Last week, I was laid off from my software engineering job at a SF Bay Area tech company.
I’ve already shared this news with my Instagram audience, but in this post I’ll be giving you an overview of the entire situation as well as answering some AMA questions.
Why I was laid off
The long and short of it is that my entire department was laid off due to budget cuts and re-prioritization. I explain it all in this episode:
My severance package
Here are the details of my layoff and severance package:
- Until March 15th: I’ll be on “garden leave”, which means I continue to receive my paychecks and benefits as usual, but I am not required/allowed to work.
- After March 15th: I’ll receive a severance payout, my PTO payout, and several stipends for health insurance and career transition assistance.
I laid out all the numbers in this post, but the TLDR is that I’ll receive about $29,604 in pay and benefits during garden leave, and about $37,188 in severance and stipends post-March 15th. All in all, I’ll receive about $66k for not working for my ex-employer.
My financial plan (my goal is to NOT touch my emergency fund)
I typically spend $2k to $2.5k per month (the majority of which is rent, at $1.4k/month). I’ve saved up a little over $13k in a HYSA, which serves as an emergency fund for about 5 months at the rate of $2.5k/month. However, my goal is to not touch my emergency fund for as long as possible.
Here’s my action plan for getting by without withdrawing from my emergency fund:
- Until March 15th: I’ll be relying on my paychecks as normal. I’m reducing my 401k contributions from around $2k/month to $400/month (that’s the minimum I need to contribute to maximize my employer match), which will increase my take-home pay quite a bit.
- That extra take-home pay will go into my HYSA and act as a “buffer” fund.
- Any additional income I earn from@organized.finance throughout the next few months will also go into that buffer fund.
- After March 15th: If I don’t have a new job at this point, I plan to apply for unemployment benefits. According to this CA unemployment benefits calculator, I qualify for $1.8k/month ($450/week). I should be eligible for these benefits for 26 weeks (6.5 months).
- $1.8k/month is enough to cover my rent and a good portion of my monthly expenses. At this point, I’ll work to reduce my monthly costs to stay as close to $1.8k/month as possible.
- If my monthly expenses exceed $1.8k/month, I’ll pull from the buffer fund I mentioned in step #1.
- Once my unemployment benefits run out: If all else fails and I run out of unemployment benefits, I will begin to draw from my severance payout.
- Finally, if I run out of severance money, I’ll start pulling from my emergency fund. This is a worst case situation and hopefully I won’t get to this point!
My goal is to have a new job by March 15th. Of course, the tech job market is currently a nightmare, so maybe that’s an overly optimistic date. I’ll keep you posted on my progress!
Answering AMAs
Here are answers to questions I’ve received on Instagram over the last few days:
How will you be managing the severance pay you receive?
My goal is to avoid using the severance money and my emergency fund for as long as possible.
Taxes will be withheld from my severance and stipend payments. I plan to keep whatever amount remains after taxes in my HYSA until I find a new job. Once I find a new job, I’ll invest whatever remains of the severance.
Will you continue saving for retirement while future income is uncertain?
Yes, but less aggressively.
- Tax-advantaged accounts:
- I’m reducing my 401k contributions to about $400/month until March 15th (that’s the minimum I need to contribute to maximize employer match).
- I’ll continue to contribute $258/month to my HSA until March 15th.
- After March 15th, I’ll stop receiving paychecks from my ex-employer, and will temporarily pause contributions to my 401k and HSA. I plan to resume contributions to both once I’ve found a new job.
- Brokerage accounts:
- Before the layoff, I was contributing and investing $2.5k/month in my brokerage accounts. I plan to reduce that to about $1.2k/month until I find my next role.
Did you anticipate the layoff?
I had an idea, but didn’t know anything definitively. There had been a lot of talk internally about budget cuts and cost-saving measures, and I guessed that my department might be on the chopping block in the event of a layoff.
Are you looking for another job in tech?
Yes 🤡
Do you have any VISA restrictions?
Fortunately, no. I’m a US citizen and so I don’t have to worry about VISA timelines.
What will you be doing with this time off?
So far, I’ve been spending time with my partner, traveling domestically, figuring out my financial situation, and applying to jobs/scheduling interviews with recruiters.
How are you feeling?
I have very mixed feelings about the layoff. I’m grateful to be in a relatively stable financial situation. I’m stressed about interviews and the state of the tech job market in general. I feel relieved that the decision to leave the company was made for me, because that’s something I’ve been struggling to find the motivation to do for a while. At the same time, I feel uneasy about the limbo state I currently find myself in. I know I’ll feel better when I find my next role!
How are you planning health insurance?
I’ll remain on employer-sponsored health insurance until March 31st. After that, I’ll either sign up for health insurance through COBRA or will find health insurance through my state’s health insurance marketplace (healthcare.gov).
Do you plan to take a break or jump into the job search immediately?
I’m taking a one week break to travel and recharge, but I’ve already applied to several jobs and have a handful of interviews lined up for when I get back.
December was very relaxing for me, so I don’t feel like I need a long recharge period—I feel ready to jump into my next role.
Will you use this as an opportunity to switch to Organized Finance full-time?
At this point, I don’t make enough money from social media to feel comfortable doing it full-time. If I start making significantly more from social media than I would from full-time software engineering, I’d consider switching over!
