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Thread: Unemployed Executives

  1. #1
    Cyburbian Cardinal's avatar
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    Unemployed Executives

    I came across an interesting article about the increased number of unemployed executives (3.4%) in the current recession. It is heartbreaking to see how they are hurting. Consider the example of this person who lost a $400,000 a year job:

    Jeff, whose $450 a week in unemployment runs out in March, adds: "When you read about people who can't afford to buy food you said, 'How do they do it?' Now, we're living day by day."

    Gone are the couple's $200,000 in retirement savings and Jeff's six-month severance. "People say you should have three months in reserves," Karen says. "We had that, and it didn't do any good. No one says (have) 15 months."


    That's right, forced to live for 15 months on $200,000 in savings plus a $200,000 severance and unemployment amounting to $23,400 per year. Frankly, I can't imagine what a struggle it would be. Not having made as much to begin with, not having nearly as much savings, not receiving a severance, and not even getting as large an unemployment check, I am so glad not to be in their shoes. (Yes, read it with some sarcasm.)

    http://www.usatoday.com/money/econom...ecutives_N.htm
    Anyone want to adopt a dog?

  2. #2
    Unfrozen Caveman Planner mendelman's avatar
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    Perhaps they blew through the $400,000 so quickly because they made the mistake of not changing their lifestyle enough?

    If I had $400,000 dollars to live off, we could live fine for about 8-10 years without any actual income, and I have three little kids.



    Granted, the house probably requires a $5,000/month mortgage, which may or may not include, I would guess, $15,000-$20,000 of yearly property taxes. That'll certainly help to kill $400,000 in a little over a year.

    Time to have a super garage sale.
    Last edited by mendelman; 31 Dec 2009 at 11:10 AM.
    I'm sorry. Is my bias showing?

    The ends can justify the means.

  3. #3
    Chairman of the bored Maister's avatar
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    I could comfortably maintain my current lifestyle for about a decade with 400K and no income.

  4. #4
    moderator in moderation Suburb Repairman's avatar
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    Their struggles include having to cancel vacations, only buy half as many Christmas gifts for the kids, canceling maid service, not putting up their Christmas lights to save electricity, spread their own mulch rather than getting their gardener to do it, eating pancakes for dinner (exactly what is wrong with that?!?) canceling the NFL Package on DirecTV...

    Yes, I am soooo sending them a sympathy card.

    I could get a good 8-10 years out of $400,000, assuming prices remain stagnant, with no income and minimal lifestyle changes.

    "Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country."

    - Herman Göring at the Nuremburg trials (thoughts on democracy)

  5. #5
    Cyburbian DetroitPlanner's avatar
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    Actually you would be making interest off of that $400k so you should be able to take it another year. Even in a poorly paying CD that would amount to about $8,000 a year, and you would hope that you could get a better paying one later.

    I am having a hard time feeling bad though for a guy who was making $400,000 a year yet only had $200,000 saved.
    We hope for better things; it will arise from the ashes - Fr Gabriel Richard 1805

  6. #6
    Unfrozen Caveman Planner mendelman's avatar
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    Eeek....8-10 years for some of us so far....what an indication/indictment of planner salaries.
    I'm sorry. Is my bias showing?

    The ends can justify the means.

  7. #7
    Chairman of the bored Maister's avatar
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    Quote Originally posted by Suburb Repairman View post
    I could get a good 8-10 years out of $400,000, assuming prices remain stagnant, with no income and minimal lifestyle changes.
    Figure with 400k you could keep 40k to live off and invest the other 360k. Even putting it into something no more imaginative than a run of the mill CD you could at least keep pace with cost of living increases for a while.

    edit: DP types faster than I do.

  8. #8
    Cyburbian Emeritus Chet's avatar
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    That "jumbo" mortgage on an ARM probably killed them in 2007.

  9. #9
    Cyburbian Planit's avatar
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    Quote Originally posted by Maister View post
    Figure with 400k you could keep 40k to live off and invest the other 360k. Even putting it into something no more imaginative than a run of the mill CD you could at least keep pace with cost of living increases for a while.

    edit: DP types faster than I do.
    Poor guy, I guess it gets really bad when the vintage ferarri had to go in the shop.



    I remember doing a little project in college. I don't remember the actual numbers, but if someone would loan me $2 mil for 2 years @ 2%, I figured I wouldn't really have to work. Too bad i never found that sucker - I mean wonderful person to do that for me.
    "Whatever beer I'm drinking, is better than the one I'm not." DMLW
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  10. #10
    Cyburbian CJC's avatar
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    In the wise words of Patrick Ewing (during the NBA lockout years ago, when several NBA players were struggling to get by when they weren't paid for a few months):

    "NBA Players may make a lot of money, but they also spend a lot of money."



    I'm sure the same could apply for many executives.

    Now, that said, I can certainly see how someone in an expensive region could run into problems if they had a large mortgage and it wasn't possible/feasible to unload the house and move to something cheaper in a hurry, but I'm not exactly crying for these folks.
    Two wrongs don't necessarily make a right, but three lefts do.

  11. #11
    Cyburbian Plus PlannerGirl's avatar
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    Well to put it into a DC area point of view

    Before I got married I rented a house, small 1930 something Cape Cod with no frills, rent for the year was $36,000, add in high utility bills as the place had original windows etc. not cheap. Cheap car payment 200, food, gas as we sit in traffic a long time, tolls for the road, etc etc. Adds up fast and that was for one person. I had 2 room mates part of the time but it was still on my neck to pay the bills.

    Add in kids, Cobra etc if you have a family and you can be spending a lot with no frills in the right market. If you have a high house payment and gads the taxes its easy 80 grand a year just to own the home with payments and taxes-not out of the question around here.

    Do I feel bad for folks, not really but I can see where things get bad in a hurry. They should have saved more but that does not seem to be the American way to do things.
    "They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." Ben Franklin

    Remember this motto to live by: "Life should NOT be a journey to the grave with the intention of arriving safely in an attractive well preserved body, but rather to skid in sideways, chocolate in one hand, martini in the other, body thoroughly used up, totally worn out and screaming 'WOO- HOO what a ride!'"

  12. #12
    Cyburbian mgk920's avatar
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    OTOH, because of the (highly questionable, IMHO) limits that the current crowd in DC is putting on executive pay, MANY top-level executive job openings are now going *UNFILLED* - if you are on the board of a really BIG company (as in 100s of billions dollars or more of market capitalization), you MUST be able to lay out the big bucks for the best talent to run it, or you will find nobody worthy of doing that job.

    It may run some of you class envy sufferers a bit nutty, but it is the way life in the real world is.

    Mike

  13. #13
    Cyburbian CJC's avatar
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    ^The only company that I can think of that that would apply to (potential government restrictions on executive pay and market cap exceeding $100 B) is Bank of America. I don't really agree with restrictions on pay (there are many other things that can/should be changed to "fix" some problems in the current system), but the things that you mention don't apply to more than one company (Citigroup is well below $100B market cap, as is AIG, as are the carmakers, places like Goldman Sachs and Wells Fargo have already paid back TARP funds and aren't restricted - certainly no pay restrictions on other $100B+ firms are being seriously considered - places like Microsoft, Google, GE, HP, Cisco, Walmart, ExxonMobil, etc).
    Two wrongs don't necessarily make a right, but three lefts do.

  14. #14
    Cyburbian safege's avatar
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    Even with inflation, I think I could live for 40 years on 400K.

    I spend less than that on unemployment now.

    Psychotics are consistently inconsistent. The essence of sanity is to be inconsistently inconsistent.
    -Larry Wall

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