Thursday, October 31, 2013

The Layoff Project: detailed financial tips from LT on surviving 3 layoffs

Yesterday, we heard from LT, whose husband was laid off three times over 14 years working in the pharmaceutical industry. Here are some of the more detailed financial tips that she has for families affected by layoffs.

CJ: You mentioned that you're quite frugal -- can you talk a little bit about that? 

LT: I’ve always been a bargain shopper, but I go into super-saver mode when necessary! I mentioned eliminating all non-essential monthly expenses. When the 2009 layoff happened, we stopped a gym membership (check your contract—some have a clause for unemployment, ours did), cut the cable back to basic, stopped the newspaper (except Sundays), stopped the lawn care service and got rid of our land-line. I cut way back on buying any type of snack foods and my all-time favorite: diet coke. I made iced tea instead, or just had water. I stopped buying paper towels, and I still just use washable rags. I made most of our bread, rather than buying it, and I experimented with other homemade items, like bagels, yogurt and granola. All dinners, lunches, coffees or any fast food out stopped as well. I went almost a year without a haircut. All car and home maintenance was deferred. Our one big expenditure was a water heater, which we couldn’t put off replacing.

Our spending, during each bout of unemployment, focused on our children’s needs and wants before ours. During the first layoff, our kids were young so they really didn’t notice any difference. The second time they were well aware of our situation. We said “no” a lot to them, but we made sure that they both stayed active in their extracurricular activities: travel soccer and music (lessons + youth orchestra). We explored scholarship sources, and one of our children received a scholarship for music lessons. It helped. When birthdays came around, there were no big parties. I think I remember one of the kids having a couple of friends for a sleepover. We did ask family members to contribute to a bicycle for a birthday present. For travel soccer, we skipped most of the “team” meals and commuted to tournaments rather than staying in a hotel. For Christmas, the kids got clothes from us. Family members gave them the “fun” stuff and they also gave them gift cards so we could get them clothes when spring and summer rolled around. My husband and I didn’t worry about gifts for each other during the holidays and birthdays. Both of the kids did odd jobs when they could to earn some money, but we wanted them to focus on their academics, rather than working.

During our most recent economic downturn (how’s that for a euphemism?), our oldest started working part time to help with her expenses and our youngest is also working a few hours a week along with the occasional odd job to help with expenses.

When college acceptances started rolling in for our oldest in 2012, a full academic scholarship was the biggest blessing imaginable, and that’s the only reason college is a reality for our oldest this year.

When we needed to have a fun activity for the family, we took advantage of our state parks and local parks and recreation facilities. Our city provides free concerts each week in the summer. We went to all of them! We packed a picnic dinner and had fun. We also have a local park that has free movies on the lawn in the summer. We packed our own popcorn and went to the movies. For more of a getaway, we found state parks with great hiking trails.

Here are few other things that I did, that have always been a part of my routine, but became more important to our finances:

Use coupons and check prices at the grocery store! You don’t have to be a crazy extreme coupon person, but you can clip coupons that you know you’ll use. If you have loyalty cards for grocery stores, get the ads by email, make your list online and email or text it to yourself, and use a coupon combined with a sale price if you can. It’s not that onerous to look at local grocery store ads, make a list, and check for coupons before shopping.

Does your store loyalty card have other benefits you can use? For example, the grocery store closest to our home offers 5 cents off per gallon of gas for every $100 spent on groceries. I use this feature a lot to save money on gas. A Target credit card offers 5% off for every purchase at the store, so I use that whenever I shop at Target. I bring my own bags to the store since Target gives a 5 cent credit per bag and the grocery store gives me gas credit for using my own bags. Combining all of these can save a lot!
  • Plan meals. A family of four can eat well, without spending a lot, with planning. I bought extra if something was at a great price, especially meat, and stuck it in the freezer.
  • Pack lunches for your children (and the lucky spouse/partner who might still be working.)
  • Do you love Starbucks coffee? Buy it at the store (use a coupon combined with a sale) save your bag, and take it to the store for a free tall coffee. 
  • For big holidays, we scaled meals back so that we weren’t spending too much. I usually cook a standing rib roast for Christmas, but rather than spending $$ for that, we prepared an elegant dinner of mussels in white wine (I got them at Costco at a big discount) as the main course. We went all out using the good china, and we had a great, memorable dinner.
The one thing I would caution anyone: Do not use your credit cards to purchase things you cannot afford. If it isn’t necessary, don’t buy it.

CJ: Was there a particular comfort that you allowed yourself during the leaner times?

LT:  Wine. We like a glass of wine (or two) with dinner. We didn’t buy (and won’t buy) expensive stuff. Trader Joes serves our needs quite well. We also had people over, when we could. We planned carefully and often had potluck dinners.

Another comfort that I allowed myself this time was a $75 fee to join a running group and $100 for a good pair of running shoes. I tried to do the running with my so-so shoes, but I got tendonitis so bad, I could hardly walk. I coughed up the money (reluctantly) and bought expensive shoes that saved my ankles. Running has kept me healthy in mind and body.

CJ: How do you go about explaining the situation (and the inability to spend money) to friends or relatives or even your children?

LT:  We’ve been up front with our friends, and they’ve been supportive. There’s no stigma about losing a research job in pharma! Sure, we’ve been invited to do things (go to the movies, go out to lunch or dinner) and we’ve just had to say, “no, thank you.” One of our children has had some issues through all of this, but I think a lot of that came when Dad moved to the [redacted] coast. That’s a lot for a high school kid to deal with! We have been as open with our children as possible. We’ve tried to stress that we have to live within our means, and that we’re all in it together, and we’llve make it work, somehow. When folks thought we were crazy for living on two coasts, we told them we had no confidence the job would last, and they understood our reasoning.

I don’t think our relatives have a clue about what we’ve been through. Our parents never dealt with job insecurity, so they don’t understand how or why their well-educated kids don’t have steady, well-paying jobs. (Mine is a stable job since I have tenure. However, my salary at a [redacted] is very, very, low—I’m an outlier in the ACS salary survey.)

CJ: How can your family and friends help?

LT:  Stay in contact! Understand that just because someone doesn’t have the means to go out, you can still get together and have fun.

If you’re the fortunate one who is still working for the company that let your friend go, call or email once in a while to see how they’re doing, but don’t ask stupid questions, like, “are you going on vacation this summer?” Also, don’t invite your out-of-work-former-colleague to lunch, and then expect them to pay! That’s pretty rude. If you have a job, and you extend the lunch invitation, pick up the bill.

One of the nicest things that happened in 2009, was when our youngest saved up enough money to take Dad out to lunch! I thought it was incredible for a middle school student to think about doing something like that for a parent.

If you are like us, and your parents and siblings live far away, if they offer to help pay for transportation costs so you can go home for a holiday visit, that’s a wonderful gift.

A few additional thoughts:
  • While you’re working, save as much as you can. You need that 6 months (or more) of living expenses saved up.
  • If you received stock options from your employer, and if they are a publicly traded company, look them over carefully. My husband found out that all of his shares were immediately vested since he was terminated in a RIF. Nobody mentioned any of this to him during the meeting with HR when he was let go. He did his due diligence (lots of phone calls and emails) and we found a way to use the cash value of our life insurance to help us purchase the stock. We had 90 days to do this so it was a bit stressful, but so far, it’s more than paid off. The private biotech gave him a bunch of stock options over the years, but since it was private, with no intention of doing an IPO, we didn’t bother to spend our savings to purchase any of the stock in 2009, which was a wise move on our part.
  • Continue to be frugal while you’re working: If there’s a great sale on something you routinely use that’s not perishable, buy a few extra (especially if you have coupons) and put them away. It’s nice when you know you have some extra dish detergent or toothpaste stashed away when you don’t have a paycheck.
  • Plant a garden in the summer. Fresh vegetables are expensive, plants are not and you can freeze most vegetables for the winter.
  • Your kids will live without the newest iWhatever. If they get teased (as mine have for not having the latest and greatest gadget) you’ll be there for them.
  • Your kids don’t need a car as soon as they get a driver’s license, even if their friends all have cars.
  • Vacations are a want, not a need.
  • Once you start back to work, give back to your community. Our local food bank displays a shopping list at the entrance to the grocery store. I feel a special obligation to help others who find themselves in a bad economic situation after what we’ve experienced.
If you find yourself in the unfortunate situation of living apart:
  • You won’t be able to save much, if at all. The cost of maintaining two households (even if one of them is a crappy one bedroom apartment) is significant. Rent combined with plane tickets home consumes a lot of income.
  • Call and text and Skype as much as possible. 
CJ here again. Thanks to LT once again for her story and best wishes to all of us.

The Layoff Project is an attempt to collect the oral histories of scientists who have been affected by the changes in the pharmaceutical and chemical industries. The explanatory post is here; stories can be left in the comments or e-mailed to chemjobber -at- gmail/dot/com. Confidentiality and anonymity is guaranteed.

11 comments:

  1. Thanks LT for your story and tips, its really good to hear from others in tough economic situations.

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  2. The best strategy for surviving layoffs is two-fold: save when you are working, and be flexible. I am having a hard time imagining purchasing a home given the state of the market for chemists. I certainly can’t predict where I will be living a few years down the road!

    My wife and I live on only 55% of my mediocre PhD chemist salary, with 20% going to taxes and 25% saved. In my 7.5 years since my post-doc, this has resulted in savings totaling over 250% of my base salary, enough to fund five year’s worth of our current spending assuming a bit of interest. Of course, about half of this money is in retirement accounts, but even just with the half that isn’t, we could easily go three or more years with no income once severance and unemployment benefits factored in. Common-sense penny pinching and/or side jobs could stretch this to at least four years. Throw in the fact that we are renters and chronic nomads willing to work anywhere a job pops up, and we don’t really worry so much about layoffs.

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    1. Im 50 and still rent. My parents think there is something horribly wrong with me.

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    2. Renting vs. buying is probably influenced by whether you have children, and the cost of living in your area. When children are a part of your life, the stability of a neighborhood and the public school system are major factors when deciding where to live. I would imagine, for many, purchasing a home in CA would not be a possibility. Ever.

      I doubt that most people early in a career or in a postdoc would be able to save at the same level as anonymous if they were also paying daycare expenses for their child(ren).

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    3. Heck, in Canada you are even more of a pariah if you don't "own" (translation: rent from the bank) a house.

      Given the instability and relatively lackluster pay associated with being a PhD scientist, I opt to never own property, never have children, and I aim to save at least 20% of my salary. I will never own property because I may need to move anywhere in North America for a job. I will never have children because I've never really cared for one, and on top of that I don't think I can reliably afford to raise one. Having a child would certainly decimate the following point, which is: I am investing 20% of my salary in the hope that I can retire comfortably, and to have a backup for long-term unemployment. This is all while I am covering 90% of the living expenses of my girlfriend and I. Maybe we will be better off when she is done school.

      Please, if having 2.3 children and a white picket fence is important to you, do not choose science as a career.

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    4. In the US, according to the 2012 Census Bureau data, the average household income was 51K. The combined standard deduction and personal deduction for a single person is 10K. The 15% marginal tax bracket ends at 36K taxable income, or 46K total income. In order for you to be paying 20% of your total income in taxes, your taxable income has to reach into the 28% bracket. If your pre-tax salary is twice the average household income, do you really want to make the claim that your salary is "mediocre?" I cringe when my fellow scientists complain that they are poor while earning well above an average wage. I know we sometimes feel our work is undervalued compared to other professionals and perhaps that's true, but it makes us look incredibly out of touch when many of the full-time employed phD's I know complain how "poor" we are.

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    5. It does indeed make us look out-of-touch...until you explain that the majority (70%) of Americans do not hold 4-year college degrees. Only 3% hold doctorates or professional degrees.

      There is something seriously wrong with the system, and Pollyannas like yourself do nothing to fix it.

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  3. Sadly, this is how my husband and I have lived for five years employed at a PUI as a tenure track prof and adjunct instructor, respectively.

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    Replies
    1. If you don't mind me asking, why "sadly"?

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  4. "If your pre-tax salary is twice the average household income, do you really want to make the claim that your salary is "mediocre?""

    I meant "mediocre for a PhD chemist". Below average in fact (think high five figures). Obviously that is still higher than the average American. However, your 51k figure is also deceptive, as that "household" figure includes a very large number of singles and retirees. It's not really useful to compare these groups to two-adult working-age couples, relative to which, btw, we are pretty close to the median.

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    1. What is the median household income for two-adult working-age couples, incidentally? I'm unfamiliar with that particular subset of household income stats.

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