Getting laid off just sucks. You're lucky if it never happens to you, but let's face it, there's a good chance that you may have to face it at least once in your career. If and when it does, it's nice to be prepared.
Of course, when I say "prepared" it means the usual stuff like making sure that you have a good network of friends and co-workers that can help with placing you in your next job as well as the obligatory 6 months of cash reserves that you can tap into for just such a circumstance.
Well, let me tell you a little story of when I got laid off. I worked for an early stage Internet company that got a lot of funding but unfortunately also knew how to spend that money a little bit too quickly. That, in combination with some bad decisions and a changing marketplace meant that after only a couple years the writing was on the wall.
Luckily, or so I thought, I was "prepared" by having made a nice network of contacts that I immediately reached out to for other possible jobs as well as having saved enough money to help me pay the mortgage and other expenses for a few months (ok, not quite the 6 months that I recommend, but at least something).
But what I wasn't prepared for was the mental stress that getting laid off caused me. I was seriously stressed out. Had I made the wrong move coming to this company? What could I have done any different? How on earth am I going to pay all of these bills?
After a few days of soul searching and putting myself through the wringer, I decided to do an honest accounting of all of my assets and liabilities, and what better way to do that then in an Excel sheet.
Now, I was not an accounting major and if you asked me what "pivot tables" were, I would tell you that you find them at Chinese restaurants when you want to spin the food closer to you.
But I had enough experience in Excel to know how to do some simple formulas and easily put together a spreadsheet that listed all of my essential monthly expenses as well as the more discretionary ones. Essentially it was my own personal P&L.
Putting in every last item that I could think of I came to the realization that I only needed about $40,000/year to get by (this was when I was making roughly $65k or so).
$40k. I know to some of you that seems like a lot and to others that seems like nothing, but let me assure you that for my circumstances at the time and living in L.A., that number came as a BIG relief. I could do this.
The beauty of that Excel sheet was that my entire personal financial universe was laid out in front of me in black and white. Nothing to hide from and clear as day. And what I learned gave me the confidence to know that although I'd had a little setback, it was also a learning experience and that I knew I would find something else.
About 3 weeks later, a recruiter friend of mine recommended me to another startup where I was hired at an even better salary than my last position as well as putting me in the perfect place to learn and grow my career.
Even to this day, I still keep a simple Excel sheet that lists all of my assets and liabilities. It helps me to understand where my money is going and how to prioritize my spending. Now if I could just get that "Restaurants and Eating Out" line item down I could actually start saving more money!