I cannot remember - in almost 30 years, anyway - having less of a grasp than ever of what our personal financial situation will be next year. Most always, I have known a) what I made in the current year; and b) what I anticipate making in the next year, even if it was just "there will be no change".
I know what I have made this year. I have not a clue in the world what I will make next year.
Even in the year of Hammerfall (2009) when I was laid off, I thought I knew what I was going to make that year - it is just that the income completely disappeared on me. But next year is a true mystery to me.
There are really only four options:
1) My salary does not change (by far the least likely).
2) My salary does change by dropping, but not significantly (possible).
3) My salary does change by dropping, significantly (highly likely).
4) My salary does change by my job discontinuing (again, I consider this an unlikely option).
So one role plays options two and three.
I keep a spreadsheet which has the potential income levels laid out as separate worksheets along with our standing expenses. So I keep going back and gaming different outcomes: if it were to drop 50%, what changes would we have to make? If it dropped 30%? If it dropped 60%? What does that look like? Where do the changes have to occur?
To be fair, in almost no scenario I am looking at is there any concern that we are going to be destitute, although in the longer term I have been told by a former colleague in HR that the generosity here makes it very hard out there to find a comparable position (so even in the event it drops a lot, it may ironically make me more employable. Such are the vagaries of salaries and business fate.).
But the not knowing anything at all is the part that bothersome. I cannot plan (except really, worst case scenarios) based on information that I do not have. And I really do not want to remind people that I am still around on the off chance that nothing changes (following the old rule that drawing attention to one's self is almost never a good thing).
So I wait, and plan, and plan again, and try to enjoy the last little bits of the fin de siecle of Thanksgiving and Christmas on an old work paradigm that is rapidly running out.
Run your dropped income estimates every 10% and document what expenses you plan to stop at that level. You'll have a good road map then. If it does drop X%, then you pull that page, offload what you planned to, monitor the result, then OODA.
ReplyDeleteWhat you have already done is something I have tried and failed to do over and over. Your success here is encouraging me to do it and get it right this time.
Start your consulting firm now. Work it in your spare time. Information you have worked a lifetime to develop is in demand. I'd never have understood that, without working at the welding shop.
StxAR, I have been doing a version of that - but in tranches of income by a fixed number instead of percentages (my mind works better that way). But the process is the same: Figure out the net, figure out what fixed expenses are present, and then keep whittling down the rest.
DeleteI have been pondering what else I could do to earn some cash. I have not yet fully developed the idea - given my current job I cannot really consult (non-compete sort of thing), but even something as simple as one of those food drop off things might work.
Broaden your view of your experience. I had a background in manufacturing, and have been an avid student of the mechanical all my life. I am a consultant at a welding shop now, that has developed into an after hours gig. The payout is all at the end, but the potential for continued contracts and maybe a retirement "job" are there. Step back a bit during the next week, and see if there are areas of opportunity to put the broad strokes of your experience to work. You may be surprised. I know I was.
DeleteSTxAR, thank you. That does make sense. As I have a bit of free time this week, I will do as you suggest.
DeleteI was always a contrarian when it came to budgets. I figured out my retirement goals and how much I needed to save. I figured out how much I had to save from each pay check to reach those goals. I had those amounts taken out of my paycheck immediately upon arrival and lived on the rest. Anything extra at the end of the year went into my retirement accounts for an earlier retirement. I couldn't tell you our fixed costs to live year by year. I do know with our variable income, some years we have quite a bit extra at the end of the year to put into our retirement funds and some years there is very little. But I always know our retirement plans are on track because they always get taken out first.
ReplyDeleteEd, we have been better about this in the last four years than we have been in the past, although the past was not a total wash. Your way is a good way. I have it pulled out of the front end now and will cling pretty bitterly to anything that would make a change in that.
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