Worldwide, there is panic over the recent, drastic stock market decline. Fear seems to be in the air. Who knows how far the market will fall? What will the short- and long-term effects be on the economy? I thought that this period of uncertainty might be an excellent time to reflect on those of us who have jobs—and to review a tale of two employees’ finances.
In one earlier articles, I compared my situation to that of coworkers. If you have not already read that post, here it is:
I met this featured coworker years ago when we worked together for a manufacturing company. Let us call him “Mr. Boot,” or “Boot” for short.
Boot and I worked in different departments.
During our time working together, the jobs paid well for our roles and industry. We worked for a large manufacturing operation with many automated and manual processes to produce finished products. The company managed nearly every aspect of the business—raw materials, manufacturing, maintenance of the equipment, a fleet of vehicles, and all accounting, HR, and payroll aspects of a large operation.
Both Boot and I have college degrees, and each of us was a manager of our particular department. We managed numerous employees and subordinate managers, and communicated with these direct reports on a daily basis.
Boot and I had common interests and became water cooler friends, discussing the challenges of the workday in an attempt to ease our frustrations. Through these conversations, I learned quite a bit about my coworker Boot.
Boot enjoys the finer things in life.
It was apparent early on in our exchanges that Boot and I were very different in our approaches to investing, saving, and pursuing early retirement. Boot enjoyed the finer things in life and was not willing to compromise his high standards for substandard products, services, meals, or experiences.
I have made my fair share of mistakes, foolishly spending money on items that many would consider expensive. My justification (excuse) was that my purchases were very limited and focused. I planned for these purchases, saving and contributing earnings into retirement accounts as my first priority. Boot had a challenge working his frugal muscles, and instead spent his earnings on the things and experiences he craved. He practiced a “YOLO” life.
I had many debates with Boot about the value of saving money via the company’s retirement plan. That did not seem to make an impact on Boot. He felt he had no money left from his paycheck for the retirement plan. He felt he was stuck. Unfortunately, his real retirement plan revolved around dreams of winning the lottery or receiving an inheritance, or the company giving him a severance retirement plan.
The spending did not stop, while the retirement savings never started.
Then things began to go terribly wrong.
Our company experienced several cycles of layoffs, acquisitions, downsizing, and other events over the years when Boot and I worked together. Many of our coworkers were devastated financially when they lost their jobs. They simply didn’t have any money saved.
Boot detested his boss and did not like his boss’ management style. Boot and I had numerous conversations about how Boot was treated unfairly by his boss. Boot ran his boss’ personal errands, washed his car, and did other tasks in addition to his work assignments. Boot was treated like an indentured servant.
He had to put on a smile when accepting these tasks or face the consequences. He hated it and vented his frustration to me quite often. His boss had no problem firing people for not bowing to his whims.
Boot became a mentally battered person but changed nothing in his life to escape the situation. I witnessed the abuse first-hand and I feel for anyone in this situation.
Boot did not plan on his employer’s whims.
The company instituted a major layoff and other changes to the organization. Entire departments were eliminated in this process, with many twenty- and thirty-year company employees “let go.”
I mentioned in earlier posts that, over the past thirty years, I have been laid off four times. This actually motivated me—to step outside of thinking of my job as the only way to earn an income. It reaffirmed my need to continue to focus on my side hustle and passive income investments.
Even during tumultuous times at the company, Boot continued his spending and, in fact, decided to upgrade his home. He spent thousands of dollars upgrading his place so he could put it on the market. He paid for this with “funny money” from a HELOC, which he used like a personal checkbook. Unfortunately, he had no luck selling the home. Years later, I heard that he either short-sold the home or that it was foreclosed.
I truly feel for him and his situation. I tried for years to show him another path. He continues working now, though he is well past traditional retirement age.
A Comparison of Two Employees’ Finances.
Boot and I stopped working together years ago. Today we have nearly nothing in common other than a former employer. I moved on to pursue a different career.
Now let’s look at the differences in our finances.
Boot’s family has no children and only one income. Boot and his wife formerly owned a home with a mortgage refinanced and leveraged often with a HELOC. They are professionals, and a likable couple who are fun to socialize with away from work. He continues to work for an employer he dislikes.
I can only assume that Boot will need to rely on a company retirement package and Social Security. Boot’s lifestyle will finally change once his income from his employer is gone. As far as I know, he and his wife have no other assets or investments.
Oldest daughter graduated with no student loans because we made the decision to save money toward her education from the time she was born. We have no mortgage, car payments, or credit card debt. Our youngest child’s college fund is sufficient for four years at the university she has selected. We can now live off our passive income and retirement accounts; we are still building our bucket list savings.
I launched a new website and intend to work for my employer until laid off. I am considering taking a long or complete break from employer work should I lose my job.
I do not think Mr. Boot is sleeping well at night.
We have reviewed scenarios with three past coworkers. One of them pursued a path of spending with little regard for the future. This ensured them a life of working for an employer with few options other than finding another job.
I am a planner, problem-solver, and part-time worrier. That is something I recognize in myself. I definitely sleep a lot easier at night these days, as we have progressed on the Financial Independence continuum from debt and overspending to our situation today. The Boots are like-minded from the perspective that they worry.
My wife and I feel it was our lifestyle, savings habits, and our side hustles that made our results different from my coworker’s results. The impact of our decisions allowed us to save large percentages of our income toward retirement accounts and other investments.
In the case of comparing us to the Boots, the difference is in the choices made. This includes where they lived, how they saved, and their everyday lifestyle. Boot earned a high salary in his working years but never embraced the need to save. It is a shame to see the situation that Boot is in today. He is a great person who did not appreciate the importance of planning for retirement. He lived for the day, not thinking about tomorrow.
We have all seen these examples in ourselves or with our coworkers. I hope that this story might have an impact on someone who is inspired to take action to change his or her present circumstances and shape his or her future with some personal finance planning.
Are you at a point where, if you were to lose your job tomorrow, you would need to look for another job? Have you created a side hustle, or do you have enough passive income that can support you? Do you have a friend who has recently retired?
*Disclaimer: I am trying to take an objective look at both of our situations—not trying to point out that either one of our lives as a whole is any happier. I am attempting only to look at our financial health and what impact this has on our current decision-making processes. I do not have a complete financial picture of my coworker’s situation. However, we have shared a lot of information between us, and I am aware of his income and net worth range.