{"id":1556,"date":"2026-03-23T04:15:54","date_gmt":"2026-03-23T11:15:54","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=1556"},"modified":"2026-03-29T08:13:30","modified_gmt":"2026-03-29T15:13:30","slug":"a-layoff-story-the-ant-the-grasshopper-the-honeybee-cobra-2","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id1556-a-layoff-story-the-ant-the-grasshopper-the-honeybee-cobra-2.html","title":{"rendered":"Layoff Planning: How to Preemptively Prepare for a Pink Slip"},"content":{"rendered":"<p><a href=\"https:\/\/lenpenzo.com\/blog\/wp-content\/uploads\/2011\/02\/grasshopper.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-1560\" title=\"grasshopper\" src=\"https:\/\/lenpenzo.com\/blog\/wp-content\/uploads\/2011\/02\/grasshopper.jpg\" alt=\"layoff planning\" width=\"399\" height=\"564\" \/><\/a>One of my favorite fables attributed to Aesop is <em>The Ant and the Grasshopper<\/em>. You know the story; the grasshopper spends all summer long partying it up like a rock star while the ant prepares for the coming winter by building a shelter and storing food.<\/p>\n<p>Of course, winter eventually arrives and the industrious ant finds himself well-fed and toasty-warm while the improvident grasshopper simply ends up as, well, toast.<\/p>\n<p>The fable offers a terrific lesson for kids <strong><em>and<\/em><\/strong> adults on the importance of saving and hard work.<\/p>\n<h3><strong>Why I&#8217;m Constantly Saving for Winter<\/strong><\/h3>\n<p>Now, as an engineer, I occasionally have to endure business cycles where my employer has to layoff employees. It&#8217;s the nature of the industry and one that I have always taken very seriously, especially since I am the sole breadwinner for my family. Never mind that the threat of layoffs are even greater now that we&#8217;re in the midst of a very significant economic slowdown.<\/p>\n<p>A layoff notice from my employer entitles me to five months of severance pay. Beyond that, I have to apply for unemployment benefits that are only a small fraction of our household expenses.<\/p>\n<h3><strong>Don&#8217;t Panic! This Is Only a Drill<\/strong><\/h3>\n<p>With that in mind, several years ago I decided to undergo a little layoff drill to try and ascertain exactly how much we&#8217;d have to cut back to make ends meet on unemployment benefits alone.<\/p>\n<p>Luckily, the Honeybee and I have been <a href=\"https:\/\/lenpenzo.com\/blog\/id14307-why-i-prefer-a-spreadsheet-to-track-expenses-manage-my-finances-2.html\" target=\"_blank\" rel=\"noopener noreferrer\">using a spreadsheet to meticulously track our monthly expenses<\/a> for 20 years, so we&#8217;ve also had an excellent handle on exactly where all our income is going.<\/p>\n<p>Anyway, I asked her to propose what cuts she would make to our household budget in the event that <a href=\"https:\/\/lenpenzo.com\/blog\/id551-how-to-stay-employed.html\" target=\"_blank\" rel=\"noopener noreferrer\">I was laid off<\/a>. Meanwhile, I independently made my proposed cuts.<\/p>\n<p>You can see the results in the spreadsheet below. Now some of our expenses have changed since we originally did this &#8212; at the time, our average monthly expenses were $8100, which is slightly less than they are today in 2020 &#8212; but that doesn&#8217;t change the message.<\/p>\n<p>As you can see, we disagree somewhat on the scope and magnitude of the cost cutting; she knocked down our budget by almost half, while I was a bit more draconian, slicing our spending plan by two-thirds.<\/p>\n<p><a href=\"https:\/\/lenpenzo.com\/blog\/wp-content\/uploads\/2011\/02\/LayoffExercise1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-1558\" title=\"LayoffExercise\" src=\"https:\/\/lenpenzo.com\/blog\/wp-content\/uploads\/2011\/02\/LayoffExercise1.png\" alt=\"\" width=\"573\" height=\"750\" \/><\/a><\/p>\n<p>Although we disagreed with our first pass on the size of the cuts, neither of us were able or willing to pare the budget to a degree that would allow us to live on unemployment benefits alone.<\/p>\n<h3><strong>Back to the Ant and the Grasshopper<\/strong><\/h3>\n<p>On the surface, it might seem like our family will be in a very tough predicament if I end up losing my job.<\/p>\n<p>Fortunately, I&#8217;ve never forgotten about the ant and the grasshopper. As such, even though I am very well-paid, I&#8217;ve always tried to live well below my means and save up for that dreaded day when I may finally lose my job. As such, we try to always keep a cash cushion of at least $25,000 on hand.<\/p>\n<p>For the sake of argument, let&#8217;s assume we agree to split the difference on our proposed budget cuts so that our monthly expenses top out at, say, $3500 per month. Add another $1250 per month to extend my health benefits through <a href=\"https:\/\/www.investopedia.com\/articles\/insurance\/11\/intro-cobra-health-insurance.asp\" target=\"_blank\" rel=\"noopener noreferrer\">COBRA<\/a>, and that brings our total monthly expenses to $4750. So in order to pay all the bills we would need to draw down our savings by $2750 per month, assuming unemployment benefits of $2000 per month. At that burn rate, we&#8217;d have at least a six-month cushion <strong><em>beyond<\/em><\/strong> the five months of severance pay I&#8217;d receive. That&#8217;s comforting to know.<\/p>\n<h3><strong>The Moral of the Story<\/strong><\/h3>\n<p>Don&#8217;t be a grasshopper and fool yourself into believing unemployment benefits will be sufficient to sustain you if you lose your job; for most households they won&#8217;t.<\/p>\n<p>I can&#8217;t imagine the upheaval that our family would face if I was laid off and we didn&#8217;t have a healthy amount of cash saved up to get us through a financial &#8220;winter.&#8221;<\/p>\n<p>Having a large savings cushion gives us the ability to postpone &#8212; if not outright avoid &#8212; the extremely tough decisions we&#8217;d have to make when living on unemployment benefits alone. And going through a layoff drill like this not only helps hone a plan of attack prior to facing a severe financial challenge like a layoff &#8212; it also shows how well you&#8217;re prepared should such a disaster strike right now.<\/p>\n<p style=\"text-align: right;\"><span style=\"font-size: smaller;\">Photo Credit: mickeymox<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>One of my favorite fables attributed to Aesop is The Ant and the Grasshopper. You know the story; the grasshopper spends all summer long partying it up like a rock star while the ant prepares for the coming winter by building a shelter and storing food. Of course, winter eventually arrives and the industrious ant [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":44072,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","pmpro_default_level":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[459,462,466],"tags":[],"class_list":{"0":"post-1556","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-family","8":"category-jobs-work","9":"category-saving","10":"pmpro-has-access","11":"entry"},"yoast_head":"<!-- This site is optimized with the Yoast 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