My Company Laid Off 4 More People

My company laid off four more employees this week, including my boss. That drops us down to 28 total employees. Thankfully, my old boss has come back over from our sister company to act as our new General Manager. I really enjoy working with him and am convinced that if anyone can help see our company through these challenging economic times, he can. Plus, I’ve stayed in touch with him since we last worked together and have been playing cards with him and some other friends every Wednesday night for the last few months.

These additional layoffs helped minimize the salary reductions that the rest of us have to take. I found out today that my salary will be reduced 10% (from $70,460 to $63,423), beginning with my 2/25 paycheck. I expected a salary reduction of up to 25%, so needless to say, hearing it will only be 10% was a blessing.

January 2009 Income statement

January was a surprisingly good income month (click on spreadsheet below) considering it was the first month of my wife’s laid off. We also had an equally good month for keeping our expenses low.

In addition to my two paychecks, my wife received a final $2,150.26 paycheck for 13 days of work and 3 days of vacation, a $60 reimbursement, $190 for babysitting, and her first unemployment check for $405 (with taxes deducted). We also received a $51.30 Citi credit card reward, $25 from selling a few items on craigslist.org, and earned interest income on our savings account of $16.71.

For the first time in a long time, our expenses came in well below budget; we only spent $5,379.39 in January. It’s great to see our belt tightening paid off. Every month we keep from touching our savings buys us more time.

Next month we have another new challenge. My company will be implementing a 20-25% reduction in pay beginning the 2nd half of the month. We also have ~$800 in medical bills for my wife that may come due. It will be more important than every for us to conserve cash.

January 2009 Net Worth Update (-$70.00)

January was a somewhat neutral month for us. Our net worth was reduced $70.00 from last month to $42,013.69 (click on spreadsheet below).

What worked:
We contributed $771.00 total to our retirement accounts (401k and Roth IRAs), although they only increased over last month by $385.61. We also deposited $900 in our savings account.

What did not work:
We pulled $1,169.14 out of savings for our 2nd property tax payment (this was a planned expense). We also pulled $1,484 out of savings to purchase 106 shares of BANK OF AMERICA CORPORATION stock for $14/share. Unfortunately, the stock is currently selling at ~$7/share.

Next month:
February should be a tough month. My company will be implementing a 20-25% reduction in pay that will hit my 2nd paycheck in February. If our business continues on its current trend, there may be layoffs in March. So, we’ll likely not invest much, forcing us to fall a bit further behind pace to hit our net worth goal for 2009. Let’s keep praying things get better.

We Love Free Stuff

My wife’s old company gave “perk” points for special achievements and she received enough of them to order us blender/food processor and automatic can opener.

We received them a couple of days ago and they are pretty nice. We even sold our old blender for $20.00 yesterday on craigslist. Now if we can just sell our old, half functioning, can opener. . . $5.00 anyone?

Watching Our BofA Stock Fall Gives Me Something To Do

. . .but it’s expensive entertainment.

We purchased 106 shares of Bank of America stock (symbol: BAC) on January 7 for $14/share. It is currently worth about 1/2 of what we paid for it. Opps. Apparently, the drop in share price is the response to Bank of America seeking additional government aid to absorb credit losses at Merrill Lynch, which they bought on January 1.

We didn’t expect the stock to go up immediately, but we also didn’t expect it to plummet either. We will wait and watch.

Didn’t We Just Sell A Truck?

One of the drawbacks of my wife getting laid off is that she no longer has a company car. Initially, we thought we could get away with one vehicle until my wife finds another job. It’s turning out that that is not the case, and there’s no guarantee that when she finds a job it will include a company car. So, we decided that we’re going to buy a cheap used truck. You might be thinking the same thing as me, didn’t we just sell a truck?

We can get a small truck with just under 100K miles for ~$3,000-$4,000. At that price, we can pay cash for it and avoid car payments. We decided on a truck rather than a car because we wanted something a bit more functional. If my wife gets another job with a company car, our plan would be to keep the truck as a back-up vehicle in case, A) We’re put into the same position again down the road. B) Our main vehicle has to go in the shop for some reason. C) We have to move anything/carry a large load.

I hate to see our savings drop $3K-$4K, but am glad we have the cash to make this happen. We’ll probably start looking at trucks next week.

We Don’t Bank With Them, But We Bought Their Stock

We sold our Toyota Motor Corporation stock (symbol: TM) for a small gain in mid December because we wanted to increase our savings once we got word my wife was to be laid off January 1st. Well this money didn’t stay in our savings account long because we purchased 106 shares Bank of America Corporation stock (symbol: BAC) today of for $14/share.

We’ve been wanting to take advantage of the depressed stock market as much as we’re able to and the financial sector is about as depressed as it gets. We chose to purchase Bank of America stock because we felt it offered the best combination of risk and reward.

Bank of America purchased Merrill Lynch this month, making them the largest financial services company in the world. It seems like they have positioned themselves nicely during this bad economy to come back strong when it rebounds.

For the 4 years prior to 2008, Bank of America stock has been over $40/share, and at times, over $50/share. Taking a look at Bank of America stock price over the last 52-weeks, their high was $45.08/share and their low was $10.01/share. That being said, we believe there is very good upside potential. . .time will tell.

What’s interesting is that we do not bank with Bank of America because they got a little fee crazy and I had to close my account a couple of years ago. The flip side is that all of those fees make for a profitable business. Let’s hope we can share in that profit.

God Takes Good Care of Us

My wife has always counted on God to help her when she needs to find a new job and it’s amazing to watch Him make things work out. Here are just a few examples from the past week:

She was informed on Wednesday that the company she interviewed with last month had decided to hire her, but unfortunately, the company was purchased and the new Owners will not be bringing any new employees onboard. It was sad that she was so close, but good to know that her interviewing skills are still sharp. Plus, this company may decide to hire her at some point down the road.

While we had hoped that she could seamlessly transition to a new job, it wasn’t in the cards. However, she received her final check from her company yesterday and it was much, much more than we thought it would be. She expected to receive 3 days pay for the end of December and 3 days of pay for her cashed in vacation time. Well, the check was for 13 days of pay for the end of December and 3 days of pay for her vacation time. After taxes and a $121 contribution to her 401(k), the check came to $2,150.26! This as a huge blessing and will buy us even more time while my wife looks for a new job.

My wife also received a call from a friend who offered her $360 if she would help her with her work one day this month. That’s good money for one day’s worth of work. My wife offered to help this friend last year when she was in a pinch, and although she did not accept the offer, she did remembered it and is now returning the favor.

My wife filed for unemployment last week and received a call from them yesterday. The lady told her that if she waited just one week, it would put her in a higher income quarter from which they calculate her benefits. This small suggestion had a big impact on her benefits, as they increased from $375/week to $450/week. Granted, she will miss out on one unemployment check because of the delay, but it will only take a few weeks to make up the missed check.

And finally, my wife has begun watching our neighbor’s child will probably earn $120 or more this month for just a few hours of work. Our neighbor’s child is a very good kid and my wife can take care of her and search online for jobs at the same time.

We’re confident that God will provide my wife with a great new job, but in the meantime, He’s taking pretty good care of us.

December 2008 Income Statement

December was a big income month for us. In fact, it was our 2nd largest yet at $11,210.81 (click on spreadsheet below).

In addition to our regular paychecks, I received a third “extra” paycheck and my wife received a huge $3,544.00 quarterly bonus ($2,028.95 net). We also received a $184.99 eye insurance refund, $150 reimbursement from my wife’s company, and we sold our 15 shares of Toyota Motor Corp stock for $47.40 gain. We also earned $31.22 in interest income on our savings account.

Even with the holidays, we were able to keep our expenses very much in line. Our cell phone bill was higher than usual and my wife had a few doctor visits, but no real large expenses. In fact, if you subtract out the extra $305 we tithed from my wife’s bonus check, we were right on par with our budget.

Next month, my wife will be unemployed, so our income will drop significantly. We have planned to dramatically reduce our expenses to ensure we don’t have to tap into our savings for a few months.

Our path to financial independence and retiring early.