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With these figures, it looks like you have a substantial financial safety net. Your household income is high, and you have a solid emergency fund. If you're laid off, your emergency fund, severance, unemployment benefits, and potential HSA reimbursements sum up to a considerable amount. Given your current expenses, if you're able to reduce them to $10k a month as planned, you would have enough to cover approximately six months without any income from your job. This doesn't account for your wife's continued income, which would extend that period significantly.
During this potential period of unemployment, it would be wise to evaluate your spending priorities and possibly defer non-essential expenses to preserve your financial reserves. It's also an opportunity to review your overall financial plan, considering the impact on your long-term savings goals, including retirement.
Don't forget to consider health insurance options post-employment. Hopefully you can get on your wife's employer's plan ic your insurance is tied to your job, to avoid needing to budget for COBRA or an alternative health insurance plan until you secure new employment.
I’d hold off on home reno and hunker down if the layoff is imminent.
But otherwise I agree you are in fine shape. Wishing you a quick bounce back!
Layoffs are never fun, but it is bound to happen at least once in your life. I was let go 4 years ago for the first time and it really put me into a depression. Fortunately, I found another better job within three weeks, and have since over doubled my income. Some of God’s greatest gifts are unanswered prayers.
You could be “ok” for at least 4-6 months, but that all depends on you and your wife practicing extreme discipline when it comes to your spending.
You COULD have been a millionaire multiple times over with that salary if you had invested wisely and also put a substantial ($100k+) amount in an interest-bearing tax free 7702 Indexed Universal Life Insurance account for each of you, but you don’t mention having that or any other passive income-producing assets or investments. 7702 accounts allow you to become your own bank, passively growing your wealth with 5-9% compounded interest, while also providing a death benefit to your beneficiaries and long term care benefit should you need it. You can borrow from its earnings tax and interest free, and there are no penalties for late or non repayment, as long as you maintain your principal balance. It’s cool stuff that the government and IRS can’t touch.
As long as you both apply a strict monthly BUDGET to your lives, you should be able to go without an income for at least 6 months living on what you mentioned. If you both hold off on making any major purchases, cut back on discretionary spending on unnecessary things like Starbucks, eating out, new clothes/shoes/cosmetics/getting hair&nails done, paid car washes, gifts, party stuff, recreational pot & drug use (some people like to waste money on that), vacation(s), paid events, entertainment, overpriced food and beverages, unnecessary driving around (burning gas), and any other UNNECESSARY “wants” (not vital NEEDS), then what you’ve set aside and have coming in through severance and UI insurance should last until hopefully you find a new job.
lol. I have 3 kids. But no I think I’m pretty conservative in “cash on hand” and struggle with how much is enough so this was super helpful to get other peoples perspective.
I’m not facing an imminent layoff but have been thinking about what the playbook would be if it happens given my income represents 80% of HHI and we have 3 kids and a $5k mortgage.
Rising Star
You’ll survive. (You could easily live on your wife’s income alone, even if it would be an adjustment)
But you don’t mention 401k’s other long term savings, ultimately those would be your safety net / long term plan.
Rising Star
Seems not a lot for your income level.
I’d lean into your anxiety and make plans to increase savings significantly.
Seems it should be possible - perhaps you’re already doing it.