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The ‘World’ Has Changed And It Isn’t Going Back

August 9, 2011 · 33 comments

in Personal Finance, Work

I started my career in 1991, fresh out of graduate school.  It was during the Gulf War, and many companies were not hiring during that period.   Most people I knew in my MBA program did not have jobs secured at graduation, unless they were already employed and were attending school part time.  The economy was nothing like it was in the 70s, but still not the best.

In July of 1991, my husband and I started work right after we returned from our honeymoon.  We had two incomes, no kids, but quite a bit of debt from student loans and from the wedding.  (Side note: NEVER go in to debt for a wedding. If you can’t afford a sizable wedding, just make it small, regardless of what you think is expected.  Your cousins that were not invited to your small wedding will forgive you.)

Anyway, we lived in an apartment while we worked hard to pay off debt and save up for a down payment.  After we were married two years, I was pregnant and we started looking for starter homes.  I truly mean a starter home too, not like what you see couples on ‘Property Virgins’ looking for, with a ‘man cave’ and totally renovated kitchen.  (You can read about my hatred for the term ‘man cave’ in a later post.)  We knew our upper limit was $100,000, and we didn’t really want to spend even that much.

Workforce Reduction?  What Is That?

The day after we signed an offer on a house, my employer started their first workforce reduction program.  I was scared out of my mind. I had limited seniority, I was pregnant, and we had just bought a house.  I had no idea what we would do without my income if I got ‘reduced’.

After a few days, all the firings were done, and my job was safe for awhile.  However, the memory of seeing people literally handed a box and escorted to their cars will always be burned into my  mind.  From that point forward, every few years there would be a mass firing, and you never knew when it would be.  In recent years, the firings have been almost monthly in some companies, if not quarterly.

However, these initial firings caught a lot of people off guard.  Many people I knew had gone their entire careers without seeing massive (white color) layoffs until that fine day in 1993.  Sure, underperformers were let go, but that was to be expected.   Many employees had structured their lives around having two incomes, and why not? Jobs just were not at risk as much back then as they seem to be now.   The business world was not nearly as global, so competition was much less.  People could expect raises, bonuses and job security.  Now, other countries are willing to do the work for much cheaper, and suddenly, many jobs, and almost entire sectors, have gone overseas.

Watching this transforming of the work force happen while I was early in my career made a huge impact on me, and it was a positive one.  I learned that I would NEVER count on two incomes again, and that you should always be prepared to be let go.  I found out that nothing gives 100 percent job security.  I have seen experts in their field let go, probably because they made too much money.

Lessons From Today’s Economy

Quite often, people learn best from adverse circumstances.  Perhaps it is because it is easy to get complacent when things go well year after year.  However, with all these little shocks our economy keeps getting, it should teach people the following:

  1. Never turn down a potential job interview (unless you fear your current employer will find out and fire you).
  2. Always have your resume updated, especially after major projects so that your accomplishments are fresh in your mind.
  3. Diversify your investments.  Who would have ever thought gold would be where it is today?  If you had some money in stocks and gold, your losses would be minimized somewhat.
  4. Always learn.  Even though complete job security may be impossible, it doesn’t hurt to be considered an expert in your field.
  5. Live on one income if at all possible.  When looking for a home, base the mortgage amount on what you could afford with just one salary.
  6. Don’t give up.  If you do lose your job, seize the opportunity to pursue what you really want to do if possible.  Some unemployment benefits will actually cover part of the cost of schooling, so take advantage.  Don’t just sit around the house depressed.  Interview and educate instead.
  7. Admit your mistakes and move on.  I am sure many people are frustrated with the performance of the stock market and may be mad at themselves for how they have invested.  Learn from these events and take action if necessary.
  8. Take a look at your entire financial and ‘life’ picture and evaluate what changes need to be made.  Have an open mind and don’t make excuses just because there are things you don’t want to give up. Sacrifice is hard and often necessary, and if you start acting now, you will be better able to handle any negative events that may happen down the road.
  9. Diversify your income.  Always look for opportunities to make money doing other things.    Think about something you have always wanted to try and see if you can find a way to produce income doing it.  With the internet, the possibilities are endless.  You could be a freelance writer, sell on Ebay/Amazon, perform video editing, who knows!  (Thanks to Kevin at Out of Your Rut for reminding me that income diversification is very important, especially with such an uncertain job market.)
I am sure that many people, including myself, miss the days where your job was secure and you could plan your life around a nice income.  However, I think those days are gone forever.  You have two choices:  Be proactive and adapt, or hope for the best and just react to whatever circumstances come your way.  I doubt many people would verbally state they think just reacting is the correct option.  Actions do matter much more than empty words though, so if you are not being proactive, then you have chosen the latter by default.
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{ 30 comments… read them below or add one }

The Biz of Life August 9, 2011 at 8:37 am

Job security is an anachronism. There will be no more lifetime employment for anyone. You work for Me, Inc., no one else, and you need to learn how to market yourself.

Back in 2000 when gold was in the 200s and everyone hated it, who’d have thought it would have been the star investment for the next 12 years.

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Kris August 9, 2011 at 2:46 pm

You are so right about the gold. I also remember a time when I was a little kid that gold hit 700 and everyone went crazy. All I know is I wish I had some gold to sell now.

I like the term ‘Me, Inc’… I wonder what my tax rate would be on myself? 🙂

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Money Reasons August 9, 2011 at 9:20 am

Great advice on all point above! It’s funny, my family encouraged me to get a decent job while they were small business owners. The idea was that I would have a better secure life. It’s kind of ironic that now I’m trying to encourage my kids to think about become small business owners…

I definitely like the idea of “Diversify your investments”. I call it Asset Class Diversification, but it’s the same concept.

It’s kind of sad that our government let things fall apart. I think better policies and smarter politicians would have made a difference in the state of the US today. I’m not just talking about the current administration either…

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Kris August 9, 2011 at 2:45 pm

Isn’t it funny how things have reversed? I always thought that you could get a great job with the Big 3, work as long as you wanted, and then retire with a big pension. Ha ha ha, was I wrong!

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Money Reasons August 12, 2011 at 2:54 pm

Unfortunately, yes… That is what my dad believed and why most people in my family pushed me into college and specifically towards an Accounting or Computer Science degree.

I don’t want to do what my dad or grandfather did, but I find myself growing tired of cube life too (and the fact that they have or had a lot more money than I do)….

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Kris August 14, 2011 at 11:33 pm

You know what you have to do MR…

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Kevin@OutOfYourRut August 9, 2011 at 10:01 am

#6 is HUGE! Though it’s natural, getting depressed to the point of inaction is worse than a waste of time. The loss of a job is the time to get moving, and as you said to consider doing what it is you really want. There’s less to lose and more to gain in that strategy today than ever before, if only because there really is no job security. There’s no choice but to move forward.

If I may, I’d like to add another item to the list: diversify your income sources! Having a second (or even a third) income source could provide a launching platform into the next career move if you’re primary job is lost. In the meantime, it’ll provide an additional income stream to pay off debts or build up savings.

We all need to think outside the box these days!

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Kris August 9, 2011 at 2:44 pm

You are right, I need to add diversified income streams and not just diversified investments. I will add that in a minute!

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First Gen American August 9, 2011 at 1:10 pm

I guess I should consider myself lucky for working at a company who had layoffs every 18-24 months like clockwork. It was always a stressful time, but it was never as stressful as when I really needed that second income. I’m with you…hopefully never again will I fall into that trap.

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Kris August 9, 2011 at 2:44 pm

Layoffs every other year is still a bummer though. It just makes you nervous about making long term plans, like for a new home or even a vacation home.

Loved your posts on your Uncle, absolutely fascinating!

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First Gen American August 11, 2011 at 9:05 am

I’ve got the last one up today. When you have a minute, go check it out.

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Julie @ The Family CEO August 9, 2011 at 3:17 pm

I couldn’t agree more with your list. I think we’re experiencing a new normal and won’t be going back to the good old days, like many are hoping for.

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Kris August 10, 2011 at 9:37 pm

I am scared to see what the ‘new normal’ will actually be. Things have been so crazy the last few years, but I suppose everything goes in cycles.

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Jenna, Adaptu Community Manager August 9, 2011 at 4:54 pm

Along with keeping your resume up to date. Keep your LinkedIn profile up to date and keep an eye on the your social profiles in general.

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Kris August 10, 2011 at 9:38 pm

Jenna, you are very right about keeping your ‘online self’ up to date, and ‘clean’. I read more and more about how employers are looking up people on Facebook. Luckily for me, my life is so generic that not a whole lot would show up that is controversial.

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MoneyCone August 9, 2011 at 5:40 pm

Very good tips Kris. I’d also add, keep networking. When times are tough what gets you an interview are referrals more than job sites.

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Kris August 10, 2011 at 9:40 pm

Networking is so important. Joining non-profit groups and being on boards is more important now than ever. I used to hate the thought of trying to network and find connections. However, you really don’t have a choice nowdays.

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Sandy @ Journey To Our Home August 10, 2011 at 7:16 pm

Great tips. I know that ‘never say no’ to a job interview thing is something I’m working on right now.

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Kris August 10, 2011 at 9:40 pm

Sandy, it can be hard to go on a job interview when you really aren’t looking. Not to mention interviewing generally isn’t real fun, and sometimes, having choices can be hard too.

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retirebyforty August 10, 2011 at 7:25 pm

Great advice! I got my degree is ’96 and all the tech. companies were gearing up for the big dot com boom. Many of my friends who graduated in ’94 and ’95 had a hard time finding a job due to the aerospace collapse. What a difference a year make.

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Kris August 10, 2011 at 9:42 pm

It is so true that a year can make a huge difference. We saw that so recently in 2008 when things suddenly started to tank. I see it in IT all the time. IT jobs used to be secure, but now it seems companies are relying on overseas workers and contractors. You never know what will happen with any industry.

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Financial Samurai August 10, 2011 at 11:28 pm

Yeah, there’s no such thing as job security. Look out for yourself first!

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Untemplater August 11, 2011 at 1:04 am

So true. Even though I think my job is fairly safe, I am so thankful I have it every day and watch my spending habits all the time. Nothing is certain and it’s always good to be prepared.

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Kris August 11, 2011 at 4:45 pm

Great attitude Untemplater. So often, people look for ego gratification and so many other things out of their job that they lose sight of the fact it is indeed great to be employed.

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Little House August 12, 2011 at 2:26 pm

Excellent perspective. I never got too comfy in any position because I don’t really work in a corporate setting and as a teacher, especially as a sub, I’m always reminded I’m an “at will” employee. My best strategy has been to diversify my income and be flexible. And plan, plan, plan for a rainy day (well, this I’m still working on!)

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Kris August 14, 2011 at 11:37 pm

I imagine it would be very difficult to be a substitute teacher. I know in the school district I used to work payroll in, if a sub worked over a certain amount of days, they had to be hired, so some subs got taken off the call list toward the end of the year.

Here in Michigan, it is very hard to get fired as a teacher. The union is pretty strong.

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Invest It Wisely August 14, 2011 at 11:08 am

Thanks for reminding me of the lessons to remember… #5 especially is a very important tip.

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Kris August 14, 2011 at 11:17 pm

It has been interesting watching how many old beliefs don’t necessarily hold true anymore. (Like work at the same company forever and get a pension…)

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101 Centavos August 16, 2011 at 11:16 pm

#4 and that’s a fact. Keep your skills current, and upgrade them at every chance.

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QUALITY STOCKS UNDER 5 DOLLARS April 4, 2013 at 7:28 pm

To many folks still think their going to work for the forture 500 company and get a great paycheck along with great benefits a college degree is not what it used to be fifty years ago. In those days it really was something to a company not like today college grads are a dime a dozen.

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