Posted on 11/09/2009 10:10:56 PM PST by Steelfish
NOVEMBER 10, 2009
Life on Severance: Comfort, Then Crisis
By MARY PILON
SILVER SPRING, Md. -- Paul Joegriner hasn't worked since March 2008, when he was laid off from his $200,000-a-year job as chief executive officer of a small bank. But you wouldn't know it by appearances.
His wife, Marzena, shuttles their two young children to private school every morning. The family recently vacationed in Virginia Beach, Va., and likes to dine on Porterhouse steaks. Since losing his job, Mr. Joegriner, 44 years old, has had several offers. He's turned each down in hopes of landing a position comparable to what he held before.
When Severance Falls Short
The family's lifestyle over the past year and a half has been propped up by a $200,000 severance package and another $100,000 in savings -- funds the family has burned through rapidly. By Mr. Joegriner's own calculations, the family will be out of money in six months if he doesn't find work.
"It will be D-Day," he says. "But on the outside, no one has any idea that we're in trouble."
Mr. Joegriner is a member of what might be called the severance economy -- unemployed Americans who use severance pay and savings to maintain their lifestyles. Many lost their jobs in 2007 and 2008, and thought they'd soon find work.
Now, they're getting desperate. Last week, lawmakers passed a bill extending unemployment benefits up to 20 weeks. Unemployment benefits, which typically last about 26 weeks, were expected to run out for 1.3 million people by the end of the year, according to the National Employment Law Project.
(Excerpt) Read more at online.wsj.com ...
What a fool, to turn down job offers that would return him to his former field of work.
People get over confident. We have had it so easy for so long that it is hard for some to accept that the wolves are at the door.
People also fail to factor in the age factor. After a certain age, job seekers may find that their value dips in the job market. No resting on past laurels.
It’s also much easier to find a job when you already have a job.
Very true. Unwise, IMO, but true.
You correctly identified a fool. He got a good job offer and turned it down.
The pain of this is regional in intensity.
See this interactive map.
Very illuminating of the ongoing Trainwreck.
http://www.slate.com/id/2216238/
Fool? Yes, and a good dose of spoiled brat thrown in. He should have tightened the belt instead of trying to maintain an extravagant lifestyle.
You’re right; I think a lot of people don’t realize how long-term some of these job losses are, and in some cases, permanent. I couldn’t imagine what he is thinking, unless he is banking on the fact that the government is going to have to extend these benefits indefinitely.
Get this man a Dave Ramsey book!!! Beans and rice, rice and beans time.
I don't think him or his wife would read it or do what it suggested.
I don't think he was particularly foolish to not take a job that would be a huge step backwards, but he was certainly foolish to not tighten his belt on day one.
I’ve been trying my best to prepare for the current economic situation for about the past 10 years, and on a variety of levels. I’m still doubtful I will even begin to be sufficiently prepared for that which seems to be coming.
Reading about these families puts the unemployment statistics into greater perspective. For years we've heard about families who were living beyond their means, saving little, and borrowing against the equity in their homes to finance excessive consumption. The families in this article likewise managed their family finances with too little consideration of economic downturns. It boggles my mind to read of a 50 year old man who appears not to have had any savings and then burned through his severance before figuring out they should economize. The man who turned down repeated job offers - what on earth was he thinking? Is he totally unaware of the economic climate? And he wants to be a CEO? Justifying going out for coffee by saving the cups???? It just amazes me. How hard is it to brew a pot of coffee at home or buy an economy box of tea bags and boil some water?
Thankfully our income is still intact, but even in the best of times we haven't indulged in most of the comforts described here. I guess there's something to be said for having grown up with parents who lost everything and were starting over.
His savings were very small relative to his income. He should have had at least $1 million in financial assets at his level.
His severance plus his savings is $300k. He will have burned through that in two years!
He could have taken the lesser job offer, tightened his belt and used only a fraction of that $300k to help pay essentials and offset the difference, if necessary.
He is of the generation that only has known an employee’s market. Now, they are all a glut on the market. He may have had more in savings, but likely, it was in bond funds or equities that got burned in the crash. They had two income properties, so that is likely where the savings went. Giving him the benefit of the doubt on that part.
A striking aspect of this man’s story is how concerned he is about how others see him. If they are both home, why do they need a cleaning lady? Turning down a job for $140k because it had no guarantee of severance was foolish, IMO.
We are self-employed. We have never earned more than $75k/year, which we thought was enough to live and save (more than this guy has saved, too). No mortgage and we have paid off most other debt, leaving a car payment and a small amount of cc debt that is shrinking. Unexpected costs like a burst pipe, a leaky roof, medical emergencies under the deductible and a dog with a torn ACL were paid from savings with DH doing whatever portion of the work he could or making arrangements to pay in installments. Our income is down by about 40%, but gardening, hunting, wood cutting, trading and always maintaining a survival stash of food and other essentials is seeing us through. When things are really tight, DH takes lunch and coffee from home. We religiously put tax and insurance money aside every week and consider that account sacred and not to be touched for anything else, ever. We have no problem admitting we have been hurt by the economy, because everyone we know has, too. But we have let people know we are not charity cases and we pay our bills and even donate a small amount as we can.
Hopefully, this is going to make the younger generations understand the importance of frugality as opposed to keeping up some sort of ridiculous appearances. All work is good and any income beats no income every time.
Absolutely right. I was really bothered by the man who said he might take work stocking shelves at night when he wouldn't be seen doing work that he obviously considers to be below him. I've always told my sons that no honest work is ever below them. Times can be tough, and doing whatever honest work is available to support themselves is honorable. I never want them to look down on those who collect the trash, clean the toilets or stack the shelves. If this man is ashamed to be seen stocking shelves, I wonder how he himself has treated "the help". I hope well, but I wonder.
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