Unfortunately, last Wednesday my wife was blind sided by a layoff. 5 people in her office got let go at once. Her 60k/year job is now gone. I still have my job making 81k/year. She was offered a 5k severance and *was told* the severance would have no impact on her getting unemployment though that's something I'm little hesitant to believe until it happens, but I hope they were telling the truth. She's got a paycheck coming on the 13th that'll be for 3 days of work, any remaining PTO(I think 40 or 50 hours) and the severance. I'm estimating this to be maybe $3700 after all deductions but I don't really know.
right away we sat down to do a strict budget. I bring home about $4255 *net* each month at my job. We have about $8,700 in a high yield savings that were were working on turning into an emergency fund. Based on the budget, our monthly expenses will be $4,325. This is based on credit card payments being made on time every month with $15-20 more than the minimum being made($310 total split between various cards) and the grocery budget I used($400) is on the higher end of our normal and could probably be shaved down a little by more frugal shopping. all in all my net take home comes close to covering us assuming 0 extra spending before we factor her final checks or unemployment. However our health insurance was from her job not mine so while we're covered for a couple weeks, we'll need to figure that out. Likely having to get it from my job, which will lower my net take home a currently unknown amount.
I also have a personal state tax debt of $3,500 that I've been on a payment plan on for years. It's paid as $332/month and is included in our budget. Non payment is not an option with this. either the monthly payment is met or the entire payment plan is canceled and I owe the full balance. The state will block my ability to renew driver license/vehicle registration if not paid.
We've considered using the $8700 savings to wipe out the credit card debt(ballpark $5kish), and/or the state tax debt. My worry is that $8700 is all we have as a cash on hand safety net. Access to further money will come at a cost. The state tax debt has no compounding interest but with it gone, that's $332 back into our monthly budget. the credit cards obviously have interest but if it takes too long for her to find a new job, the cash on hand would be more important than a better credit score.
So does essentially wiping our emergency fund to pay off debts and increase monthly budget by a little over $600 make sense at all? The idea of us being 1 income for an extended period of time with literally no savings is a bit terrifying but also $600/month more in our pocket could likely make a noticeable impact on our ability to get by until she gets a new job. That said I feel like we could be in serious trouble if she's unable to find work before unemployment runs out because there will be no more safety net of cash. She smart and has good skills and work ethic, lots of experience in banking and finance, so I don't expect that to happen but browsing online and seeing people talk about struggling to get work for 6+ months makes me a bit worried. I keep telling her everything is ok and we'll be fine but honestly that shit is a front to make her feel better so she doesn't stress and can just focus on finding a new job. I've spent nearly every free moment I'd had since Wednesday crunching numbers over and over again trying to figure out the best move forward that buys us the most time.
I'd really like to avoid the conversation of what we *should* have done as that can't change the situation we're in. Priority right now is making the money we have stretch as far as possible to give her time to find new work.
original posted by Tankard356 to r/personalfinance on Sun, 03 Mar 2024 15:10:55 GMT.