Transitions at Work

Today 3 people retired and 5 people were laid off. Sorry to see everyone leave. Wish we all had work. Instead the few left will pick up more work.

The retirees are in good shape. They saved money, paid off debt, planned for collecting social security, and have interests to keep them busy. Very happy everyone was ready for the opportunity.

My laid off coworkers are in pretty good shape, with savings and little debt. A lesson aerospace workers learn early in our careers. Was told a joke when I starting out, “There are two types of aerospace workers - those who have been laid off, and those who will.”

Anytime you are not working, life gets hard fast. Unemployment does not cover rent, bills and food. Your savings has to cover what spending you can’t cut while you are job hunting. Everyone needs a minimum of 6 months savings to cover bills. I prefer over a year of savings on hand for emergencies.

How do you start building your emergency fund?

Put ~10% on your first or current job into your 401K. At least put enough to get the employers matching funds.

Then put money aside for emergencies, vacations, car repairs and hard times. Start with ~10% after taxes. Automatically deposit this to your savings account. You won’t see it, so you are less likely to spend it. Live on the 90% or less after taxes deposited to your checking.

When extra spending is necessary, you can transfer funds to your checking account to cover it. Most people may need to do this once or twice a year.

Secrets to financial independence:

1) Spend less than you make. Credit card debt not paid off every month ruins more people’s finances than any other mistake.

2) Every time you get overtime, a bonus, or a tax return: Put 10% in checking to spend on a treat. And put 90% in savings.

3) Every raise increase the percentage saved in the 401K and savings. 10% becomes 12%, then 14% and more. You aren’t use to spending the raise, so you don’t miss it.

Properly invested savings earn compounded interest and grow faster than you believe possible. When medical expenses occur, you can pay off the credit card. 6 months of job hunting becomes manageable. Eventually you can afford the down payment on a condo or house.

Good habits make you rich. Poor habits stress and shorten your life.