Last week, Mrs. Wallet lost her job. Enter full panic mode! All plans for early retirement have come to a screeching halt! We must desperately search for a new corporate taskmaster!
Just kidding.
While Mrs. Wallet was initially upset (even though it wasn’t performance related, she’s never been let go before and that’s never fun), I strangely had no emotional response to the situation. We had known this was likely coming (her boss quit which upset the higher-ups and they decided to eliminate Mrs. Wallet’s position as well), and Mrs. Wallet hated her job.
Why we’re not concerned
The way I see it, two things happened when Mrs. Wallet lost her job:
- She was freed up for something better to come into her life
- The bills will continue to automatically pay themselves, and life will continue as it tends to do
There are a few mitigating factors that make this situation easier to handle. When Mrs. Wallet was working, we were saving over ⅔ of our income. Probably north of 70%. Even with our income being cut by a third, that means we’re still saving 50+% of our income. Not exactly the picture of someone that’s hurting.
While moving from saving 70% of your income to 50% could technically add years to your expected retirement date, depending on where you’re at in your journey, we don’t expect income to stay this low for long, and we have built flexibility into our life and financial plan.
Let’s unpack each of those statements. While Mrs. Wallet could easily find another corporate job, most likely landing even higher pay, a more relaxed environment, and superior benefits, we had already been working on diversifying our income streams through side hustles and our yoga business. Now that she has more time, Mrs. Wallet can pour more energy into her private practice and possibly pick up a part-time job she enjoys to take advantage of 401k contributions. This should make up the difference between what she’s currently making in the yoga business and various side hustles and her previous income.
However, our financial picture has another lever in addition to income: spending! We should just continue spending the same, Willy nilly, regardless of our income being cut by a third, right? Wrong! While I advocate frugality and cutting spending, our spending has admittedly crept up a bit in the past couple of years. The good thing about this is that there’s fat to trim, so it shouldn’t be too hard for us to cut back! Even if this wasn’t the case, if we were concerned we could definitely take temporary measures to cut back even further, although I don’t think this will be necessary for us at this point.
Is there anything to worry about?
In my mind, the one potentially annoying aspect is the lack of a current 401k option, mostly due to the tax benefits and the fact that I can’t make up for this year next year if we don’t hit the maximum. Luckily, Mrs. Wallet was already on my health insurance, so we didn’t run into any issues there. Having already maxed my 401k for the year, we had just increased Mrs. Wallet’s contribution to roughly 50% to max hers out at the end of the year and maximize her employer contribution. We will also lose the ~$450 in employer contributions that her company had already contributed due to a terrible five year vesting policy. Either way, this is hardly enough money to be worth enduring a toxic work environment and unhappiness in your job.
Most likely, Mrs. Wallet will start a part-time job she enjoys (she’s been talking about helping out at a bakery) and contribute her entire income or whatever the max is for that company to max out her 401k by the end of the year.
What’s the point? Are you just bragging?
Aligning our financial strategy with what really brings us happiness in life, building flexibility into our plan, and saving a large percentage of our income by living frugally continues to pay huge dividends, and I’m not talking about cash. Understanding the world of money upfront and setting a realistic plan in place to get you to your goals (whatever they may be) lends you a huge amount of flexibility and freedom and allows you to decouple stress from money in your life. I’d say it’s been well worth a little of my time to set myself up not to worry now or in the future. If I can do this, so can you.
Love,
(Your) Wallet