Have you recently been laid off from your job? Maybe you are changing jobs for a better position or pay? Did you know this could be the BEST time to get your money working for you?
Chris Miles shares how you can put your 401k or 403b to better use in case you get laid off or change companies. Tune in to find out how to take advantage of this unique opportunity!
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What You Need To Do If Changing Jobs Or Getting Laid Off
Welcome to show that’s for those of you who work so hard for money and you’re now ready for your money to start working harder for you today. You want that freedom and cashflow not 30 or 40 years from now, but you want it today so that you can have that life that you love with those you love. It’s so much more important than that. It’s not just by getting rich. It’s about creating a rich life because as you’re blessed financially, you have a greater capacity to fulfill and live your life’s purpose, and bless the lives of those around you. That is the true goal of financial freedom.
Thank you for tuning in. Thank you for sharing and for being part of this show being a rippler in your own life because ripplers do just that. They are looking to bless other’s lives. For those of you sharing this show with others and promoting it, I know there are more than you and I can even count. I appreciate it so much. Thank you for doing so.
If you haven’t done so already, I would invite you to do this. This is something that’s new. It’s not new, but if you are on Facebook at all, we have a Money Ripples Facebook page. If you want to be invited as a part of that, please go ahead and look up Money Ripples on Facebook and be a part of that community. I post a lot of different things from our different YouTube channels and whatnot. Even my own personal thoughts, I put on there too. Check that out today.
I’ve noticed there’s something going on in the marketplace today. There’s something going on in the economy where supposedly, we have the best unemployment rate ever. Yet I hear more and more of you, especially if you’re in the tech sector, getting laid off. That’s a thing that sucks. Remember, if you know my story, I’ve been in a horrible financial place. I’ve been at a point where I was starving and under-employed in this sense where I was sinking every single month. In some cases, just as bad, if not worse than some people when they become unemployed.
I want to give you some advice specifically. I have friends and clients who are in a situation right now where they feel like this curve has been thrown at them that is a little bit unfair. The truth is it is. It’s not fair at all, but let’s make the most of it. I want to find the silver lining in what you can do with this opportunity because you may not have this opportunity back again to do this. I want to talk about this specifically because here are a few things.
Let me give you a few bonus tips. If you’re in a situation now where you’re laid off. By the way, if you’re not even laid off yet, this is something you want to note. If it ever happens to you or if you’re changing jobs, this is very important to do it. Statistics show that one-third of people will change their jobs next year. If you’re going to be one of those one-third people, this also applies to you.
If you’re ever switching jobs or maybe there’s some low or you get laid off or furloughed, whatever it might be, one of the best things you can do if you have debt, this is just a bonus tip. I wasn’t planning on sharing this but I’m just going to share this now. With debt, look for ways to defer payments or if there’s anything you do to defer. How often around Christmas time the banks will say about your auto loan, “You can skip a month.” Ask them, “Can I skip a month? Can I be able to do this to help put out the payments a little bit longer?”
If you have student loans, you can put them in deferment. They are in deferment now but starting next month, they won’t be. If you’re in a situation where you’re changing jobs or laid off, you might be able to work out a deal with them to either have zero payments or very low payments, allowing you to extend that situation. Look for ways to do that.
Also, it’s a great time, when you’ve got the time to do it, look at your personal monthly expenses. Look for ways to create some side income or some side hustles. It could be through contract work or labor. I had one client who is in the tech industry who was laid off and took contract work. Even though it was temporary, it still helped bridge the gap while he was there. The pay was in some ways even better when he was getting paid with another job than the previous job.
Going from my own experience, sometimes these things happen for you rather than to you. We don’t always see it at the time but there’s often a purpose behind it. Sometimes there are things that can happen that get you to look at other options that you never knew were available. I was listening to one of the books by Alex Hormozi. He was talking about how his coach has a franchise business, but the gyms were completely shutting down.
Everybody is refunding money. He’s getting left with the bills. He had $150,000 credit card debt and he was thinking fast. He and his wife were trying to call up some people, trying to sell them on their weight loss programs. He calls up a guy, a gym owner in Boise, Idaho. The guy says, “I could use some help. I don’t want to shut down. I’ve got friends that I don’t want to lay off. What can I do? Can you can you help me out here?”
Alex was like, “I’m pretty much getting out of this business. I don’t want to do anything with trying to build your business for you. Teach me how to do it. Teach me how to build my business.” He’s like, “I don’t know.” He’s like, “Please, come on. Teach me what you did.” He’s like, “Fine. $6,000 and I’ll teach you, but I won’t fly out there.” He’s like, “Fine, just teach me.” The guy was like, “Great. Here’s my credit card.”
Even though the guy was mostly getting maxed out on his credit card, he’s like, “I’ll do it. Whatever I have to do to learn your system that I know works, I’ll do it.” It shocked Alex so much. He said, “Is this going to work?” He called up another gym owner and pretty soon, he’s offering $7,000, $8,000, and $10,000 to work with these people to help teach them how to do the marketing he’d already mastered himself.
He went to his wife and said, “Honey, we’re not doing the weight loss thing. This is our new focus now.” He was able to pivot because of the hardship he was going through. Sometimes, this gets you to look at other options you never knew were available to you. I know this is not the main financial strategy I was going to talk about here today, but knowing that I’ve been in a place of struggle, just like with me when the last recession hit and I was broke. You never know what that’s going to lead me.
They got me to stop teaching people about passive income for a bit and got me to show people how to get resourceful and find free-up cash, just like I teach in my cashflow secrets course, even part of that Wealth Accelerator Academy, and how was I able to dig out of my own hole, pay off over $1 million of debt, and be able to be financially independent in less than ten years.
It’s something that I know has helped a lot of people literally. Not just hundreds or even thousands of people like you through Money Ripples. I know I let another company use my stuff and they’ve had thousands of people use that too. I’m grateful that my pain became everybody else’s gain, but I wouldn’t have seen it had I not struggled and not said, “I can’t teach about passive income because I’d be a liar. I’m in the rat race myself. I can’t tell people to get out of the rat race when I’m in it. Let me tell people how to do what I’m doing,” which is finding money, save money on taxes, paying off debt in a more creative way, how do I track my money, and do things to be able to get lean and mean so I can dig my way out of this hole.
That’s what I’ve helped many other people do as well. The same could be true for you. It might mean going into a better job. In fact, I would hold on to that fate that the harder it might feel right now, probably the better the reward is going to be. That’s one thing I’ve noticed in life. The harder the obstacle, the better it gets. I’m going to tell you to hang in there. Everything is worth it and there’s always a reason. Even that reason is to get you open up to other options that might be a completely different career or a business that you wouldn’t have started had you not had this freedom. If you’re changing jobs, this is one thing but I’m talking to those especially who got laid off or furloughed, or something happened where maybe you don’t have that job or that regular income anymore.
Let’s get to that strategy I was mentioning about the original thing I came up with. The truth is I know there are a lot more things going on emotionally. That’s why I want to make sure I address that and let you understand that I get it. I’ve been there. The strategy is this. Here’s the silver lining of when you get laid off and/or you’re even just changing jobs, which may not be a bad thing. You might be changing to a better job anyway.
This might open up opportunities if you have a 401(k) through that work. The problem is when you work for an employer, that 401(k) is locked up. They only let you get to it unless you either have to be struggling financially or you got to pretty much be borrowing from that loan, then they got to make you pay back every single paycheck.
That’s a horrible way to access your own money. That’s what the problem is with 401(k)s and IRAs. You’re the custodian. It’s for your benefit, but the government is the owner of your 401(k) or IRA plan. You don’t own it. You don’t have any control. That’s why they can change their rules and the taxes whenever they feel like it or whenever suits them best, not to say what’s in their best interest. If you’re changing jobs right now or you lost your job, the good news is now you can get to that money.
If you lost your job or you lost your employment, you can tell them, “I’m in financial hardship now. That’s one way you can access your 401(k) money without the 10% penalty. There will be taxes. That’s true, but if you’re going through a financial hardship, that’s one of the ways you can access those funds and use them right away.
I did this when I launched a business. When I was in my financial advising business and I went full-time, I had that 401(k) that now became free. I used that to help my family make it through. I use that money. I didn’t go and roll over an IRA. I said, “This is the money. It’s going to help me use seed money.” I didn’t have to pay any taxes because I left the job. I told them, “I’m now jobless. I’m commissioned-only with my business. I need this money.”
I was able to avoid the 10% penalty, but then also that money because I used it in my business for business expenses, it was able to write off some of it. I didn’t use all of that. I used some of it at home, but the parts that I am able to use for my practice, I was able to use. Remember, whenever you use money for business purposes, it’s a write-off. Even though I’m paying taxes on money, I also get a write-off of that money and it cancels out the taxes.
That’s one great opportunity you have. If you’re trying to launch a business, you’re 401(k) could be the seed money to help launch that business, and potentially access that money without any real tax, like net tax burden there. You could also use that money to help you out. That can be money that can be used to allow you to live. If you don’t need it, hopefully, you have an emergency fund outside of the 401(k). You never ever want to use a 401(k) as your emergency fund. You want to have a minimum.
By the way, if you’re in the tech industry, especially, 6 to 12 months of expenses. No less than six months of expenses that you need to have on hand because it is hard the higher level you are. This is even true if you’re outside the tech industry. The higher level you have, like as a middle manager and things like that, those are the jobs or those are things you need to protect against more. You need to have more liquid cash for those months.
I’m seeing the statistics coming out now because there are a lot of layoffs happening. Middle managers are those who are in higher income brackets and are the most threatened by unemployment. In fact, wages haven’t gone up if you’re in the middle management or in the higher echelon. The only people who get raises and have pretty much job security are those usually making about $40,000 or $50,000 a year or less. Those an entry-level jobs, service-type jobs, and things like that.
The higher up you are in the position, the more you need cash reserves. If you have those reserves and you have a 401(k), and you’re changing jobs and/or being laid off, do not roll your 401(k) into the next employer. It’s not worth it. It doesn’t give you any advantage. Instead, look for ways maybe how we can use that money today, beyond just being able to live. It can be a great safety net if you need additional funds, but you can also use that money.
You could roll it over into what’s called a self-directed IRA. When you roll money over to a self-directed IRA, now you get to self-direct. You get to decide where to invest that money. When you hear me talking about things like different types of real estate investments, you can do lending. A lot of things that can earn you potentially double-digit returns. You can roll your money over into a self-directed IRA and from there, be able to use that to invest. This could be one of your best opportunities.
This was great in 2020. 2020 was such a fun year because the government said, “Because of the hardships or whatever else is going on, we’re going to let everybody access $100,000. You can pull it out.” You’ll only have to pay the taxes over the next three years if you don’t reinvest it back in an IRA or a 401(k). My clients said, “I want that money. Give it.” They got it and are a lot more able to invest and do things.
In one particular situation, I had one client who was furloughed for two years. He was essentially waiting around to see if his employer would ever hire him back again. They were very hot COVID spots, so that’s part of the problem. The great thing is that allowed his money to be freed up to use however he wanted to use it. He ended up buying some investment properties. He went and did some syndications where you pull your money with other investors to buy certain things.
Things that would generate more cashflow to the point where he was able to if you were on a tight budget, replace his expenses. It didn’t cover everything for her comfortable life, but he was able to keep going. He stowed some cash reserves on the side. We made sure he stayed liquid and he had money paying a passive income, which worked together hand in hand. It worked wonderfully for him.
As a result, two years later, he got rehired. Now he’s saying, “Chris, this is great. Now, almost all the income I’m earning, I can use to reinvest, can I?” I said, “Yes. Now, you can create some massive freedom.” He’s gotten rehired again. He can get closer to that work option within a year or two. That’s the benefit. By the way, he had IRA and 401(k) money that was now available for him to use and do some things with.
I had another experience. Another client was working in Hollywood. It’s the same thing. The thing that helped him out when Hollywood shut down like it is now a little bit. Even though it’s trying to reopen and debate is still going back and forth with the writers’ strike. Still, the job market is uncertain there in that industry. He was able to weather that storm just fine. Do you know what the replacement is about? It’s 75% of his expenses.
He was 75% on his way to being financially independent. Still, you can imagine if you still have your cash reserves and that money you’re able to use is being used to be able to create passive income, it creates more safety. This is the beautiful thing. If you’re changing jobs or careers now or just changing companies, this is a great time for you because you’re not under stress. You’re not having that big gap, but if you’re being laid off. The good news is, at least if you’re going to get laid off, let’s take full advantage of it. Let’s make sure you can get that money liquid.
Remember I talked about get lean, get liquid, and get out? For getting laid off, you’re trying to get lean pretty quickly, but you also want to be liquid. You want to make sure you have enough cash to keep yourself going, pay the bills, and do everything else to take care of your family. Also, that extra cash you can now have access to that you didn’t before, now it can get out to start working harder for you so the next time, you don’t have to work so hard for it.
If there’s ever another round of layoffs or another uncertainty because of the economy or whatever might be, you’re protected because you have passive income. This is not just about you, is it? This is about protecting you and your family. This is about protecting your future. I can’t tell you how many times I’ve seen people get laid off or lose a job. All their savings get depleted and they’re like, “Chris, I’m back to square zero.”
Even for those of you that aren’t getting laid off right now or you’re not changing jobs quite yet, the best time for you to prepare is right now. Now is the time to prepare and just so you know, there are some major headwinds that’ are coming. The recession is not over despite what everybody is saying. That’s how people get blindsided by recessions because they say, “We’re fine. Everything is great. Everything is awesome.” That’s how it works, but it doesn’t work that way. Things do shift and it’s going to surprise you.
I can guarantee you credit card balances and defaults, although they are already going up, they’re going to start happening more and more. The US government is going to start wondering how they’re going to avoid default. The great news for the US government is that Europe and other countries around the world, even China, are in worse shape than the US government is.
I don’t know if that’s a good or bad thing. I said that’s a good thing. It’s good for America because at least, people still want to invest in our dollar. Bad though because that could create a global crisis or another repeat of a different type of financial crisis. Now, we have skyrocketing debt from consumers and the government. Higher interest rates are killing people right now. I mean that metaphorically speaking. Hopefully, not literally.
It’s swiping out a lot of money. This is your time right now to prepare to be ready for that. As I said with that client, Hollywood shut down. He was able to weather that storm because he had a passive income. Your best time to prepare is today. Not tomorrow, not next year, not in 5 or 10 years. Not saying, “Someday, I’ll get to this.” It’s right now. There is no better time than right now. The next best time is tomorrow, but don’t put off tomorrow until someday, then someday becomes never because that is when you find out you’ve lost your chance for freedom.
You’ve lost that ability to have that time and those resources to do so. I’m telling you, right now is an amazing time to get your money to work harder for you. Markets are almost the highest it has been since 2022. That’s not going to stay there forever. Real estate prices are pretty darn good too. We’ve got lots of good things there. If you have rental properties, it might be the time to sell those properties and move them to something else.
By the way, if you get laid off and you have rental properties, it might be a good time to sell those, especially if they’re lower-priced properties like in the average to the lower-than-average range. You could have more buyers coming in to buy those properties. Sell them off and get cash out to then maybe use somewhere else to make a better cashflow return than what you were getting before.
There are so many things you can do. The best time to prepare is before you need to prepare. That’s the best time. Banks want to lend money and you don’t need it. That’s how it works. The best time to prepare is when you don’t need to prepare. When you can look at this from a level head, plan and make it work for you.The best time to prepare is before you need to prepare. Click To Tweet
If there’s anything we can do to help you out. That’s where we come in as well. We work with you one-on-one and help connect you with people like I’ve invested with as well. People that I won’t bring on this podcast because there’s a limited amount of deals. We want to take those deals for ourselves, for our clients, and our community. That’s the thing that we can offer. Plus, I offer you support to see what you can do to strategize right now.
If you’ve been laid off, it’s a tough time. It may or may not be time to get us to help you now or maybe the perfect time. If you haven’t been laid off, it might be the best time right now. We can help you. You can reach out to us at MoneyRipples.com. Try that passive income calculator and fill it out. If that number is at least $15,000, then we need to be talking. We need to see what we can do to serve you right now. Make it a wonderful and prosperous week. See you later.