Many advocate that if you prepare for the absolute worst case scenario, you’ll get over your fear. So, what if you lost your job tomorrow? What is the worst that could happen? Your family goes hungry. You lose your house. Jobs are scarce. Keep the thought experiment going. What would you actually do?
I’m lucky to have a family support system (I realize many do not). My parents have provided us housing during a stretch of unemployment in the past. If we both lost our jobs tomorrow, both of our families would ensure that we and our children would not be homeless. If our home was paid off, we would only have to come up with $800/month to pay for our housing expenses (including utilities such as gas, electric, trash, and water), but since we’re talking about tomorrow, our mortgage would not be not paid off. We have savings, so we wouldn’t be destitute immediately. We also have a large amount of salmon in the freezer that could carry us until next dipnetting season (at which point, we would ensure we actually caught our household limit of 65 salmon which could feed us for 4 days a week all year!). Obviously, we’d cancel our cell phones ($75/month) and stop paying for travel. As I’ve said, we’ve been through this before (we only had one kid at the time). We’ve proven we can win the unemployment game. We would get to work. Since we were able to survive in nearly the exact same scenario (with way less savings and confidence!), I’m not that afraid of a job loss tomorrow (also, since we each bring in income, the chances of us losing ALL income overnight is very low… the power of income diversification!).
What are your biggest fears associated with a job loss tomorrow? How would you survive? Have you gone through the whole thought experiment?
The difference between the “worst case scenario” job loss situation and the annual job resignation is that instead of asking “What if?” you’re forcing yourself to ask “What Next?”
If you had 5 days to spend in a hotel room alone, what would you choose to do? (Not going to lie… Catching up on sleep and binge-watching Britcoms would cover my first day, but that would get old quickly!) You couldn’t see the sights. You couldn’t leave the room. You could, however, bring tools with you (ie: computer, books, wood, paint, actual tools, etc.). How would you spend 5 days?
For me, this is a much more difficult thought experiment than the first one. My days would definitely involve some reading, writing, and researching. What exactly those days would look like is hard for me to pin down.
The point of this exercise is to identify your work passions. If your answers in this thought experiment have nothing in common with what you do for work, Guillebeau would argue it’s time to quit your job.
What If and What Next in Finances
When you create a financial plan, both questions need to be asked. You shouldn’t cater entirely to your fears of What If? but you also shouldn’t ignore those real fears. (I’m sure our previous unemployment period has something to do with our desire to pay off the mortgage early!) And if your What Next is just retirement, it’s time to think about how you actually want to spend your days (even if you manage to reach financial independence!).