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Faces of the Unemployed - Meet Don

February 3rd, 2010 at 03:42 pm

This interview is the second in a periodic series profiling those who have recreated themselves following a job layoff. Each story is unique, yet the challenges they've faced will resonate with many who share their experience.

I recently spoke with "Don," a former senior-level IT director in southern Connecticut who carved a new path outside the corporate track after losing his job at age 58.

Q. What happened to your last full-time job?

Don: It's been four years since my job in IT was outsourced to India, like so many others. At the time, I was 58 years old and had known for over a year that this was probably going to happen as my company was merging different business units.

I had been working in IT for over 30 years, working my way up from a programmer's position to the level of director of information technology. My salary plus bonus in 2005 was about $125,000.

Q. What was your biggest immediate concern following your layoff?

Don: I had considerable savings and investments, so I was more worried about losing my medical benefits than I was about the financial impact of my job loss. After researching various options, I discovered that I would be eligible for health coverage if I worked part-time (at least 20 hours a week) at Starbucks, so I got a job at a local Starbucks as a lowly barista. I started working there in 2005, while I was still working as an IT director. It was just a few months before my layoff. So, for a period of time, I was working about 60 hours a week between both jobs.

As expected, I lost my IT job at the end of 2005. I got a very generous severance package and continued working part-time at Starbucks, which qualified me for medical coverage.

Q. Was it difficult to make the transition from senior-level corporate executive to coffee-server?

Don: For someone who once managed 10 people and a $5,000,000 budget, the Starbucks position was, of course, very menial; I was essentially a clerk serving beverages and emptying the garbage. But I enjoyed the job and felt a sense of relief that I had left the corporate world once and for all. It was kind of strange reporting to supervisors who were in their early 20's, but I got along well with everyone.

I enjoyed getting an inside glimpse of the workings of a large, successful company by day and reading the company's corporate news announcements in the Wall Street Journal the same night. Still, there were times when I was self-conscious and a bit embarrassed when former colleagues and friends would show up as customers at Starbucks.

Eventually, I took on two other part-time jobs to keep myself busy and supplement my Starbucks income. One was working as a clerk at a gas station eight hours a week at a low salary, but with one big benefit: getting my two cars fixed for free there whenever they need repairs. I always enjoyed being around cars, and it's a nice casual place to work, where I can bring my dog if I want. We have a big TV on all day too.

I also landed a job as a driving instructor at a local driving school for another 10 hours a week. It's something I enjoy immensely since, in the early days of my career, I worked as a high school math teacher. I like being with the kids.

While I've kept the driving instructor and gas station jobs for over two years now, I was laid off by Starbucks in mid-2009. It came during a big wave of layoffs there following a drop in coffee sales and the deepening recession, and a change in their business model where they wanted to hire mostly full time employees.

Q: Did you lose health coverage when you left Starbucks?

Don: No. I had remarried when I turned 60, so I wasn't upset to lose the Starbucks health benefits since I'm now on my wife's superior health plan. It was fun working there for almost four years.

Q. Are you able to make ends meet now and provide for a comfortable semi-retirement?

Don: My two jobs provide sufficient activity, stimulation and income, combined with my other investment income. I also decided to begin collecting Social Security benefits at age 62. This allows me to work only about 15 to 20 hours a week now between both remaining part-time jobs.

I'm happy to be out of the IT world with its politics, pressure and often incompetent managers.

Q: Did you consider any other career paths once you left the IT world?

Don: Early on, I did consider becoming a licensed practical nurse (LPN), since there's been a chronic shortage of nurses and the job prospects in that field are booming. I've also enjoyed working with elderly people in various volunteer activities I've had over the years. In the end, I decided not to pursue that path, though I'd recommend it to others. I chose not to pursue nursing because it would take me two years to get the schooling and license, and I don't want to be working that much longer or harder.

Q: Can you describe the most significant changes in your lifestyle today compared to just a few years ago?

Don: The best thing about semi-retirement is the added time it's put back into my life. I'm working less than 20 hours a week now and I have a lot of time to do many things I couldn't do before, like travel, golf, volunteer work and spending more time with my wife, family, friends and new dog.

Life is good. I'm happy, content and, while far from rich, I'm financially comfortable, with no regrets after 40 years in the work world.

Q: What advice could you give to others who face a possible layoff? How easy is it to reinvent yourself after investing so much time in your career?

Don: Take a chance and try something new. I could have advanced into management at Starbucks, but I wasn't interested. But there are plenty of opportunities out there for interesting jobs, where you don't have the pressure to make a lot of money. Just make sure you can continue health care benefits one way or the other.

Faces of the unemployed

January 12th, 2010 at 06:06 am

This interview is the first in a series profiling those who are dealing with the loss of a job. Each story is unique, yet the emotions they feel, and the challenges they face, will resonate with many who share their experience.

I recently spoke with "Dido," a former psychology college professor in Pennsylvania who decided to change careers after investing 20 years in academia. Dido is also a fellow Saving Advice http://dido.savingadvice.com/

Q. Dido, why did you decide to leave a 20-year career as a college professor?

Dido: To understand why, you'll need to understand the nature of traditional tenure track positions in college-level teaching. It's very much a "publish or perish" environment. I started out teaching psychology at a research university, but because I wasn't publishing enough, I was asked to leave after six years. Since then, I have taught psychology courses at several small liberal arts colleges, where I mostly worked as an adjunct professor.

Q. What's the difference between a tenured professor and an adjunct professor?

Dido: If you're on the tenure track, you need to be doing some research and getting stellar teacher ratings from the students. An adjunct professor is the equivalent of temporary help, and you're usually hired for short-term periods of a year or less. As an adjunct professor, you're likely assigned to teach introductory courses that are requirements for incoming students, and these are the classes students are most likely to rate as "average."

As an adjunct professor, I was patching together individual courses for two years with no contract longer than four months at a time. At one time, I was teaching five different classes at four different colleges. I put a lot of miles on my car.

In 2003, I landed a full-time, one-year sabbatical replacement job at one liberal arts college. I taught there for six consecutive years with six consecutive one-year contracts. That contract wasn't renewed in May 2009.

Q. So it was after that layoff that you decided not to return to teaching?

Dido: My exit strategy was actually several years in the making. I had already begun to think about a career change a few years prior to my layoff, during that period of one-year contracts. I was unhappy with the instability of my teaching career and became involved with a small group of women who each felt like they were facing a transition point in their careers. We would meet periodically and give each other little homework assignments. Those discussions helped me realized that I wanted to merge my interest in psychology with an interest in personal finance. I wanted to do financial planning, helping people overcome financially self-defeating behaviors. I'm interested in how findings from psychology and behavioral economics can be used to help people more effectively manage their financial futures.

After some investigating, I realized that most financial planners essentially end up working as sales people for some company. I decided to take a different route and am now pursuing my CPA and enrolled agent licenses so that I can eventually work at a small CPA firm doing taxes, accounting and some financial planning. (Editor's note: An enrolled agent represents their clients with the IRS.)

I've been enrolled in classes since 2004 and have completed three of the four required CPA exams. I expect to have both my CPA and enrolled agent licenses by July of this year. Of course, I would have liked to control the timing of my departure from teaching, but that was not meant to be.

Q. Job loss often triggers a great deal of emotional distress, turmoil and feelings of isolation. But it sounds like your classes and exam preparation have kept you very busy during your last eight months of unemployment. Is that true?

Dido: Yes, studying is my anxiety reduction technique. I have felt a sense of isolation, but ironically, it was while I was still working.

Q. What do you mean?

Dido: When I learned that my teaching contract would not be renewed, my colleagues at work started avoiding me. People were friendly, but most of them never asked me about my future plans. No one really had time to listen. There was a studied avoidance of me, and after my office was moved to the philosophy department away from my colleagues, the separation became even more uncomfortable.

Most educators who have committed themselves to a teaching career have a very strong loyalty to academia. So they really couldn't relate to my career switch. I have a PhD in psychology, but at the college level, everyone has a PhD, so it's not valued. Now I have to hide my degree because prospective employers think I'm overqualified.

Q. How did your interest in personal finance develop?

Dido: I got involved in a http://www.simpleliving.net that was created by a group of Quakers who formed an online study group based on the book, http://www.simpleliving.net/shop/category.aspx?catid=2 That book changed my life, and really got me thinking differently about money.

Q. Tell me about your "Happiness Project."

Dido: The Happiness Project was an assignment I gave students who were taking my Money & Happiness class at several of the schools I taught at. It was an elective course for psychology majors. We delved into behavioral economics, cultural expectations about money, advertising and consumerism, and "positive psychology." As part of the class, I asked students to use what they were learning to make a conscious effort to make themselves happier.

http://www.happiness-project.com/ is also the title of a new book by Gretchen Rubin. I decided to create my own "happiness project" by coming up with different ways of keeping myself happy while dealing with my job loss. So this month, I'm keeping a gratitude journal. Each night I write a bit about what I'm grateful for each day. Next month, it'll be something different, maybe committing myself to performing random acts of kindness. I'll also use ideas from Sonja Lyubomirsky's The How of Happiness and the tools at http://www.happier.com for guidance.

Q. What else are you doing to keep busy?

Dido: After being shunned by colleagues after my teaching contract wasn't renewed, I made sure to cultivate friendships outside of work. So these days, I exercise regularly with my walking "buddies." I'm active in my congregation, I do some volunteer work, I'm a community leader on a diet website forum and I'm part of an online women's coaching group. Each week, we talk on the phone and offer feedback to one another on "getting unstuck." And, of course, I'm looking for a full-time job.

Q. How has prolonged unemployment affected your personal finances?

Dido: I'm fortunate in that I recently started working for H&R Block for the coming tax season, but unemployment has been very hard on my bank account. Despite having a substantial cushion prior to my layoff, my credit card debt now exceeds what I have in savings. After my layoff in May 2009, I had about $3,000 worth of work done on my car. My dog became seriously ill and required expensive surgery and radiation treatments. I racked up over $9,000 in credit card debt.

Not counting my mortgage, this is the first time in 15 years that I've been in debt. I'm very much concerned about going deeper into debt before I find a real, self-supporting job.

Fickle economic currents can swamp the boats of many workers who never saw the wave coming. People like Dido can regain a sense of control by being proactive, taking the initiative to manage their careers rather than waiting passively by the phone for a call that may never come.

Although returning to school and changing career paths may not always be feasible or the right move, other choices exist for those determined to discover them.

From the Trenches: A Financial Counselor Reflects on How We're Coping

January 3rd, 2010 at 05:49 am

If you wanted to gain insight on how working Americans are dealing with the recession, you need look no further than Michelle Vullo Pastor, a Denver-based Accredited Financial Counselor. Through her business, http://www.enrichfinance.com, Michelle visits the workplace to speak with employees about their personal finances.

I sat down with Michelle recently to talk about her impressions of how Americans are responding to the financial crises many of them face.

Q. Can you tell me a little more about your business, Michelle?

Vullo Pastor: Enrich Finance is a financial wellness company specializing in consumer credit and personal finance issues. I travel across the country to visit with employees in all sorts of industries, from manufacturing and technology to law firms, government agencies and hospitals. I get my business primarily through word-of-mouth.

This year, I've visited 95 companies, from San Francisco to Worcester, Massachusetts, to provide workshops on reducing debt and saving for the future. At some companies, I might present a two-day, 16-hour presentation where attendance is mandatory and shift work is stopped so that employees can attend. We also offer one-on-one counseling for individual employees, which could include a series of five or six sessions, according to the employee's needs. At other times, I'm called in after layoff announcements have been made.

We deal with hundreds of different companies of all sizes, and I talk with people who are making as little as $25,000 to over $400,000 a year. Regardless of income, what is striking is that for some employees, this is the only personal finance education they'll receive.

Q. What's the difference between an Accredited Financial Counselor and a Certified Financial Planner?

Vullo Pastor: Unlike a Certified Financial Planner, an Accredited Financial Counselor like me has no products to sell, so my advice is completely objective. I don't provide specific investment advice.

Q. Why do employers invite you to speak with their employees?

Vullo Pastor: My presentations are paid for by employers because they understand that a distracted or stressed out employee is not a productive employee. Research shows that fully 25% of employees worry about their finances to the point where their health and productivity suffer and this, in turn, takes a toll on the employer's bottom line. In fact, 70% of healthcare costs can be traced back to poor lifestyle choices brought on by stress, such as smoking, overeating, substance abuse and poor sleep habits.

What's more, employees in financial trouble may be fielding creditor phone calls at work, calling their bank or credit card companies from the office, using excessive sick time or even looking for higher-paying work elsewhere.

So employers are often looking to increase worker productivity; at other times, they want to offer an additional benefit.

Q. How do employers become aware there's a problem?

Vullo Pastor: Sometimes, individual employees may approach HR or their manager for a raise or pay advance. Another big red flag is they'll be looking to take out a loan or distribution from their 401(k).

Q. What kinds of things do you speak about?

Vullo Pastor: Nearly everything that affects an employee's personal finance, including budgeting, impulse spending, debt consolidation options, how to compare loans, avoiding foreclosure / bankruptcy, negotiating with creditors, auto loans versus car leases, dealing with collection agencies, 401(k) loans, medical bill relief and how to build an emergency fund.

Q. Americans have been forced to reexamine their attitudes about money since the recession started in late 2007. How successful have they been in creating a more responsible money mindset, and do you think these changes are lasting or transient?

Vullo Pastor: People are cutting back in some areas but are unwilling to reduce spending in other areas. For example, they may be willing to eat at home more often, but they won't give up their cell phone or cable TV. Those are the first two luxuries I find myself suggesting they cut back on when money gets tight, but many people refuse to do so.

People are scared. In the past, they often used credit, like a home equity line of credit, to finance a lifestyle they couldn't afford, but now that credit's tight, that's not so easy to do.

Some individuals still have trouble getting their priorities straight. I had one client who was desperate to reach me just a few days before Christmas a few years ago. She was in dire straits. She couldn't pay her utility bills, so she had opened new accounts for them in her 12-year-old daughter's name. She told me excitedly of how thrilled she was to have been "adopted" by an "angel family" at her church, which meant that her children would receive Christmas presents. As we discussed her situation further, I asked her what other big expenses were coming up, and she told me that what she really wanted to buy her daughter for Christmas was an Xbox, a video game console that typically sells for about $300. I told her she couldn't afford it, but she wasn't willing to listen to that advice.

Q. What's the #1 concern on people's minds right now?

Vullo Pastor: Job security, to the point where many employees are sticking with jobs they don't really enjoy. While funding the kids' college education and saving for retirement used to be on the radar, these financial goals have fallen by the wayside lately; people are more narrowly focused on just making it through the year.

One of the most disturbing trends I've seen is an increasing number of employees who are not only taking loans out against their 401(k)s but cashing them out entirely, despite the big tax hit many will take for early withdrawal. People want that cash in hand, but when you see a 55-year-old with barely any retirement savings, that's not good. Robbing yourself of your own retirement is probably the very last thing I would recommend.

While there are almost always other options, too many people are using that 401(k) money to maintain a lifestyle they can't afford and they may cling to a false sense of entitlement that because they work hard, they deserve this.

Another worrisome trend I've seen is a big increase in wage garnishments by credit card companies and other creditors. If, by the time an employee comes to see me, his wages are already being garnished, it can be very difficult to set things right.

Q. How do you help employees who sit down with you for one-on-one counseling?

Vullo Pastor: It's amazing that many employees, even those making a six-figure salary, have never really studied their budget. Others are close to the edge of a full-blown financial disaster.

I'll ask clients ahead of time to bring their financial information with them to the counseling session, and I've had some who brought in an entire box of unopened credit card statements and bills.

One of the simplest, yet most important things you can do is take a look at how much money's coming in, and how much is going out. Most of my clients aren't willing to track their spending for an entire month, so we arrive at their spending habits by looking at old utility bills and so on.

I worked with an attorney once who was earning over $400,000, yet he was spending $5,000 more a month than he earned. So the problem of overspending is often the same, regardless of personal income.

If there's a negative monthly cash flow, I'll brainstorm with the client for places to cut spending. For instance, I'll warn about "bill creep," or the ease with which recurring monthly bills can increase, like when you switch from basic to expanded cable or upgrade to a higher speed DSL service.

If expenses have already been cut to the bone, we'll look into possibly restructuring high interest credit card debt into a debt consolidation loan from a credit union; credit counseling, bankruptcy and home equity loans are other options. We'll send them home with a written plan and check in with them after a few weeks and tweak the plan as necessary.

Q. It sounds like your job involves two parts financial counseling and one part psychotherapy. Is that true?

Vullo Pastor: Absolutely. If I'm working with a married couple, sometimes one spouse is very committed to making changes but the other is not on board; for example, the wife wants to keep on the cleaning people but the husband does not. It can be difficult. The counseling sessions can get very heated. I've had to leave the room because people are yelling at each other. Finances are the #1 cause of divorce.

Q. How do you get people to change their behavior?

Vullo Pastor: Because so many people are operating in the dark when it comes to their finances, it can be a real eye-opener for them to learn about the true state of their financial affairs. Once we arrive at hard and fast numbers, what's coming in vs. what's going out, I can offer clients a system that allows them a fixed amount of "fun money" each month. This is money they can freely spend knowing that all their essentials (the mortgage, utility bills and so on) are covered. Knowing what their limits are can provide security and peace of mind.

Q. Are workers optimistic about the future?

Vullo Pastor: Not really. Nearly everyone these days knows someone who's lost their job, whether it's a friend, neighbor or even their own spouse. Maybe they're employed, but they didn't get a pay raise this year, their work hours were cut or there were forced furlough days.

Q. What is at the root of our obsession with spending?

Vullo Pastor: Immediate gratification. People work hard, and they feel they deserve to have fun things in life, whether it works with their budget or not.

It's important to some people that they appear as successful as their neighbors, coworkers, friends or family. For instance, I had two clients who worked at the same company. When I spoke with the first one, he told me how financially strapped he was and described a situation that really did seem desperate.

When I met with the second man, he too spoke of the terrible shape of his personal finances and how much trouble he was in, but he mentioned the first man by name and said, "Now there's someone who really has his act together. He makes so much money. That's who I want to be like."

So what you may envy as your coworker's great success story can really be just a house of cards.

Nowhere is the sense of immediate gratification apparent than in real estate. When I delve into my clients' background, more often than not, they purchased their house with no or very little money down and can't afford the payments.

Q: Do you think that, 10 years from now, Americans will look back at this recession as a blessing in disguise because of the lessons it's taught us?

Vullo Pastor: I believe that most people are reacting in crisis mode and have not yet made fundamental, lasting changes in their financial lives. Once the money starts flowing again, I suspect that many will revert back to their old ways of spending and saving.