

What do laid off bankers do when the severance runs out? - cwan
http://online.wsj.com/article/SB125780714976639687.html?mod=rss_whats_news_us

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trevelyan
Interesting psychological twist at the end of the article, where this guy says
he considers it more risky to take an offered job than whittle through
savings. I'm amazed at his expectation that an employer would guarantee
severance pay on hire. Ditto for the wife's complaints that she can't find an
employer who will "accommodate her schedule with the children". Can't her
unemployed husband take care of them?

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sethg
Look at it this way: if I'm unemployed but I can get a $100K job, and I get an
offer for a $75K job, I'm leaving $25K on the table--not just a one-time loss
but a permanent reduction in income. If another month of job-searching,
burning through another $7500 of savings, will get me a $100K or at least a
$90K offer, then it is perfectly rational to turn down the $100K offer.

~~~
gvb
...except experience has shown him that he _cannot_ get a $100K job (he has
been jobless for a year - and that is a recurring theme in the article). In
reality he is leaving $75K on the table by not taking the job.

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seanc
Early in my career my wife and I were very aggressive savers. We lived a fair
bit below our means.

The day after my first layoff we sat down to look at what the new budget would
look like. The first thing to go was all of our investment and money market
contributions. Completely painless.

The lesson I learned is that the best part of saving for a rainy day isn't the
nest egg you build up, it's the flexibility you gain from having a nice amount
of surplus cash flow.

Or, when looking at your cash, it's not the constant that matters, it's the
first derivative. (and maybe the second)

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jgrahamc
> What do laid off bankers do when the severance runs out?

I figured they were money experts and could work this out for themselves.

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gvb
Ummmmm, it looks like that is exactly _why_ they were laid off. The whole
article is made up of stories of "money people" full of hubris who have no
clue how to manage their own money.

~~~
gaius
Well, not really. Most of them do (did) have savings for example. What they
don't know how to do is adapt to a new reality.

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kogir
The article wasn't just about bankers, but it seems some of them are no more
fiscally responsible with their own money than they were with others'. Only
after personally crashing and burning have some of them learned.

Makes me wonder what, if anything, the bailed-out banks learned...

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fgimenez
This might be splitting hairs, but why do people insist on going out for
coffee? It's way cheaper to make at home with a $20 coffee maker. The price
per cup is cheaper, you don't need to leave the house, and it is little to no
work at all.

~~~
bigiain
You clearly haven't got sucked into the "I need a $500 grinder to go with my
$2500 espresso machine at home" and the $60/kg coffee beans that you throw the
leftovers out after a week or so 'cause they're stale already...

(I seriously looked up how much a kidney would sell for when I first saw a
$12,000 Speedster Espresso machine at one of my local roaster/cafes...)

~~~
naish
You might need one of these bad boys:

<http://www.nespresso.com>

I can't speak from personal experience, but I've heard many good things.

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endtime
The main takeaway for me is that people forget how to be frugal. Hopefully
I'll leave grad school having learned more than just CS - given how I spend
these days, I can't imagine ever blowing that kind of cash while unemployed.

~~~
gaius
Well, it's more complicated than that. The thing people fear most is the
destruction of their self-image: finding out they are not who they thought
they were, or everyone finding out that they aren't. Most times when you see
someone do something that's utterly inexplicable given the facts - like,
having no income but continuing to spend frivolously - this is the mechanism
in action. The "executive" has come to associate themselves with the physical
trappings of success - the car, the suits, the watch, and so on. Letting go
means admitting failure, means admitting that their life was just a facade.

It may sound shallow, but it's not an entirely negative thing. A fireman
enters a burning building, he's afraid sure, but his self-identity is the
hero, he's not going to back down, he's more afraid of the shame.

~~~
endtime
Makes sense, and I agree that there are utilitarian benefits (e.g. firemen),
but it's a pretty shallow life. Maybe it's because I define myself more by my
thoughts and values than my actions, but I can't imagine questioning my
identity because I got laid off.

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ihumanable
I have a hard time giving a shit about these people. With so many being fired
with no severance and no safety net at all, who were paid such paltry wages
that they have little or no savings.

The first guy started with $300,000. Even without finding a new job, he could
have paid himself a $50,000 / year salary for 6 years, $100,000 / year for 3
years.

Were do I sign up to get $100,000 / year for the next 3 years without having
to work?

