Author Topic: What to Do with a Job Severance Pay?  (Read 2090 times)

Offline Cool Blue

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What to Do with a Job Severance Pay?
« on: September 18, 2010, 07:32:09 PM »
This week I got a heads up from the director of my department that they may be cutting my position meaning there's a chance I might be laid off.

Luckily I'm unionized so they're supposed to find me a similar job somewhere else but it is possible that I might be out of a job ,however I'm starting to think that might not be a bad thing, especially since I'd get a sizable severance pay.

I'm thinking of what to do with that severance pay now.

My wife and I only have our mortgage left as debt and the severance would amount to 50% - 80% of it.

I figure my choices would be:

1) put the money on our mortgage and be mortgage free in about 1-2 years

2) invest the money

3) start a business

Maybe I could do a little bit of all 3?

With the daycare expenses of having both our kids in daycare, if we eliminate our mortgage, our net income per month would actually be higher with me not working!

What do you guys think?

Offline Pathfinder

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Re: What to Do with a Job Severance Pay?
« Reply #1 on: September 19, 2010, 06:10:02 AM »
#1 - don't count your chickens before they hatch. You are assuming you get a severance check, until it is in your hand, it is not real. You are also assuming it will be a certain amount, it may not be. You are also assuming that you will be laid off, it may be the guy next to you. I speak from experience.

Don't get me wrong, planning is a good thing, just don't go overboard - yet.

Your situation will dictate what to do with the money. How likely are you to get another job will dictate one course of action. Is your home one you want to stay in when the economy finally fails and you can't move or get the equity out? Is the neighborhood transient or stable? Would the money be better spent toward a BoB or BoV?

Can you use the money for training in another skill for future use?

How are your other preps - beans, bullets and band-aids? Anything need addressing? Have you conducted a risk assessment like Jack talks about and covered the bases best you can?

Only you can answer these and related questions. But your thinking so far is a start, just keep it going with all of the facts.

Offline survivininct

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Re: What to Do with a Job Severance Pay?
« Reply #2 on: September 19, 2010, 06:32:22 AM »
Well, you could always give it to me!!   ;D

Seriously, keep it in reserve man - you might need it in this economy to make ends meet.  Don't spend it unless absolutely necessary.  When you land a good stable job again, kill the mortgage ASAP!

Offline Cool Blue

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Re: What to Do with a Job Severance Pay?
« Reply #3 on: September 19, 2010, 06:33:57 AM »
If I'm laid off, I will get a severance.  I'm a government worker in Canada, it's guaranteed.  Plus, I'm the only person in doing the work in the position that's to be eliminated so it's unlikely that they'd cut somebody else.

Being in Canada too means that we didn't have the housing collapse that you guys had and neighbourhoods in transition are practically unheard of here.  We're in a fairly rural area already so a BOV or BOB isn't a priority right now.

My wife and I are thinking of moving to a new house in 3-5 years.  We were hoping to build if we could but if the situation changes the plan will have to change too.

My wife also makes a very good income so we don't have to worry about preps though we do have about a month's worth of food.

As I said I think with:

- severance to pay off mortgage (or almost pay it off)
- stay at home to eliminate daycare
- me working any part-time job

...we could actually be about equal in terms of net household income, maybe even ahead.

As for retraining, I think I'd be interested in some computer and maybe business admin training.  Maybe finally finish my university degree.  The severance could be used for that or I could possibly qualify for a workplace retraining program.