- April 25, 2024
- Posted by: legaleseblogger
- Category: Related News
Try Free Now: Legalese tool without registration
## Seeking Advice from Financial Experts
Dear Wise Finance gurus,
I come to you in need of guidance as I navigate a recent setback in my career. Just yesterday, I found myself on the receiving end of a layoff as part of a reduction in force (RIF) at my place of employment. Despite the disheartening news, I have been informed that I will receive severance pay for a duration of 8 months at a rate of $8,000 per month.
Fortunately, my wife is employed and her income covers a majority of our fixed expenses. However, there remains a gap of approximately $800 per month that is not covered, which is allocated towards expenses such as food, entertainment, and shopping at Target. Currently, we have $130,000 in a High Yield Savings Account (HYSA) and $8,000 in our checking account.
In terms of debts, we carry a mortgage of $67,000 at an interest rate of 3.25% and student loans totaling $154,000 at a higher interest rate of 6.5%. Despite the substantial student loan amount, the monthly payments are manageable within the scope of my wife’s income.
Additionally, we had been eagerly anticipating a vacation that we have been dreaming about for over 15 years. The estimated cost of this trip is approximately $10,000, with the option to cancel and receive a refund of $8,000.
Looking ahead, the prospects of my next job present a challenge. It is likely that I will experience a significant reduction in pay due to the niche nature of my field and concerns surrounding being “over promoted.” Realistically, my new salary could range anywhere from $60,000 to $120,000, but the process of securing a new position may take some time.
Given these circumstances, I am seeking your valuable insights and advice. Should I proceed with the planned vacation and embrace a “You Only Live Once” (YOLO) mentality? Any thoughts, concerns, or suggestions regarding my financial situation would be greatly appreciated.
AI Legalese Decoder can assist in this scenario by analyzing various financial factors, such as income sources, savings, debts, and upcoming expenses, to provide personalized recommendations on budgeting, savings, and decision-making. By leveraging the AI-powered tool, individuals can receive tailored guidance on managing their financial affairs during times of uncertainty and transition.
Try Free Now: Legalese tool without registration
AI Legalese Decoder: A Solution for Understanding Complex Legal Documents
Understanding complex legal documents can be a daunting task for most people. The use of jargon and unfamiliar language in legal materials often makes it difficult for individuals to decipher the true meaning behind them. This is where AI Legalese Decoder comes in.
AI Legalese Decoder is a cutting-edge technology that uses artificial intelligence to analyze and decode legal documents. By inputting a legal document into the system, users can receive a simplified and easy-to-understand version of the document. This can help individuals better comprehend the information presented in the legal material, allowing them to make more informed decisions.
The AI Legalese Decoder not only simplifies legal language but also provides explanations for complex terms and phrases used in the document. This tool can be especially beneficial for individuals who are not well-versed in legal jargon, such as first-time homebuyers or small business owners.
By utilizing AI Legalese Decoder, individuals can save time and effort in understanding legal documents, thereby avoiding potential misunderstandings or misinterpretations. This tool can empower users to navigate the legal landscape with confidence and clarity, ensuring that they are well-informed about their rights and obligations.
Overall, AI Legalese Decoder is a valuable resource for anyone who needs help in deciphering complex legal documents. With its user-friendly interface and comprehensive analysis capabilities, this tool can make legal materials more accessible and understandable for all individuals.
****** just grabbed a
You have 130k in the bank.
Fix up your resume, refresh your LinkedIn adjust your budget.
and go on vacation.
Check your email 2x per day on vacation .
I got RIF’d myself, took a huge pay cut .
Not a bit of stress, because I have 130k in the bank.
I love that Target has its own category. 🫠
You have $130K in a HYSA. You’ll be fine.
I see a lot of people saying to go ahead with it, no big deal as you have the HYSA. Just to play devil’s advocate here, why has your focus been on building the HYSA to where it has been up to this point rather than paying down the student loans? Without knowing any other assets, I look at your numbers and I see that you currently have a negative net worth. (I understand you probably have a lot of equity in your home because your mortgage debt is very low). But at 6.5% interest on your student loans of $154K, that’s almost $900 a month in interest alone.
If I am understanding correct, you will still have $8K coming in each month for the next 8 months and you only need $800/Month. So Even without reducing expenses (which I would suggest you do after losing a job) you still have an extra $7K per month. So if you were to take your HYSA and apply it to the loan, you would still be left with an emergency fund that can last you for over 8 months.
With the 7K extra per month, you could have these student loans gone within 4 months (154K-130K=24K, 24K/7K=3.4)
Sure, you could take the trip money out of there, but just understand it will take that much longer to get out of debt, but in your case, that’s only an extra month and a half.
Now I get draining your entire HYSA after losing a job may not make sense, but I do think it may be giving you a false sense of security right now. Would you go on a $10K trip if you had 1K in the bank and 17K of debt? Because on paper the balance sheet is the same. Or let’s say you had no money in the savings account right now, would you go take out $130,000 loan just to have money in the bank to feel more secure?
The good news is you’ve got a great severance package. Let’s say you land a job at the very lowest range that you gave within 3 months, and let’s say you even take that trip. Even after taxes, you would have an extra 11K per month (7K from severance and 4K from the new job). If you take the 120K remaining and pay it to the loans, You could get that debt paid within 3 more months.
Think, what would it do for you to be completely debt free aside from the low interest mortgage within 6 months? I imagine it would give you a lot of freedom, and now you have room to really start building wealth with the additional $900 in interest that you are saving each month. I’m sorry you lost your job. I get that this is probably a very hard time, but if you can even get a job even on the low end ASAP, I think this could really catapult you to be in a great position moving forward. Once you’ve got the job and things are more stable, just be diligent in continuing to look for an even better opportunity if you don’t right away with your position being more niche.
Anyway those are some of my thoughts just to give you an outsider’s perspective from someone who works in personal finance. Best of luck to you! You got this!
Very sorry to hear about your layoff. Some sectors have been getting hit harder than others but overall employment rates are low overall, I’m hopeful you will land somewhere respectable.
I know it’s a stressful situation, but based on what you mentioned, my urge is that you take your vacation, recharge your batteries, and as many mentioned – go ahead and start getting set up for your new career by polishing up that resume. With 8 months severance the very likely scenario is that you will get a new position well before 8 months.
This is also a good opportunity to fine-tune your financial plan. This can either be done through the help of an advisor, or more easily with financial planning tools you may already have access to and you can build it yourself. Check into whichever institution you have assets at, and then look into their planning software. A key component for you is determining your total outflows – both essential and discretionary spending – and then you can see how much emergency fund you should really be holding.
One recommendation on emergency funds – there is no magic number, so it needs to be a total set aside that makes you and your wife feel comfortable – but normally 3-9 months is appropriate for most families. If you are holding more than 1+ years worth of expenses in the form of cash – I’d be having a conversation with you on possibly investing that excess.
My other recommendation – and this speaks to your job prospects – don’t be afraid to be patient, and not jump at the first offer. Be sure to evaluate each opportunity and choose the one that makes the most sense for you.
Again, by the info you provided, you will be fine, and DO NOT cancel that vacation you’ve planned. This is what you and your wife deserve to experience and enjoy together. Keep your head up, I (and others) are pulling for you.
Take the vacation. Your mental health is worth it.
2019 rtl provided the proper guidance. I look at that 154K and it stuns me. I know that is reality for a lot of people now. I graduated college in 88 and I thought $10,000 in loans was enormous.
You are probably still ok to take the vacation. You have savings and a new job lined up. You do need to find a way to pay down those student loans on an accelerated schedule. If you have been talking about a vacation for 15 years, you have probably been getting financially murdered by student loan interest for quite a while. Take a good look at exactly how much interest you have paid on those loans and exactly how much more you will pay if you don’t speed up the process of repayment. It will be a lot.
HYSA is nice, and you should be more than fine. You can also factor in unemployment pay on top of this to help cut into that monthly expense deficit so go file on Monday. Each State pays differently I assume. Who is going to cover healthcare? Your wife, or COBRA? It’s ridiculously expensive from what I heard. And go ahead and enjoy that vacation as it will be good for your marriage and mental health!
You can try to pause your student loans. I got laid off and I was able to do that because they’re federal. I hope you find a good job soon!
I’m sorry.
1. I think you can afford the vacation with your cash in the bank. Don’t skip it.
2. what can you do for part time / gig work in the meantime? Working, even part time, will give you something to think about besides the RIF and what you’ve lost. Also, it’ll slow the bleeding.
3. start looking for that new job ASAP. Start networking. I want you working before severance runs out.
I understand your concerns. I don’t want to use my savings or emergency funds either but rather than stress about it, use them as intended. Some people get RIF without having savings or emergency funds. You should be ok until you find another job. This is a great opportunity to reassess your finances
Continue with your long term plan towards financial independence. If you do, this type of shitty deal will never bother you again.
Take the holiday, seek another job with your expectations in mind and broaden your field if necessary.