A Tale of Two Layoffs

[truenorth418]

This post is inspired by the recent “Do You Talk with Friends about FIRE?” post. Sorry it’s a bit long, but I’d be interested in your perspectives on this variation.

One of my best friends works for a major company. He is whip smart, but it is a competitive industry and he has a tough territory. He was placed on a 100 day performance plan which is now over, and it is likely that he will be terminated soon. He is 50 years old. He would probably have a tough time finding a similar position elsewhere. He is pretty worried.

His approach to personal finance has been quite different than mine. We both live in expensive cities, but he has a cool apartment in town plus a nice beach house where he spends most weekends. As a result, I don’t think he has much money saved, maybe around $50k, and he spent down his 401(k) to almost nothing the last time he was out of work a few years ago. If he were to lose this job and not get another one soon, I think he would be forced to make some very hard lifestyle choices. Selling the beach house, for example, would be a huge blow to his self-esteem.

On the other hand, I have lived a frugal existence for a long time so that when I was laid off two years ago I was actually pretty relieved. I was basically FI and ready to ER - both financially and emotionally. But I kept my FIRE plans to myself, shying away from the subject with my close friends. Why? First, there was an outside chance I would return to the workforce and I thought I would look pretty ridiculous declaring my “early retirement” and then heading back to work. Second, and more importantly, I did not want to go around bragging and shoving my financial independence in peoples’ faces. I was 47 years old when I left the workforce. I do not personally know anybody who has retired at such a young age.

So, back to my friend who is about to lose his job. Although I have not shared details of my financial position with him, he is beginning to catch on that I no longer need to work. I don’t think our friendship is in jeopardy as a result of our different financial positions. But I feel sorry for him and would like to give him emotional support and advice during this crisis even though he may be a little uncomfortable with the differences in our situations.

Any thoughts, recommendations, or similar experiences you would like to share?

 

[NW-Bound]

I would gently tell him that unless he gets a new job soon, he cannot afford the beach house with $50K cash to his name, whether he owns it outright or not. Even his apartment may be in jeopardy soon.

If he refuses to let it go because of pride, there would not be much more I could do for him.

 

[REWahoo]

I would gently tell him that unless he gets a new job soon, he cannot afford the beach house with $50K cash to his name, whether he owns it outright or not. Even his apartment may be in jeopardy soon.

I'd avoid this (and any other financial) subject unless he specifically asks for your input. He's a smart guy and no doubt already knows this. No reason to bring it and rub salt in his wound.

I doubt there is any financial advice you could give him that would be helpful at this point - too late. Even though you don't think your friendship is in jeopardy, a financial disaster can be very tough on relationships.

 

[NW-Bound]

Perhaps it can be done in a more indirect way. For example, I can try to commiserate with him and say I was able to survive my layoff because I did not have the obligation of the home, etc... Sometimes even smart people cannot think straight when they are desperate.

Why is it late, if he can stop the cost of maintaining that house and use the equity of it to survive for a while? Of course, I do not know if truenorth's friend is open to suggestions at all.

 

[clifp]

Perhaps it can be done in a more indirect way. For example, I can try to commiserate with him and say I was able to survive my layoff because I did not have the obligation of the home, etc... Sometimes even smart people cannot think straight when they are desperate.

Why is it late, if he can stop the cost of maintaining that house and use the equity of it to survive for a while? Of course, I do not know if truenorth's friend is open to suggestions at all.

I like the indirect approach also. Kinda of I was there not to long ago.. Here is something I did to save money.

 

[FreeAtLast]

I would just be there for him and offer help as the situation presents itself.

 

[MooreBonds]

This post is inspired by the recent “Do You Although I have not shared details of my financial position with him, he is beginning to catch on that I no longer need to work. I don’t think our friendship is in jeopardy as a result of our different financial positions. But I feel sorry for him and would like to give him emotional support and advice during this crisis even though he may be a little uncomfortable with the differences in our situations.

Any thoughts, recommendations, or similar experiences you would like to share?

As others have said, don't give him any financial advice unless he asks for it (and he likely won't ask for advice....money, on the other hand.....)

There are many personality types in the world, and your friend may or may not succumb to this, but if he (as you say) is "beginning to catch on that you no longer need to work", don't at all be surprised if he suddenly appears on your doorstep asking for a 'loan'...."just to make the payment on the beach house this month only". Because, after all, you've known him for so long. And he would NEVER hesitate to help you out if you had come to him when he had a job and asked him for a month (or two) of mortgage help! And it's just for one month's payment. He'll get a job next month.

(30 days passes).

"Aww man, I had 3 interviews, and one company brought me back in but elected to hire someone else. I'm still out of work, and I'm about to lose the beach house again. I know I said 2 months ago was it, but you can't leave me hanging like this. I don't have anyone else to turn to. You can't let them take my house from me!"

If your friend goes through extended unemployment, you'll find out what type of person your friend is. You need to hold fast to your finances, and not fall for his pleas (if he hits you up), because he will likely try to hit you up if I had to bet on it. Just tell him you put all of your money into an annuity so you don't have to worry about making money, and you don't have access to any cash anymore.

 

[CatInHand]

Why not try the 'positive spin/look clueless' approach:

"Man getting laid off sucks. Thank god you were smart enough to buy that beach house as an investment!"

...said in passing with a hearty slap on the back (or whatever men do). Then he walks away with a new idea and he feels smart.

 

[growing_older]

No matter how obvious to you the outsider his financial choices, it is unlikely he will welcome or do anything useful with any unsolicited financial advice you offer. If he approaches you for advice, perhaps that can help, but from what you've described it seems very unlikely he would. And if he did, what advice could you offer? #1 use your time machine to undo a lifetime of choices? #2 slash expenses by giving up his status properties and start living on a fraction of his accustomed lifestyle?

 

[ERD50]

Good advice from others, but I have to add:

.... he has a cool apartment in town plus a nice beach house where he spends most weekends.

....

On the other hand, I have lived a frugal existence for a long time ....

But I feel sorry for him and would like to give him emotional support and advice during this crisis even though he may be a little uncomfortable with the differences in our situations.

Any thoughts, recommendations, or similar experiences you would like to share?

Yes, did your friend ever feel 'a little uncomfortable with the differences in your situations' when he had a cool apartment in town plus a nice beach house, and you lived a frugal existence for a long time ?

Some people live it up early, some live it up late. You both chose different paths, and the outcomes were not entirely unpredictable.

Just be a good friend and get over the guilt trip.

-ERD50

 

[Elbata]

As time goes by, the more I realize it's to my benefit to not give advice.

Even that turns out to be advice.

 

[MBAustin]

Not long after I ER'd, a good friend was laid off. I knew that her family's finances were precarious and offered to provide a scholarship for her and her husband to attend Financial Peace University. It made a big impact on the family.

There are lots of ways to be supportive - be creative!

 

[Major Tom]

From the information you have given about your friend, I suspect that if he is laid off, he is in for a rough landing. The fact that selling the beach house would be a huge blow to his ego indicates to me that outer appearances and the status achieved as a result of maintaining these appearances are more important to him than prudent financial planning. Hopefully he has enough equity in that house to net some cash if he does sell.

As others have said, I'd be careful about giving him unsolicited advice, but I do like CatInHand's idea of planting seeds in his head with positive statements.

If, as seems the case, he is the type of person to only change his financial behavior when crisis hits (instead of preemptively planning for the worst-case scenario), he may be about to learn some very difficult lessons. It might be a good idea to brace yourself for a possible layoff and accept ahead of time that there are definite limits to how much you can help him if he doesn't choose to help himself.

As REW said, financial disaster can be very tough on relationships. Let's hope he gets to keep his job. *Fingers crossed*

 

[Walt34]

Not long after I ER'd, a good friend was laid off. I knew that her family's finances were precarious and offered to provide a scholarship for her and her husband to attend Financial Peace University. It made a big impact on the family.

I like that idea. When the time comes, and it will, when one BIL (the one married to "Spendarina") cannot work at his job anymore they're in for some rude awakenings.

So I'll hang on to that thought and offer to do it for them. He's really a nice guy and works too many hours but doesn't plan ahead very well.

 

[Texas Proud]

I question how smart he can be to get on a 100 day performance plan and not do what is necessary to keep employed...

He was out of work before, spending down his 401(k), so maybe he needs an attitude adjustment....

 

[Rustward]

I question how smart he can be to get on a 100 day performance plan and not do what is necessary to keep employed...

He was out of work before, spending down his 401(k), so maybe he needs an attitude adjustment....

I inferred (possibly incorrectly) from the OP's use of the words "competitive" and "territory" that this is probably some kind of sales position. My observation over my adult years is that sales j*bs are much easier to get than they are to keep.

. . . but it is a competitive industry and he has a tough territory.

 

[Texas Proud]

I inferred (possibly incorrectly) from the OP's use of the words "competitive" and "territory" that this is probably some kind of sales position. My observation over my adult years is that sales j*bs are much easier to get than they are to keep.

It was my take also.... but if the guy is a good salesman, then he can work it until he gets something better... at least not get sacked... if he is not a good salesman, then he is supposed to be smart and would know this.... (I am a lousy salesman and know it).... and would look for a different kind of job...

Most of the salesmen that I have met do the things that the OP said... when they are flush with money, they spend it... when things are tough, they still spend... they are usually the flashy ones that want to show off their wealth.... Not all mind you, but there are enough of them that this is the picture in my mind...

 

[obgyn65]

I would just keep silent and avoid talking finances.

Any thoughts, recommendations, or similar experiences you would like to share?

 

[BLS53]

Visions of Glengarry Glen Ross. "They can't be serious about trimming down the salesforce".

 

[Fishingmn]

If the topic comes up you could use the indirect route of pointing him to something like the Mr Money Mustache website which preaches a life of frugality and freedom. Otherwise, I'd steer clear.

 

[RunningBum]

I question how smart he can be to get on a 100 day performance plan and not do what is necessary to keep employed...

He was out of work before, spending down his 401(k), so maybe he needs an attitude adjustment....

At my last megacorp, I only know of one person who was able to satisfy the performance plan and stay on. It's pretty much a foregone conclusion that you are being pushed out the door and the plan is there simply to avoid lawsuits.

I don't really have advice for the OP. It's mostly got to do with personalities, so you'd have to know what he might be receptive to as far as financial advice. But that "condo as an investment" idea is a clever one, changing it from "you have to sell it" to "cashing in on a wise investment". I just hope he's not underwater on it.

 

[Chuckanut]

When I talk finances, I simply tell people what I have done or am doing under similar conditions. People who are trusted and close to me may get more details. Others get less. They can take what they want and leave the rest.

 

[In-control]

As time goes by, the more I realize it's to my benefit to not give advice.

Even that turns out to be advice.

Yep!!!!

 

[truenorth418]

OP here. Thanks for the great advice and POVs. My friend just had his review and, to his surprise, he was NOT let go. Yet. It is probably only a matter of time, and maybe he has until he end of the year. This should give him time to assess his situation and hopefully tuck a little more money aside.

I think it's right not to give out unsolicited advice, and I like the idea of providing positive reinforcement where possible ("That beach house was a great investment..."). I am a little concerned about him approaching me for money, and, fortunately, the reprieve will make that less likely for the time being at least.

 

[Chuckanut]

I am a little concerned about him approaching me for money, and, fortunately, the reprieve will make that less likely for the time being at least.

I never loan money to relatives and friends, at least in my mind. If I do 'loan' money it is with the attitude that it is a gift and if I get paid back some or all of it, that's very nice and I am glad for both of us. If not, it was a gift.

If I can't afford the gift, I don't 'loan' it.