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You don't have to use the emergency funds if you get unemployment.
How are you taking a hit working for $30K from $70K in terms of basic spending?
Quote:
Originally Posted by selhars
I think it's more so not that they lost a job -- but that they couldn't find ANOTHER one. Clearly a person who lives paycheck-to-paycheck with no/little savings is at risk. But some people HAD more than six months a year or MORE of savings AND 401K and ROTH Ira -- and STILL had to spend it all down. But at least having that helps stretch unemployment or a lower salary or hourly wage.
A person making 70-thousand and living below their means and finds a jobs for 30-thou even with savings may be at financial risk.
Even people who live below their means -- and I think there are lots of them -- may not be able to take a 30, 40, or 50 percent pay cut. I'd say even most FRUGAL people aren't living on HALF or even 3/4 of their income. That's a heck of a hit even for someone who is "frugal."
How much "below your means" are we talking about in order to save money or have an emergency fund?
Haven't read the whole thread, but just had to add a classic encounter from this week....
Once a week a helper comes to the house of my disabled father to assist for a few hours. She's not the greatest worker, and she spends more time talking on her cell phone then helping my father some weeks. But anyway.... this week should told us her car was just booted. She had dozens and dozens of parking tickets, and actually had gotten on a payment plan with the state, but I guess she fell off the plan..... And today she filed for bankruptcy too. So I guess she has payment problems in other arenas.
And while she was telling me this she took two personal calls on her Blackberry cell phone... including one from Comcast. She is paying for a tech to come out and set up more cable boxes in other rooms of her house.
You don't have to use the emergency funds if you get unemployment.
How are you taking a hit working for $30K from $70K in terms of basic spending?
1) For those who are unaware, uh, unemployment usually doesn't pay anywhere near what your salary was. One site I saw said: "Unemployment compensation usually pays between 48% -52% of your monthly salary." And other sources all said it's no where near what the worker made while working. AND I believe it's taxable.
Basic spending is relative. I personally don't know anyone who could live off of less than half of what they make. No one I know makes that much to be able to take a hit like that.
So what do you mean, "You don't have to use the emergency funds if you get unemployment?" You may not run through your EF AS QUICKLY if you get unemployment, but you still might have to tap into it, so it might last longer.
2) Perhaps I wasn't clear...Do you not see how a person who was making 70-thou, loses a job and is out of work for a while, then finds a job for 30-thousand -- less than half of what they made -- would be taking a financial hit?
1) For those who are unaware, uh, unemployment usually doesn't pay anywhere near what your salary was. One site I saw said: "Unemployment compensation usually pays between 48% -52% of your monthly salary." And other sources all said it's no where near what the worker made while working. AND I believe it's taxable.
Basic spending is relative. I personally don't know anyone who could live off of less than half of what they make. No one I know makes that much to be able to take a hit like that.
So what do you mean, "You don't have to use the emergency funds if you get unemployment?" You may not run through your EF AS QUICKLY if you get unemployment, but you still might have to tap into it, so it might last longer.
2) Perhaps I wasn't clear...Do you not see how a person who was making 70-thou, loses a job and is out of work for a while, then finds a job for 30-thousand -- less than half of what they made -- would be taking a financial hit?
When you're faced with unemployment, it all depends on what your expenses are and using your emergency funds. If you are already living below your means, it can work.
When I lost my job (back when unemployment was only 6 months), the check equaled 49% of my working pay. Since that was about what I was living on when I was working, the biggest adjustment I had to make was not putting money away for retirement.
Lesser adjustments were made (giving me savings just in case I didn't find a job in 6 months), I immediately stopped "wants" like Netflix, DishTV, and book-buying, etc. I didn't go out. The only time I left the house was to an interview or the unemployment office, and did what little grocery shopping I needed on the same trip. I stayed home and didn't spend money.
And I really believe it all worked because I was already living frugally before unemployment. My credit card was at zero the whole time. I was never late on a mortgage payment. I never touched my emergency funds.
Happy to say, in the last week of my 6 months of unemployment, I got a temporary 30 hour a week job. Three months later it turned into a permanent 30 hour a week job. One month after that, it turned into a permanent 40 hour a week job. I'm still there and my paycheck is larger than it was at the previous job. And I'm still living way below my means.
When you're faced with unemployment, it all depends on what your expenses are and using your emergency funds. If you are already living below your means, it can work.
When I lost my job (back when unemployment was only 6 months), the check equaled 49% of my working pay. Since that was about what I was living on when I was working, the biggest adjustment I had to make was not putting money away for retirement.
Lesser adjustments were made (giving me savings just in case I didn't find a job in 6 months), I immediately stopped "wants" like Netflix, DishTV, and book-buying, etc. I didn't go out. The only time I left the house was to an interview or the unemployment office, and did what little grocery shopping I needed on the same trip. I stayed home and didn't spend money.
And I really believe it all worked because I was already living frugally before unemployment. My credit card was at zero the whole time. I was never late on a mortgage payment. I never touched my emergency funds.
Happy to say, in the last week of my 6 months of unemployment, I got a temporary 30 hour a week job. Three months later it turned into a permanent 30 hour a week job. One month after that, it turned into a permanent 40 hour a week job. I'm still there and my paycheck is larger than it was at the previous job. And I'm still living way below my means.
1) For those who are unaware, uh, unemployment usually doesn't pay anywhere near what your salary was. One site I saw said: "Unemployment compensation usually pays between 48% -52% of your monthly salary." And other sources all said it's no where near what the worker made while working. AND I believe it's taxable.
That is highly dependent on the state where the employee is based. In many, there is a maximum benefit of $300-350 per week which may be a small fraction of the wage that the person has been earning.
Haven't read the whole thread, but just had to add a classic encounter from this week....
Once a week a helper comes to the house of my disabled father to assist for a few hours. She's not the greatest worker, and she spends more time talking on her cell phone then helping my father some weeks. But anyway.... this week should told us her car was just booted. She had dozens and dozens of parking tickets, and actually had gotten on a payment plan with the state, but I guess she fell off the plan..... And today she filed for bankruptcy too. So I guess she has payment problems in other arenas.
And while she was telling me this she took two personal calls on her Blackberry cell phone... including one from Comcast. She is paying for a tech to come out and set up more cable boxes in other rooms of her house.
Unemployment pays enough to pay your bills without touching your emergency funds.
$70K to $30K is a big drop but the only financial hit would less savings and less money for investments. $30K a year person should not have any problems pay his/her bills though.
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Quote:
Originally Posted by selhars
1) For those who are unaware, uh, unemployment usually doesn't pay anywhere near what your salary was. One site I saw said: "Unemployment compensation usually pays between 48% -52% of your monthly salary." And other sources all said it's no where near what the worker made while working. AND I believe it's taxable.
Basic spending is relative. I personally don't know anyone who could live off of less than half of what they make. No one I know makes that much to be able to take a hit like that.
So what do you mean, "You don't have to use the emergency funds if you get unemployment?" You may not run through your EF AS QUICKLY if you get unemployment, but you still might have to tap into it, so it might last longer.
2) Perhaps I wasn't clear...Do you not see how a person who was making 70-thou, loses a job and is out of work for a while, then finds a job for 30-thousand -- less than half of what they made -- would be taking a financial hit?
Good post. It can easily work if people manage their money properly.
Quote:
Originally Posted by G
andalara;22062280
When you're faced with unemployment, it all depends on what your expenses are and using your emergency funds. If you are already living below your means, it can work.
When I lost my job (back when unemployment was only 6 months), the check equaled 49% of my working pay. Since that was about what I was living on when I was working, the biggest adjustment I had to make was not putting money away for retirement.
Lesser adjustments were made (giving me savings just in case I didn't find a job in 6 months), I immediately stopped "wants" like Netflix, DishTV, and book-buying, etc. I didn't go out. The only time I left the house was to an interview or the unemployment office, and did what little grocery shopping I needed on the same trip. I stayed home and didn't spend money.
And I really believe it all worked because I was already living frugally before unemployment. My credit card was at zero the whole time. I was never late on a mortgage payment. I never touched my emergency funds.
Happy to say, in the last week of my 6 months of unemployment, I got a temporary 30 hour a week job. Three months later it turned into a permanent 30 hour a week job. One month after that, it turned into a permanent 40 hour a week job. I'm still there and my paycheck is larger than it was at the previous job. And I'm still living way below my means.
So, im wondering HOW bad does the U.S. economy need to get before americans are willing to make severe cutbacks ?
The economy doesn't necessarily have to get bad.
You could reduce social welfare spending or tighten the requirements.
Okay, so you have 46 Million households (not people) on Food Stamps, but have you seen a commensurate decrease in cable/satellite services? No. Cell-phone services? No. Internet services? No.
You have seen a commensurate decrease in NefFlix subscribers, but that is only because they were jumping ship to Blockbuster.
If you made it a requirement to get Food Stamps that people had to obtain a letter from the local cable/satellite service provider stating that services had been terminated and no future service provided (until they were off of the Food Stamp Program), and a letter from cellular service providers stating that service had been terminated and would not be available, and from internet providers stating the same thing, you'd see a lot more frugality.
So long as other people are willing to fund other people's life-styles, you're not going to see much in the way of frugality.
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