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Copyright © 1999 by David E. Ross
In 1995, after 33 years of continuous employment in my career as a software engineer, I was laid-off from my job. I was without work for nearly six months, starting a new job in 1996 just two weeks before my eligibility for unemployment benefits was exhausted. Unfortunately, that new job lasted only seven months, after which I was laid-off again. This time, I was unemployed for four months. Finally, in April 1997, I was employed by a major Department of Defense contractor where I still work.
Early this year, while being evaluated for a security clearance, an investigator from the Department of Defense strongly questioned how I was able to survive financially while being unemployed for a total of ten months out of a 17-month period. Of course the government is concerned that an individual who is in desperate financial trouble might sell defense secrets. (In general, this is a far greater problem with government employees than with contractor employees; but for political reasons, the government always focuses its attention on the latter when the former "sell out".) I gave the investigator the information I present below.
Because I have friends who are occasionally unemployed, I thought I should share this information. No, these measures for staying financially healthy are not generally applicable to everyone; they are very specific to my own situation. However, they should help others to find their own measures.
The question is: "How does someone financially survive unemployment after a long career as a highly-paid professional?"
- I applied immediately for unemployment benefits with the California Employment Development Department (EDD, sometimes called the "unemployment office"). The benefits are not great: One week's benefits were less than what I had been earning in one day. However, having bought my house in 1973 (before the big surge in real estate prices of the mid-1970s), one week's benefits covered a month's mortgage payment. Fortunately, my seven-month job lasted beyond the one-year anniversary of my first lay-off, so that I established a new six-month eligibility period.
- I joined Experience Unlimited, a no-fee, self-help program sponsored by the EDD to help unemployed professionals to improve their job-search skills. Although this is a program of the state of California, similar programs exist in several other states. The program takes the successful experiences of prior participants who have returned to their careers and teaches those experiences to the remaining participants. This program taught me how to improve my resume, how to participate in a successful interview, how to read between the lines in a want ad, and how to find opportunities through networking. It also taught me that I still had a full-time job — finding employment — and gave me suggestions that led to this list of financial survival techniques.
- I called my life insurance agent. Years ago, he sold me and my wife some policies that accumulated cash balances and paid dividends. Until I lost my job, I had allowed the dividends to be used to buy additional life insurance, which accumulated even more cash balances and paid even more dividends. The dividends on some of the policies now exceeded the premiums. I told the agent that I wanted the dividends used for paying the premiums; only if there was any money left over should additional insurance be bought. Thus, I ended a significant semi-annual bill while leaving the cash until I truly had an emergency.
- My largest debt and my largest monthly expense (almost half my non-discretionary spending) were for two disaster loans through the U. S. Small Business Administration (SBA). I called the SBA, and they sent me some financial forms. After I submitted the forms along with my written lay-off notice, the SBA waived three months of payments on the loans, after which I only had to pay the interest until I became employed again.
Of course, interest was added to the principle during the three-month waiver. Also, the SBA did not change the date of the final payment the reflect the waiver and the subsequent months of interest-only payments. Thus, they wanted a balloon payment. Although I was then employed, I was able to negotiate a delay in the final payment sufficient to eliminate the balloon.
- I hate paying the high interest on credit cards, so I always paid the balance in full every month. When I lost my job, I did not have any monthly payments on old balances. I also eliminated most discretionary purchases; thus, my monthly payments on new balances remained small.
- I stopped buying stamps and recorded music for my collections. I also stopped buying books.
- In the mid-1960s, one autumn I was hit with four large bills, bills that could be anticipated but fell due only once or twice a year (e.g.: auto insurance, home owner's insurance). I struggled to pay these and vowed I would never be caught short again. Thus, for almost 30 years, I have set aside specific amounts from each paycheck into a credit union savings account to cover large, regular but infrequent bills. Even without a paycheck, I was able to pay my property taxes, insurance, and a gas bill that soared in the winter.
- Of course, I stopped adding to my retirement investments. One investment was in a mutual fund that was not in an IRA. I called the mutual fund to have them mail me the monthly dividend rather than reinvesting it. The amount of cash was not great, but without a paycheck it was appreciated.
- When I received the annual bill to renew my membership in my professional society, I called them. Unemployed members can renew at half-dues.
- I wrote to my congregation. Most Jewish congregations are funded not through weekly donations but through annual pledges of dues. While anyone may attend Sabbath services, some activities of the congregation are limited to those families who are current in paying their pledges. Only those who are current may vote in the annual meeting to elect the officers who operate the temple and who employ the rabbi. My congregation waived my dues while I was unemployed, while they kept my membership fully active as if my payments were current.
- My wife and I boycotted all restaurants. I lost some weight by eating lunch at home. My visits to the ATM for cash became quite infrequent. (My brother is a real estate agent. He says the first step towards saving the down payment for buying a house is to buy a cookbook.)
- In the winter, I turned the thermostat on the furnace cooler.
- I replaced a number of incandescent light bulbs in the house with screw-in fluorescent bulbs. The newer fluorescents are quiet, and they give light that is almost the same as incandescents. And the fluorescents use only one-fourth as much electricity.
I was somewhat fortunate that my wife still had her job. Her wages were only one-fourth of my former salary, but her job also provided us with excellent health insurance (not an HMO!). Her paycheck assured us that we would still eat.
In the short-term job after my first period of unemployment, I again received a nice salary. However, neither the salary nor the duration were sufficient to restore fully my depleted savings. In my current job (which ended my second period of unemployment), my savings were finally restored about a year after I began work. It was not until about six months after that when I became comfortable about spending money on things I merely wanted but did not truly need.
This is about financial survival. However, I must also cite one very important job-search technique. Above, I briefly mentioned networking when describing Experience Unlimited. Networking is what you do when you make use of established friendships and even mere acquaintanceships to obtain leads to employment. If you are unemployed, DO IT! It works. I am now in the 37th year of my career, during which I have had six different employers. Three of those jobs — so far amounting to over 28 years of employment — I obtained through networking. My current job is one of those three.
Also, when you are employed, you should help others to find employment through networking. You will never know until it happens that they in turn might help you later. A friend (a former coworker) knew I was unemployed in 1997 and helped me to get my current job; I am now helping him because he was just laid-off.
28 September 1999
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