By: Revanche

A recession or layoff: financial planning

June 25, 2025

I’ve managed our finances since, hm, probably always?, definitely since 2010 as a balance between living moderately in the present and aggressively saving and investing to protect against a future recession and/or job loss. Having been through a year-long job loss in the Great Recession transformed my already cautious financial brain to a very conservative brain. I insist on roughly a year of full normal expenses in cash / equivalents. I don’t count on unemployment or severance.

We got a stress test of this recently. What a shot of cortisol.

Like many big companies, PiC’s employer did another sweeping layoff. He had reason to believe he was affected so he texted me immediately. On seeing the news, I cussed a blue streak. Then fretted about all the benefits we’ll lose:

– daycare. Before this year, a layoff would mean losing the subsidized daycare entirely. This year, we would be allowed to continue, but at market rate. At a guess, that’s $3300 a month full time. Could we afford that if we were down to one income?? Big question mark. SmolAc won’t start kindergarten until Fall 2026, we need daytime coverage for at least 12-14 months.

– healthcare. We have good relationships with our doctors and don’t want to change! We could get insurance through my work but I hate that provider and really don’t want to start all over with new doctors. My health is a complete mess to manage and our current GP likes and understands us, that’s hard to get. I also want to use our dental benefit for JB’s next set of orthodontia. We’d have to balance the cost of COBRA against the cost of a new provider.

– healthcare FSA. I’d really been appreciating having a second FSA. We spend more than $6000 annually on FSA-eligible healthcare (mostly mine) and I’d hate to lose that second account so soon.

– Ditto 401ks. We haven’t had 2 401ks for very long, I want to save as much in tax-advantaged accounts as we can to make up for 17 years of not having one.

As stress management, while waiting to hear the official news and information, I started a list of things to do before the layoff was final. I was hoping that we’d get at least 60 days notice before he lost his benefits: submit all remaining FSA claims, examining the house maintenance jobs to cancel, running through the list of things we keep (JB’s sports, SmolAc’s daycare if we could swing it for another 14 months), cancel or cut down on (therapy twice a month instead of once a week, pause the trainer).

A couple hours later, he told me with huge relief that the cuts came unbelievably close but they missed him this time. He’s been working double time for the past several months across multiple departments, a ton of pressure and stress, and that extra stuff could be what saved his job.

Moments of reflection: I am so glad that we tolerated very lean months this year to max out our 401ks. My original reason was I wanted to have that done in case I rage-quit my job sometime later in the year. I’m toughing it out because it’s a crap job market right now but that doesn’t make it any less frustrating. A layoff is also a second great reason! (Also, in that case, no rage-quitting).

I didn’t like that we didn’t have a clear and complete set of priorities for what must be cut at specific time points and at what budget levels. I’ve started a fledging spreadsheet laying out non-absolute essentials (housing, insurance, foods, utilities) like my extra healthcare stuff and activities.

We learned that his company’s severance policy is generous: salary and benefits are determined by tenure. If that doesn’t change, we could have extra buffer. I won’t plan for it because that CAN change at any time but it’d be something to look out for that would measureably push out our panic mode point.

It generally feels like it’s only a matter of time. My job is likely safe for the rest of this year and probably through half or all of next year. I can’t/won’t bank on anything beyond that. For PiC: it remains a complete mystery if and when the axe could fall again and this time take him with it. We have done ok on our cash holdings but I would feel a lot better if our investments were more robust as a second line of defense.