In January of 2008, my husband was working a big corporate job. Although he’d survived seven layoff cycles in his six years there, the recession finally caught up with him, and he was laid off. He was given a severance package of three months’ income.
While the layoff wasn’t a complete surprise, it still left us crazy with fear. I had just stopped working six months prior when our first son was born, and we’d had to adjust to life with 40 percent less income.
Financially, we were a mess. We had credit card debt of over $10,000, a car payment of $500 a month and no savings to speak of, apart from the severance pay, which was the only money keeping us from foreclosure. Luckily, we had no student loan debt hanging over our heads. But with only one income, which was much smaller than we were used to, no savings and lots of debt, we needed a plan and fast.
My husband quickly swallowed his pride and wrote emails to all his former classmates, ex-colleagues and friends. He called everyone he knew. He dutifully went to his former employer’s sponsored job-finding sessions, mostly to network. He applied to every open position that he was remotely qualified for (or way overqualified for).
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A month later, the networking paid off. A former boss who was impressed with his work ethic offered him contract work at another large corporation. It wasn’t a good fit experience-wise, but it would pay the bills. He went to work every day, even though it was clear that this wasn’t the job for him.
The stress of being laid off caused a heavy strain on our marriage. My husband hated that 100 percent of our financial future was on his shoulders and was resentful that I wasn’t working. I was angry that he kept pushing me back to work when I felt I needed to be home with our son, especially since childcare would eat into most of my salary. His contract job was getting worse and worse.
“I would quit, but we need the money,” he’d say, as he felt increasingly incapable of doing anything right. He feared that he’d be fired almost every day.
Meanwhile, I realized that we had to make better financial decisions. He’d been working at the new contract job six months when I found a copy of Dave Ramsey’s popular book “The Total Money Makeover.” I devoured it in a day and convinced my husband that we needed to eliminate our debt. We applied what was left of the severance pay, minus $1,000, to our credit card and car debt, and began cutting the expenses we used to think were so necessary — going out to restaurants, lawn service, house cleaning. I drew a big red thermometer on our bathroom mirror, and we colored in lines every time we managed to pay off a bit more debt.
In November of 2008, the contract company laid off all their contract workers. My husband was given no severance because he wasn’t an actual employee. The familiar feeling of panic rose in our throats. It was strangely mingled with relief — no more waiting to be fired. This time, though, we only had an emergency fund of $1,000 and the money in our checking accounts to get us through.
Again, my husband sprang into action. He contacted some ex-colleagues from the company that had originally laid him off and worked out a deal so that they rehired him in his old position as a contractor. Because he would no longer receive benefits, he asked for 20 percent more income and got it. We were financially solvent but at a huge emotional cost.
The uncertainty and fear of those two layoffs ripped the rose-colored glasses off our faces. No longer were we the innocent 20-somethings who thought the job market was ours for the taking. We’d gone through more stress as a young family than we would for the next decade.
A year later, after much searching, my husband took a new job in a company with a no-layoff policy. It meant a cross-country move, but job security had become more important than living close to family. Terrified of having a mortgage again, we rented for our first two years in our new state. We also continued to pay off our debt and save for the future.
It took 18 months, but we paid off all our credit card and car loan debt. Then, we began to focus on net worth. We started saving as much as we could so that we’d never again have to live through the uncertainty of having no emergency fund. Ten years later, we now save almost half of our incomes and are just a few years away from financial independence.
Without those two layoffs in one year, we would never have turned around our terrible financial habits. That terrible year laid the groundwork for the solid financial footing we have now, and it forced us to start paying attention to what really matters — not stuff, but each other. It took living through huge amounts of uncertainty and fear to spur us on to learn how to manage our money better. After a decade of perspective, I’m so grateful for those two layoffs.
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