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November 08, 2011

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What a bad break for someone who had a great job and seemed productive. I don't know but it could also be that Ben Stein did not see what was really happening in her work.

I'm afraid even six months emergency fund would not have helped this young lady. Her best bet would have been a stable life partner....and not a dog.

The dog certainly came out bad on this one. The corollay here is that you should plan very carefully before taking on any kind of obligation for another life (whether a dog/cat or a kid). Do you have savings? And is your lifestyle such that you can manage having it taken care of properly? What if something happens?

Separately, what is the "going" advice these days? How much should you have? 1k? 3,6,8 months? Personally I think a full year is best, but probably more if you are single.

Luis:

1) She did not get fired from Ben Stein. Read the article again! It was a different job.

2) Unfortunately, "stable life partners" aren't something you can go to Walmart and buy. Some people aren't fortunate enough to have found their partner. Especially if you're someone who isn't very good looking. People will pass you over, no matter how great of a personality you have. So 'getting a stable life partner' isn't always a financial possibility. (I'm painfully aware of this one).

But yeah, I agree with you about the savings. Sometimes it doesn't matter how much savings you have if your luck is bad. I've run into many hard financial times, even with savings, and still have had to give up pets, and more.

BD --

"stable life partners aren't something you can go to Walmart and buy."

Funny way to put it, but oh so true!

It's just another example of how "life happens" and you have to be prepared for it. In hindsight, I'm sure she wouldn't have bought a house for her dog, it's easy to poke holes in her shcool of thought now. Just have to be prepared for whatever comes and fully except the fact that your preparation may not always be enough.

I think my response about the middle aged lady fails to stay within the scope of the story...the need to save money. I agree with this assertion and even more so for single people with dependents.

The middle aged lady in this story had the best opportunity to save given her high salary job and increased net worth. For those in industry that have high risk in returning to the career field onceafter job is lost, then they need to find ways to financially sustain their life until they get back on their feet. A high earner like her should have been able to have equity in their home, have Roth IRAs, have high FICO scores and really good credit cards. They should be able to by virtue of preparation:

1. Downsize their home
2. Downsize their car
3. Downsize their monthly expenses
4. Tap into their Roth IRAs
5. Put some monthly expenses on a couple of their 5.9%APR credit cards and pay the minimum monthly payments
6. Apply for unemployment
7. Budget for food
8. Economize their heating and A/C consumption
9. Take out a HELOC (tap into their home equity)

There is so much more a high income earner can do to sustain a jobless streak than compared to those with lesser incomes.

I wonder if she was the only one fired off the 8 year show? That's unfortunate that she didn't have enough savings built up for an incident like that. I would think that she would have some money invested and some in savings accounts collecting interest. Living in LA is expensive as it as and not to save is just plain silly.

"Unfortunately, "stable life partners" aren't something you can go to Walmart and buy. Some people aren't fortunate enough to have found their partner. Especially if you're someone who isn't very good looking. "

So true. I can attest that good looks don't always help either.

I think this lady should try harder to downside. If she can sell, she could try to sell and buy maybe a townhouse condo - OK for a dog yet cheaper. Also while rentals with dogs are harder to find than without pets, there are people who allow pets. I just rented out my father's co-op, and we were OK with renting to people with pets. When I used to rent, there were complexes that had no problems with pets. I don't know California, but in my area, I'd be able to point out immediately complexes that allow pets. Sure, someone renting out a condo they just renovated with new carpets may have a problem, but an older place with hardwood floors may have no problems. Many complexes are OK too.


But yes, it's surprising how people haven't saved anything. A buy a friend of mine met a few months ago once told her how in his previous job he was making so much money he was "barely able to spend it all". But now he doesn't, so when my friend suggested they go to a Broadway performance (each person pays for one's own ticket), he said - oh it's in a few months, I'll start saving for it now. My friend was extremely surprised he needed to save for it given that he was already around 50 and has worked his whole life. Then he told her how if he loses his job he can't pay his mortgage. The funny thing about it was that as he bought his place ages ago, he only owes about 15,000 on it, so my friend told him - this isn't much, can't you just pay it off immediately? He said he didn't have that much money saved. Now the guy is 50, surely a single professional who's worked all his life earning above-average salary should at least be able to just have more than this amount available?

People in the U.S. are obsessed with keeping up appearances. So many people see this is the main target when thinking about saving and spending. Maybe save just enough for emergencies, but never enough to compensate when a major emergency (such as losing your job) should come up. People are more concerned with having a car as a status symbol, or making sure they wear designer labels then they are about affording a smaller home within their budget. Its not our saving tactics that need to be changed (although they do in many cases) but our obsession with material things and image. Media and Hollywood raise the bar to which we believe we all need to live up to.

Its more than just savings. It's the attitude that we are told and sold of "we can afford it." You can afford the car payment, the house payment, the dinners out, the vacations, the spa treatments, etc., as long as you are gainfully employed.

Few really pay attention to what would happen if they weren't or that what they thought was a six month emergency fund is now only two because of the additional monthly burdens they've put on it or because the falsely believed they'd just sell the car or house in a week or a month without any problem or any additional cash out of their pockets.

Golden handcuffs anyone?

I have often heard that everyone has 20-20 hindsight. there are no easy solutions to any of this econimic mess except personal responsibility. the whole job market is in flux and no one is exempt from joblessness. The only thing to do (and to advocate to everyone you meet) is: Save for the worst situation, save a lot (one years's worth of expenses), look ahead and plan with caution. It is unfortunate, as the article outlines, that people just don't get it - so these sob stories will be repeated, adnauseum.

This points up how foolish it is to give to charity. Much better to add that money to your emergency fund.

I think people struggle with living below their means and they should not. Just because you can afford a $500,000 6 bedroom, 4 bathroom house on your salary, does not mean that you should buy one. Suppose you lose your job? You won't be able to pay for the house which was probably at your max. mortgage limit. Get a smaller home and SAVE. People underestimate the power of savings. When you're faced with unemployment or another life changing emergency, you always wish that you have some finances to fall back on and help you through.

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