Loss of employment and Savings Goals

Hi All

I have two weeks left in my current job before my contract expires. I won't be renewed (it gives me some solace that the reasons appear to be unrelated to my performance and that I had a couple of past extensions).

In the last year, I became quite financially literate and learnt many things about money I never knew before. I was making big plans with saving, considering future investment and superannuation decisions, and was actually taking action to live within my means and only buy what I needed in order to save. I rarely splurge or buy pointless items at all now. I got through the early stages of temptation, and now I am mostly okay each day.

Now I face unemployment (although I am alive in some other job application processes that hopefully bear fruit). The only other time I was unemployed in my working career was for a period of 4 months. My recollection was that it was terrible and savings, and holidays paid out from the previous job, disappeared. Then debt grew.

I wonder what I do now? I am not talking of a job searching nature, as I am working hard in that area. But do I now enable myself to temporarily shelve my savings plans, and just focus on long-term sustainment of what I have? I feel like I need to survive unemployment by being really stingy with my money. When I am working again, I can set those saving goals straight back up again based on my new salary.

Comments

  • +2 votes

    I don't know but personally if I could, if I had no job I'd definitely be saving as much as I can. Maybe worth setting aside a small amount you're happy to spend just to have fun with so you have a mix of enjoyment and financial safety?

  •  

    In a way, I am happy I saved some money, in addition to accumulated some leave to be paid out. There is always the feeling "I wish I had saved more," but the lesson for me would be to ensure that if I ever become unemployed a third time, then I have even more saved again.

    I think I'll find it somewhat easier this time than two years ago because I am familiar with what to do. Plus I saw a lot of friends unemployed last year due to COVID-19 (albeit they cashed out 10k of super).

  • +1 vote

    Hi,

    Good luck with the Job Hunting, try and use the people you currently work amongst and ask them if they know of anything.
    (It is a lot easier to do this while you are still there and they may have been looking around too).

  • +1 vote

    Withdraw your savings out of your bank account before you apply for Centrelink, or they'll make you wait a lot longer before you can get help

    • +2 votes

      Used to be sound advice, but it isn't anymore. Centrelink asks for bank statements now, and they'll definitely have questions about where that money went.

      Their assumption is that you have the money until you can justify it being spent on a necessary expense. Even if you don't have the money because you spent it on a holiday or even used it to pay off your mortgage, they'll still give you a payment preclusion period with virtually no appeals as if you did.

      I've seen multiple people who tried to pull a fast one here and got burnt by it. One of the worst was someone who got a huge workers comp payout, wasted most of it immediately on pokies and a new car, then centrelink gave them an 8 month preclusion period and said to figure it out. Can't work because of comp, had to sell the car immediately at a huge loss to make ends meet, then had to move back in with his elderly mum. Little sympathy, but it still seemed like a stupid way to (profanity) up your life.

      • +1 vote

        Well worker's comp will be official money like redundancy payouts etc that are listed on your employment separation certificate, that's impossible to hide. Different to general savings. But take your point that they will look at your bank statements. I guess you'd have to have a read of their policies and see what exactly they look at to see if there's any way you can make it better for yourself. Eg maybe 5k of savings makes you wait 3 months but they only look at 1 month of bank statements - maybe that means you can withdraw your savings then wait a month before you apply and have your statements not show that money. I don't know what their exact policies are so could be worth OP doing some research.

      •  

        I suppose it depends how much. If it’s just making a few cash withdrawals at the atm over the next few weeks, and buying some supermarket gift cards which OP will need anyway to bring it under a threshold it could still be a worthwhile strategy. Also paying any bills due if just over the threshold could make a difference. Depends how close OP is to the asset limit.

  • +1 vote

    Great advice. I think there is a real difference for me when I think of 'why' and 'what'. If I think 'why me,' or 'why aren't they keeping me,' it is easy to be sorry for one's self, if not get angry or forget to be grateful they even gave me a job once upon a time. I find 'what,' helps me more. As in, 'what can I control and what can I do about it'.

  • +2 votes

    Focus on covering non-discretionary expenses. Defer discretionary expenses until after you re-establish a regular income stream.

    Are you financially prepared for up to 8 months unemployment?

  • +3 votes

    I am a contractor also, have been for over 10 years.

    During that time, I learned quickly that work can be volatile. Although I have been mostly lucky, I have seen many people let go with short notice or asked to take a rate cut or leave.

    My first goal upon contracting was to pay off the house, then save and save for a rainy day.

    Once you have the buffer, you will feel more comfortable with life's events and be able to roll with it.

    Job loss mitigation starts years before it happens, and have a plan in place on what items you can do without when times get tough, this means having a well set out budget so you can see the discretionary and non-discretionary items.

    •  

      Thank you. I recall when I once had a full time job, like many others, I felt extremely entitled to my pay and all of its benefits (and travel allowance). Being a contractor is so different in that I now have to have not only a plan to save, but a plan to mitigate the potential for a salary to completely disappear for days, months or more. Yet, I work around a team of full time staff who still talk and sound so entitled lol

      •  

        Don't worry about their mindset.

        As a Contractor, you are paid more to cover for all leave types you miss out on, and potential job losses.

        So bring prudent with money is more important than ever.

        I lost my contract for 4 months and never had to worry about money.

      • +1 vote

        Depending on the industry you're in those full time staff might be getting around half the take home pay that you were as a contractor.

        Contractors get paid a premium to accept the risk of job loss (and loss of paid holidays) and therefore it makes sense to save a substantial portion of your income. Sadly its really easy to fall into a habit of spending more when you have so much income coming in.

        I'd suggest the number one priority for you when you get your next contracting role should be to save 6+ months of salary so if this happens again its only a setback not a devastating blow.

  • +2 votes

    I rarely splurge or buy pointless items at all now.

    And you're on ozbargain? That is self control to the max.

    • +1 vote

      Well, it is like flybuys and coles rewards. I like buying items that I already wanted to buy anyway, but got it cheaper and/or with points.

  • -1 vote

    Buy a hotdog franchise.

  • +2 votes

    I find it a bit ironic. Most of my relatives live pay cheque to pay cheque, if not on centrelink or very low paying jobs. They look at me as rich when I am lucky to be even middle class. So while I am concerned about my future finances, and likely unemployment, they have the view that I am okay as I have thousands of emergency dollars. I guess one man's garbage is another man's treasure (I hope that doesn't sound harsh).

    • +5 votes

      Never tell friends and family how much money you have, especially those who are living pay cheque to pay cheque or on centrelink.

      •  

        so what do you say when they're so persistent about it? "Fak off, I don't want to talk about it!" or "That's it, we're not friends anymore - you ask too many questions that I don't want to answer!" or… how do you explain yourself when you suddenly acquire a nice car or something expensive that they would think you couldn't have afforded it and them noticing it?

        •  

          Just lie to them about it.

          •  

            @sangohan: Will have to make another lie when that lie comes around and hits me back….

      • +1 vote

        no comment huh?

        •  

          Just say,"I do OK" or change the subject, seriously it's none of their business and people who ask are just rude.

          •  

            @onetwothreefour: What if they said "Well I told you mine, you have to tell me yours now!" They would think it's fair after telling about themselves to have your obliged to tell them about yourself….

        •  

          Let them think as they like. Alternatively, you could purchase a normal family car to not draw attention to your expenditure and or worth.

          •  

            @Joshaz: Yes….. I need an alter ego…..a cheapskate, freeloader tightarse self and the dumb spend everything you got self as soon as you get your money….and never reveal both to anyone….

            •  

              @Zachary: Work on your communication and social skills and you'll know how to answer.

              •  

                @Ughhh: If only I was a smooth talker….

  • +2 votes

    Yep, it’s probably a good idea to be a bit stingy until you find another job. If you continue to be a bit stingy for the first little once you get a job, you might catch up to where you wanted to be quite quickly.

    Being stingy doesn’t necessarily mean being miserable either, you could get into some sort of free hobbies (e.g. outdoor fitness/running).

    Now is probably a good time to sell anything you no longer want on marketplace or similar, since you’ll have time on your hands and every little bit helps. Could also be a good time to do a stocktake of your expenses and see where you can make savings.

  •  

    The savings you have accumulated exist for a range of purposes (including being a rainy day fund). It always sucks to find yourself between gigs as it erodes your financial position, but you are absolutely far better off with this cushion than not.

    But do I now enable myself to temporarily shelve my savings plans, and just focus on long-term sustainment of what I have? I feel like I need to survive unemployment by being really stingy with my money.

    You will somewhat need to shelve your savings plans, as (I'm assuming) your net cash flow position while in unemployment will likely be neutral at best. Depends what you mean by "stingy" … clearly there is likely to be a need to spend less than you've been recently used to, but it doesn't necessarily mean living off fresh air and fingernails either.

  • +2 votes

    Work on survival. Cut out all unnecessary expenditure

    •  

      rent is the most expensive, so he should just forego it completely, sell/trash everything he owns except the car and some clothes on his back and other necessary items for getting a job and then just live in the car until he finds another job.

  • +1 vote

    Gonna have to lay low for a bit my friend.

    Fortunately you have already spent several months exercising your frugality muscle. You know instinctively the kind of expenses you can cut, and you are likely getting good at cooking your own meals. Imagine the situation if you hadn't had that practice!

    Good luck! Australia pays contractors more, but most other countries pay them less because they aren't a real employee and the company rewards its employees first. So there's that, too.

  •  

    laying low and being prudent with money is the best course of action. May I ask what field do you contract in and your age/savings?

  •  

    But do I now enable myself to temporarily shelve my savings plans, and just focus on long-term sustainment of what I have? I feel like I need to survive unemployment by being really stingy with my money. When I am working again, I can set those saving goals straight back up again based on my new salary.

    Of course this is what you should do. If you have no income the amount of money you have will only decrease over time due to living costs.

    I don't know what else you've been considering but this is the most sensible way to go about things.

    Sorry to hear about your job, hopefully you get a new one soon.

  • +1 vote

    This time of year is generally a good time for those looking for roles, although will be interesting to see if that rings true with covid. A lot of people decide (I imagine over Xmas and NY and a break that they hate their job or) it’s time to move on which opens up some opportunities, and a lot of companies will hold vacancies until the new year.
    Keep searching for your next gig via linked in, seek/indeed etc

  • +1 vote

    If you have the job hunting side down, then my advice would be to use this time to change your mindset and stick with it even when you have a job. Assess all your liabilities, assets and expenses. Eliminate or drastically reduce what you don't need. Get into the mindset that every dollar counts, don't buy it if you don't need it, save what you can. Sell what you don't need or don't use now. Only loosen your belt and buy 'wants' minutely when your income exceeds all your expenses and savings goals. Never live beyond your means/income again!

  •  

    Sounds like OP has got thier priorities and plans sorted out already

  • -3 votes

    So, you have all this money, and a house I presume, and two cars, and you now expect to bludge off the Govt for unemployment benefits.

    Go tell the dole office how well you have been accumulating all your wealth, but want to be paid the dole bc you don't want to use your accumulated wealth.

    •  

      Where did you derive that OP has two cars and a house (either paid or mortgaged)…?

      We don't even know the OPs age and profession. I think most readers are assuming something like 30yo, and working as an construction contractor.

  •  

    I just want to thank everyone for their advice/ information/ guidance.

    In a crazy turn of events, I had a job to walk straight into so only spent a Saturday and Sunday unemployed between two jobs.

    Giving up contracting, I am taking less money. But I think I am happier to have something longer-term (albeit I have to get past probation like any new job).

    Now that I am going to be paid out my holidays from my old job, I run a greater risk of going up to the next tax threshold, so I now need to do a bit of careful engineering (maybe donations and or salary sacrificing).

    Reflecting on this in hindsight, I am torn whether folks like myself are just stupid/ignorance of the need to have better financial literacy. Or whether certain industries capitalise on people not having a clue about how to save/invest their money. In any case, this whole experience has shown me a need to simultaneously appreciate every dollar I have (and live within my means), but also try to get better wages and savings (albeit not losing gratitude for what I have or ignore a difficult journey and hardwork to progress).

  •  

    I have actually found that obsessing over making money or ignoring it were both completely counter productive. Now I need to plan everything, but neither stare endlessly at my spreadsheets and bank balances multiple times a day (this leads to disappointment and impatience).