We have historically low unemployment. But does that mean you’re safe? How can you protect yourself against job layoffs and fallout from recessions? Here’s what you can start doing right now. Chris Miles shares his insights on how you can prepare yourself because you can’t always protect yourself from job layoffs. Chris stresses that having cash reserves and passive income streams is the key to protecting yourself against rash decisions when job layoffs hit you and you need money. Tune in to this episode for more tips!
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Are You Safe From Job Layoffs?
Welcome to the show. It’s for you because you work so hard for your money, and you want your money to start working harder for you right now. You want that freedom and cashflow today, not 30 or 40 billion years from now. You want it right now so you can live that life that you love, with those that you love.
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I’m going to talk about an article I saw here on Yahoo Finance recently. This particular article was talking about layoffs with Meta or Facebook Meta, that company. There has been a lot of talk about layoffs in the tech sector. We’ve already seen it happening with Twitter. We’ve seen it happening even now. We’ve had tech billionaires becoming bankrupt with FTX. We’ve talked about that recently. There are a lot of things happening right now.
The real question is, are you safe from these layoffs? Is it something that you have to worry about? What can you do to prepare? That’s what I want to address in this episode. I’m going to go into this article right here, right now. This article is Meta layoffs took workers by surprise: “I thought I’d be clear in this layoff.” This is an article by Alexandria Garfinkel. They talked about a technical recruiter, somebody who thought she was completely safe and thought that nothing bad would happen. In fact, they didn’t think layoffs were a big issue. What was interesting is that they were even told that layoffs weren’t happening, and then the next thing they heard from the Wall Street Journal is that layoffs are imminent.
They talked about there are two big common threads that emerged for all three of these employees that were at Meta that they talked to or that they interviewed. They said that first, they had spent the last few months that layoffs weren’t on the table, then second, as I said, they described a work environment that had shifted radically in recent days, especially after the Wall Street Journal reported that layoffs were imminent. She talked about how it was a dream company to work for. It was great. They put their full faith in them. Now, after these layoffs, she’s wondering if the company and its future are going to work out.
Of course, when you have employees that become disgruntled, they’re going to have a skewed effect. It doesn’t mean that Meta is going out of business, but it does shake a lot of people’s confidence. The only people’s confidence that doesn’t shake is the stock market. The funny thing that I’ve learned as a stock trader in my previous life when I was doing that is that whenever they announce layoffs, stocks typically rise. They typically go up. Why? Because it means there are more profits. When there are more profits, it means more money going back to the shareholders. They encourage layoffs. They want people to become more streamlined and efficient, and not overpay for employees and things that they don’t need. They want you to get those profits in check.When layoffs are announced, stocks typically rise and go up. Because it means there are more profits, and it means more money going back to the shareholders. Click To Tweet
Chronically, that’s not a good thing. In the long-term, when you look at the vision, if there are constant layoffs, then that will be a negative impact on the stock too. It’s funny that the stock jumped up 10% that day after they announced layoffs. It was a shock to them, and I don’t want to spend a lot of time on just Meta.
The big thing is Twitter fired over 50% of their employees because you have Elon saying, “If you’re not a workhorse and you’re not going to slave away from my company, you shouldn’t be here. This is not the culture you’re going to want.” He’s trying to weed out everybody and get everybody to quit until he can get down to this culture that he wants to create. He wants to revamp the entire culture and get rid of it, and just throw it out the window. That’s fine. There’s no problem with that.
The thing is, especially right now, there has already been a big bubble in the tech sector just like Y2K. You’re going to see more layoffs happening. That’s a guarantee. You’re going to see more layoffs in probably a lot of sectors because everything bubbled. Everything got better. Even the retail sector came back strong after 2020 and things like that. We have a lot of these sectors that are starting to either stop hiring, there’s going to be a hiring freeze, or there can be more layoffs.
Remember, the feds are totally fine getting people to the point where there’s higher unemployment. In fact, they want to encourage and create higher unemployment so that things don’t run rampant, especially with inflation, which challenges the value of the dollar. That’s what they’re trying to do. We got a lot of headwinds coming here. The question is, are you safe? You might say, “I’m a business owner. I’m great.”
Did you know that even business owners, as we found out in 2020, can be shut down? We could become a non-essential business. We’ve seen that happen. We know that’s kind of bull. I’m a business owner. I know that things can get shut down potentially. It’s not as likely and you have more control of that situation, but we can’t control everything. We can’t control what’s going to happen tomorrow, let alone the next ten minutes of our life. I hope, knocking on wood, nothing happens to you guys. We want that to be the case, but the unexpected happens in life.
Most importantly, if you’re a W-2 earner and you have a job, even that tech recruiter thought that her job was safe. She thought she had all the benefits she needed, and it was great. By the way, their severance package was awesome. They’ve got sixteen weeks of pay plus all the other unpaid benefits they hadn’t got. That’s incredible to get that much benefit from a company that laid them off.
For people that whined and complained, “I didn’t get my just. I should have not been laid off.” Maybe not, but at least they gave you a nice little buffer and some extra pay to help you transition to your new job. That’s a nice little package there. Remember, she thought she was safe and fine. She was going into her third trimester of pregnancy. She thought, “It’s going to be fine. I’ll take a little break and come back to work. Everything is going to be like what it was before,” yet it wasn’t.
We’ve seen this happen time and time again. I mentioned 2020 because it was a great time. Several of our clients have been on our show. We had Louis Visco on for example. Louis talked about how he was in Hollywood. He gets contracted in different things. Even if he’s in Hollywood, he needed that passive income to help him weather the storm so then didn’t have to just pick any odds-and-ends jobs. He could cherry-pick the best jobs for himself and not feel he had to go in a rush.
That’s my point in this episode. We can’t always protect ourselves from layoffs. I do agree. Do what you can to create a lot of value for an employer. If you’re currently employed with somebody or if you’re a business owner, do whatever you can to be lean and mean in your business to ensure that you’re profitable.
If things do happen or there are more headwinds that come and it could be affecting your business, you’re not going to be shut down within days. That’s what happened in the last recession. Many businesses were caught unprepared. They didn’t have enough cash reserves on hand. They were extra fat. They had a lot of expenses. I was one of those people too. That’s why I’m emphasizing this. They weren’t tracking their money properly. They were the ones that if they didn’t have sales coming in, they were toast. That’s something you want to avoid.
I didn’t get out of business, but I took a lot of months of no paychecks. I was trying to struggle and hustle to help pay just for my expenses, let alone if I take home money for my family. Be prepared. You want to make sure you’re lean and mean in your business if you’re a business owner. If you’re an employee, have your emergency savings, have at least 6 months, if not 12 months of emergency savings, just in case. Even if you don’t get a severance package, you’ve got some time to transition.
Most importantly, you need multiple streams of income. You need multiple streams of passive income coming in. It’s fine to have multiple streams of active income, but you only got so many hours in the day. You can only do so much. You need passive income. I’m so grateful that many of the clients that hired us in 2020 were about in the same transition. It almost seems serendipitous. It was almost perfect timing that we were able to get them some of that passive income, even if it’s only $2,000, $3,000, $4,000 or $5,000 a month, whatever it might be to help them weather through that transition period. Some of them were laid off, furloughed, or just had to wait until they could reopen their businesses.
Having cash reserves is key, and having passive streams of income made it better. Some of the dental clients I know debated after those 60 days they had to shut down, “Maybe, I don’t want to go back to practice anymore or maybe I do want to stay in practice because I was bored out of my mind, but I only want to practice a couple of days a week.”
It’s the same thing. The strategy is still the same, even if the intention is different. You want passive income. You want money coming in to give you those options. You want to become work optional so if you ever become laid off and you all of a sudden have no work, at least you have something to go on. This can seem like common sense, but I want to stress the importance that even if you don’t think it’s a recession, we are in the middle of a recession right now. We have things changing in the marketplace. There are already things happening that are giving us tons of clues that we’re moving into a bubble burst. We’re seeing it bursting in many different places, especially in the tech industry.
You’ve got to be prepared. You do not want to be the person who last minute says, “I’m out of work. What do I do?” That’s the worst time to try to create planning because mentally, you are desperate for money. You need to make money. That’s when you make the worst decisions with investing. You want to make sure that you do it from a place of calm, preparedness, and peace so that you can relax and say, “Let’s make sure I’m making the right decisions for me in my situation. Not just because I need the money right now.”
You need that time to ramp up. You need that time to work. I’m going to keep this short and sweet. You need passive streams of income, and you need good ones. You need to make the best of your situation and be prepared so that if anything happens, you’re taken care of. The cool thing is we’ve even had clients that said, “What do I do about health insurance? I don’t know what to do?” The cool thing is we’ve had health insurance options come on here. We’ve had episodes about it before where they were able to get just as good if not better rates than they had, working for an employer.
There are even individual plans you can do. There are transitions you can make. There are things you can do with your taxes to help out. There are things you can do if you have 401(k)s and IRAs. Can you start accessing those funds and using that to start investing if you do happen to get laid off? Those are all perfect things. There are tax advantages you can take advantage of if you’re in financial hardship. You can avoid 10% penalties in some cases.
There are a lot of cool things we can do, but we want to make sure that you’re fully prepared so that if anything happens, you’re not rushing and making rushed decisions that cost you money, and potentially gambling your money where you could lose it instead of making more with it. My challenge to you is if you want to be financially prepared as you’re heading to the end of the year and going to the New Year and there’s tax planning and things like that involved, reach out to us at MoneyRipples.com. Find ways to be prepared. As it says in the scriptures, “If you’re prepared, you shall not fear.” I invite you to come at it with full faith, not fear, and from a place of abundance, not scarcity. Make it a wonderful and prosperous week. We’ll see you later.