Canadian Personal Finance Blog

Severance and Redundancy

Those of you who are regular readers know that I work in the High Tech industry at a large telecommunications company, that was until Wednesday July 30th, when my position there was declared redundant and I was given a severance package.

This is not a parable or a story on my part, this has actually transpired, I am now gainfully looking for employment after 20 years of work at the same company. As I mentioned yesterday, this is most likely going to temper and change the tone of this blog, to be less “savings” oriented and more “survival” oriented. As most can tell, I write about things in the financial area that matter to me and to my family, and this kind of upheaval and change is bound to cause a thematic change in my writings (at least for now).

I have spoken to many people about this already (including most of my loved ones, hopefully no more are learning from odd places, as my Brother learned from a comment I left on an industry web site), and I have already “activated” my network of contacts for job searching.

I am open to requests for articles or requests from my readers about this event in my life, however I must say that legally I am not allowed to say how much my severance package is, and there are some other points I am not supposed to discuss, that I can’t remember. I will say that it is very generous (but it should be given I have been there for 20 years, and am now 47 years old), and I have been given access to a firm that will help me get ready to find a new job.

I am also eager to hear of stories of redemption and success in this area, as well as helpful tips on how to survive and better still overcome this tumultuous event in any worker’s career.

Excellent Layoff and Severance Articles So Far

• Gail Vaz-Oxlade has written this excellent article: 9 Things to Do If You Lose Your Job . Good reading.
• Canadian Capitalist made a post a while ago (and he and I have spoken in E-mail about this situation already): Surviving a Layoff .
• Uncommon Sense also lays out some important points in: 14 Tips For Living Through a Layoff

Those were the happy thoughts told to me one day at Church. The minister giving the sermon, worked with homeless people and such, so his view might be a little stunted, but that was the point of his statement, “We are all three pay cheques away from living on the streets”.

Is this really the case? Well that all depends on the debt burden that you carry.  If you suddenly had no means of income, but you didn’t have any debt to pay off, you’d simply need money to pay your day to day expenses that may be manageable or controllable. If you are carrying a large credit card debt load, and have minimum payments to make, then your issues are far more complicated and you must find ways to pay spiraling debt as well.

Am I three pay cheques from living on the streets? I don’t think so, I have a fair amount in RRSPs and such, and I also have some savings, but I also have a debt load that does worry me, and given the renewed vigour I have been given from reading good books like: Smoke and Mirrors , I think that is my goal is to kill my debt load while I can.

BCE & Nortel Both Cutting

The news is full of job cuts at BCE as they head towards privatization, and there was the renewed cutting announced by Nortel at the start of the year as well, which may mean some dark times ahead in the High Tech World as well. Hope those folks aren’t three pay cheques away from the streets.

Telus and BCE can both enjoy a new class action suit against them as well for their new texting surcharges. That won’t help BCE, that’s for sure.

This post was originally My Top 5 Investing Regrets of My Life, and I wrote it in response to a challenge from another blogger. This week I have been cleaning up my blogs old posts and I realized I really do have a treasure trove of interesting posts, so I apologize for resurrecting yet another “chestnut” but I really like this post as well. Have a great weekend folks!

Top 5 Investing Regrets of My Life

As part of a writing concept put forward over at Problogger I am making this posting about my Top 5 Investing Regrets over my lifetime. Thanks to Mrs. C8j for proof reading and suggesting content changes as well.

I offer this as a list for folks to learn from, and maybe not make the same mistakes that I have made.

5. Bought Whole Life Insurance

When I was just married and was quite naive when it came to investing, a gentleman from a very large insurance company sold me on the value of whole life insurance as an investment tool and as a way to protect my wife in case something goes wrong. Lots of flashy graphs showing how it becomes self-sustaining, and all of that stuff.

This was a mistake on my part, if I had bought term insurance at the time (I was in my 20’s) I should have paid somewhere around $10-15 per month but I was paying upwards of $50 to $75 a month (I don’t remember the exact amount it was way too much).

I thought this was investing, but I finally met someone who set me on the straight and narrow, and I cancelled the policy, but if I had invested the $40 or so extra I paid a month in an RRSP back then, I’d be much better off now. The good part of it is that I realized my mistake and corrected it, or I’d be looking at this “investment” wondering why I did this. Mistakes happen, but that is why pencils have erasers.

4. Not Understanding the Tools Available

Even after taking two business courses at University I forgot the tools that were available to me on my on line trading site. I monitored things closely but I did not realize the power of the tools that my on line site gave me:

• Bottom limit rules, which I could set up, to automatically sell my investment if they dropped below a certain price. This can limit losses and save you a basket of money.
• Buy orders to pick up a stock I am looking at, at the price that I wanted to buy it. I just bought with a market order, and it went in as soon as I pressed the “OK” button. If I’d looked at the stock and liked the stock, but thought it was overpriced, I could simply put in an order to buy when if it dropped to the price I wanted to purchase it at.

These two simple tools would have saved me a lot of money, if I’d thought a little bit about the tools that were available. Remember, a good tradesman uses their entire toolbox (not just the hammer).

3. Invested with my Heart and not my Brain

This comes back in my #1 mistake, but it’s important to have a Plan for your investments and have a set of rules to work by (and use the tools available to you). If you set down a clear set of rules about when you buy , and when you sell, then you are not relying on your instincts, and your decisions are easily understood.

It’s not hard to make up some simple rules about when you think you should buy a stock, and as soon as you do that rules for when you are going to sell it (because you eventually are going to do that). Some good rules for when to sell:

• Stock drops below a target price after a certain date (so you aren’t constantly buying and selling).
• Stock has not grown by more than 5% in the past year
• Dividend from the stock has either disappeared or has dropped below your goals for the stock
• Stock is now worth twice as much as when you bought it, and you want to remove your original investment, to protect your money.

These are some pretty simple rules, and you should think of your own, but they are something to think about.

2. Did not start an RRSP or Retirement Fund soon enough

This is a common mistake. Saving for my retirement, using sound investment rules, would have me much farther ahead in my life, I think. Set down a set of concrete goals for investing a certain amount of money every year, when you are much younger and you will not be playing the “catch up” game later in your life (as I and others are doing right now). Did I have the money back then? Well, maybe not, but even a little bit of money put away in your past makes your future that much better (it’s kind of like how to get better at playing Golf, go back in time and start playing earlier).

Time can be your best friend when it comes to investing, especially if your investments are growing over that time.

1. Did not sell out of High Tech in 2000

Riding the High Tech Bomb all the way down

I have talked about this blunder before, and being a High Tech guy in the industry, I knew this was a bubble, yet, I “drank the Kool-aid” as well. I fell for the stories being told, and I rode that bomb all the way down to the ground. If I had set rules for investing, I would have at least bailed out and only got singed or lightly burnt, instead of completely incinerated the way my investments did. The funny thing is that my employers stock is the one I got burnt on the worst, and you would have thought I would have known better, but, then again in hindsight I can see what I should have done, but at the moment, it seemed like a good idea?

Take your losses, but also take your profits and move forward with them, don’t just leave your money lieing around, make it work for you.

I hope this helps you, dear reader, in your investing plans. Yet another fine, “do as I say, and not as I do” posting by the Canadian Financial Opinions.