Our Current Financial Situation (Part II)

So after closing on our house in September 2008 K and I moved in and immediately started working on fixing up the house, including adding in the kitchen. This was way more of a project than we had anticipated, but we managed to keep our budget very low, spending only about $10,000 in adding the kitchen.

Starting in January it became clear that the construction industry in Boston was taking a hit. However, K's company thought they still had enough work to last a few months. Through February and March it became clear that the jobs they had anticipated getting were falling through and layoffs started. K managed to make it until the beginning of May before being laid off.

At the time it was actually a relief for K to be laid off. The dread of being laid off had been building for months, so to me at least, it seemed that now that it had happened we at least wouldn't have to worry about it. For a carpenter in K's position being laid off wasn't unusual as most of the workers would often be laid off as jobs end. K had been laid off many, many times in the 10 years he's been a carpenter with the longest layoff lasting only a month.

When he's working K makes a lot more money me. He actually brings in about $90,000 a year, depending on how many hours he works. This is about twice as much as me. But fortunately Massachusetts has very generous unemployment benefits, covering around 60% of a worker's salary. So a short term layoff is not a problem.

But throughout the summer and fall it became apparent that the construction industry was only getting worse. As I write this, 30% of the carpenters in K's local are unemployed (60% of iron workers are unemployed), with the number only expected to grow. The pre-construction planning and permitting process has been so weak that the local expects no major jobs until 2011 at the earliest. And the jobs that are currently taking place will be ending soon.

In July my company laid off about 10% of our workforce (okay it was six people, but we're a small company) and dropped everyone's base salary by 2.5%. In August I found out that the raise that was overdue to me from the previous fiscal year would not be paid and that I would lose the $1,000 in commission that was budgeted as part of my salary because we had cancelled one of our spring events and it wouldn't be replaced.

So where are we now? The honest answer is I don't know. I've scrimped and saved everything I could out of my paycheck starting in January when it became apparent that K could be laid off any day. I now have an emergency fund of $10,000 plus a few other funds that can be tapped if it needs to be. K has gone through his state unemployment and his first federal extension should end within the next few weeks. We don't know if he will get a second extension. The rules are unclear and it's difficult to determine.

If he gets a second extension we'll be okay until either that runs out or K gets a job. If he doesn't the bad stuff really begins.