problem. You may want to drop the cable TV, cut off spending on all credit cards, or sell a car. Refinance your house before you think you'll need to. You may not be able to consolidate debt or alter the terms of your mortgage in any way if you are not employed.

Take Advantage of Opportunities

Not everyone works at a place that hands out annual bonuses, but Green and Shocking Pink used to. Whenever Shocking would get bonus money, it was debt reduction time. She never spent it on anything fun. When she had a car loan, they would suddenly get a huge extra payment in the amount of the bonus. One year, she paid off almost all her credit cards in one swoop with the bonus money. Likewise with the tax refund money. When her employer laid her off, she used the severance to pay off the remainder of her car loan and any residual credit card amounts, which weren't much by that time. (When she felt unemployment approaching, like when the layoffs first started at her old company, she took that opportunity to cut back on spending then, as if she were already not working.) She put the rest into easily accessible savings. She's had some extensive periods of unemployment, punctuated with occasional contract work, but she isn't worried. She'll be making her house payments OK for a while. Likewise with Nightshade when she was most recently laid off. She cut out the restaurant lunches and dinners, among other luxuries. All of her cars were paid off, so all she had to pay for was gas, insurance, and routine maintenance. She was unemployed for over six months, but she still has a decent amount in savings left.

Get Rid of the Highest Interest Rate Debt First

With minimal debt load, you can remain unemployed a lot longer without the danger of losing your place to live. Try it for yourself using the spreadsheet. Take the total amount you owe on each credit card and divide it by 12. Enter that amount under each month. See how much credit card payments could be eating up? Because whether you pay it back sooner or later, you will have to pay it all back eventually, with interest, so get in the habit of paying your cards off each month or not using them at all. You will never have an investment that pays you as much or more than you will be paying in interest to credit card companies. Now remove all those payments (temporarily). Your money could have lasted a lot longer had you not used your plastic so much. Do the same with your car payment to see how dramatic the difference is over a year's time. When you're employed, you want to get rid of as much debt as you can. Send in extra on your mortgage to be applied to the principal. Pay off your credit cards first and your non-deductible loans second (i.e. cars). When you're not employed, now is the time to defer all payments as long as possible. Put the cable TV on hold. No housecleaning service. No driving through the fast food places. Make the minimum payments on your credit cards. Call your mortgage company, before there is a problem, and inquire as to whether or not they can defer any payments (some lenders just tack them onto the end of your loan) - but beware. They can become a balloon payment, which means all the money you didn't pay is all due at once in one lump sum at the end of your mortgage.

Pay Attention to Economic Indicators

You should be reading the business section of your newspaper every day. When you read articles about businesses in places like cnet.com or newyorktimes.com, use these to gauge which way the market seems to be heading. Are there many IPOs (initial public offerings)? This might be a sign of health, or a sign that the market is overheated. Is the Federal Reserve cutting interest rates, or raising them? How about interest rates on mortgages? Are they rising or falling? What is the current unemployment rate? Is it rising or falling? Is the national level of unemployment different significantly from your local level of unemployment? Which specific market segments are doing well or not? If pure IT's slow, maybe IT within health care is not. IT within manufacturing may be recovering while IT within telecom is still shaky. Only if you watch the financial news, read the business sections, and keep an eye on market conditions will you know what kind of worst-case scenario you have to plan for.


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