Tips on being prepared in case you lose your job
BY TERRY SAVAGE SUN-TIMES COLUMNIST Jul 14, 2006
Updated: May 3, 2013 12:14PM
Originally published: March 11, 2004
This isn’t the first “jobless recovery.” Economists always say the unemployment figures are a “lagging indicator.” Historically, hiring picks up only well after a recession has ended and business regains confidence about the future. Economists will also point out that our current unemployment rate is the lowest in nearly 30 years, and that more than 94 percent of those who want to work are gainfully employed.
But all of that is small consolation if you -- or a member of your family -- can’t find work.
Even worse, this time around, it’s not that people are out of jobs. The sad fact is that the jobs have actually disappeared -- or at least traveled overseas to countries with lower pay scales.
That’s not news either. But the subject of exporting jobs is being treated by politicians and the media as an unusual phenomenon, when, in fact, it’s part of a cycle that has happened several times throughout American history.
It happened when farm workers were replaced by farm machinery. It happened when factory workers -- think of the steel industry -- were replaced by foreign competition, or even by computerized equipment that took away jobs in the plants. And now it’s happening to high-tech workers, who figured their education and skills would guarantee them a secure career. Their jobs are going to offshore workers who accept far lower pay.
Gartner Inc., a major research firm, estimates that 40 percent of the Fortune 500 companies are expected to send jobs overseas this year. And Gartner is predicting that 25 percent of all IT professional jobs could go overseas by 2008, according to an article in Fast Company, the “bible” of the tech business.
The one thing that is different this time around is that so many of those who are losing their jobs have so little in the way of resources to fall back on. Highly educated professionals are still paying off college loans, not to mention financing current lifestyles with record levels of personal debt.
There’s no feeling more sickening than being told your job is being eliminated. You can never be totally prepared -- but you can be better positioned if you act in advance.
Here are a few practical suggestions for those who still have jobs:
Re-evaluate your lifestyle
In every generation we come to accept it as our right to live better than our parents. But that’s not a law of economics, nor a part of the Bill of Rights. So consider what would happen if your income suddenly stopped. Whether it’s little things like your daily latte, moderate indulgences like dining out or video games for the kids, or major items like private school tuition or a family vacation, this is the time to consider doing without, before you’re forced to change your lifestyle. And if you cut back now, you can take the next step.
Pay down your debt
You know I’ve been saying this for years, yet consumer debt keeps rising. And so do bankruptcies. If you do cut back your spending lifestyle now, you can use that money to pare down your debt. The goal: Eliminate all credit-card debt that you can’t repay in a month or two. Pay off your car loan, instead of buying a new car with a larger loan. Of course, many people are struggling just to stay even. But who knows who’ll be next to lose a job? And if it’s someone in your family, you might be asked to help. That’s why it’s time to cut back now if you can. And then take the next step.
Create alternative income
If you have a side income -- even if you are employed full-time -- it will come in very handy. Everyone in your family -- teens included -- should start thinking about a weekend or part-time job. Or consider becoming an entrepreneur, using your special talents to start a little service business on the side. It’s easier to start now, when all you’re giving up on the weekend is a trip to the mall, than it is to get going when you’re in a panicked state of mind.
I’m not really trying to scare you. Maybe you’ll be one of the 94 percent of Americans who are working, continuing to take home a regular paycheck. Those odds are pretty good. But putting yourself in a sound financial position can’t hurt ... just in case. And that’s The Savage Truth.
Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange. She appears weekly on WMAQ-Channel 5’s 4:30 p.m. newscast, and can be reached at www.terrysavage.com.