Action plan for the employees sacked from yahoo!

They came, they hired, they sacked! 

#Yahoo is #laying off hundred's of its employees at its #Banglore center in India in one of its restructuring exercises. The news is a disaster to all those who were sacked and lesson to all those who believe that 'I work in an MNC' story never ends.

Yahoo is offering them five month's pay as severance. Now a days when a lot of people live from pay check to pay check, either by choice or by forced circumstances, we can imagine, how long will this money last!

Amid all resistance and cries...the fact prevails...Within hours of the decision being announced, we have more than 400 employees rather more than 400 families worrying about their next loan EMIs, medical bills and school fees. While some of these families may sail through the situation because of family support or earning spouse, there may be a lot who are clueless till they find out another source of income. Whatever is the situation, the blow of loosing a handsome job will be hard to get over!

Though, how one can cope with this professional yet financial and personal distress will depend on his or her #Financial Landscape and emotional capacity to bear it, there are some quick action items that can help.

Current Action Items:

1. Keep Calm: 

Easier said than done... try not to let your blood pressure shoot and create health problems for you. It will only increase the amount of medical bills for you.

Remember, just couple of years back, in year 2008, a lot people in America and the other parts of the world have suffered because of recession. They were sacked, lost their investments and were rejected in personal lives. Yet they survived and finally got their lives back.

In contrast to those days, today, economic sentiments in India are positive, lot of investment has been promised and hence there can be various opportunities for you to explore. So focusing on updating your resume and linked in profile will be more useful. Also tap your network, it is the time to take some help.

2. Keep your severance packet safe: 

You may be lucky to bag an offer at a lesser known firm and may be feeling relaxed. You may be wondering about how to use your severance...Keep it safe!

Do not invest it in buying financial products and policies which are risky and illiquid. Until your future source of income is secure and regular, you may need this money so invest the money in safe instruments like Fixed Deposit.  

3. Buy Medical Insurance:

Despite several articles being written by the financial planners about why one should buy extra medical insurance, a lot of professionals in jobs rely solely on the medical insurance provided by their employers.

In current situation, where you have lost your job, you have also lost the medical insurance cover provided by your company! So buy medical insurance as early as possible if you already do not have one.

4. Decrease your EMI: 

You may not be able to change you regular expenses like grocery bills or rent or school fees but there is a possibility of bringing change in your one major expenditure ie Loan EMIs!

If you are paying loan EMI or EMIs, either on home loan or car loan or credit card, ask your bank to Increase the term and Reduce the amount of monthly EMI. You can later increase it again to pay off your loan faster. Also you may negotiate hard for getting some EMI holiday period. 

5. Involve your family:

By now your family may have already got the news, it will be helpful to share all your fear and tension with them...they can be your pillar of strength in this difficult time!

 If you have grown up children they may have heard it from outside as well, prepare them to face the questions asked by their friends. Let them know that it is a passing phase and also a challenge of working in a dynamic environment. Let them understand, how much it is important to save money and always have a back up professional plan ready! 

Hope the above action item will help some!

As a #Financial Planner, I offer to consult #Yahoo employees without any charges at this point of time!

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About the author: Shilpi Johri is a ‘Financial Planner’ and does Comprehensive Financial Planning for individuals. She also counsel individuals & families on matters of personal finance. She writes and conducts workshops on various aspects of personal finance.

To read more about her work, please visit:

Facebook page: https://www.facebook.com/shilpijohricfp

Blog: http://shilpijohri.blogspot.in/

Youtube: https://www.youtube.com/watch?v=DS1HsIkStR0

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Image courtesy: computing.co.uk

How to handle my Personal Finance?

In the personal finance field there is this classic dilemma of DIY (Do it yourself) Vs Choosing a Fee Only Financial Planner Vs Going to an insurance or mutual fund agent?
Is it your Dilemma too?

In an answer to a facebook post describing the dilemma of anyone who does not have interest or knowledge of personal finance like some of us may feel handicap today's ever changing technology world! here were my two cents to the conversation.

First of all, all the three categories described above may seem exclusive from each other and there is a general feeling that if you are doing or are associated with one, you do not need the other. But in my opinion and as per experience, to have a sound 'Financial Landscape' (Your financial landscape consists of personal, professional, health and financial situation) and a confident and peaceful life...You need all of them!

Why DIY:

Let me explain, you need to get involve in DIY meaning ...Understand basic terms, so that you are able to differentiate between Mutual fund and ULIP or insurance and investment so that you are being emotionally coerced into just signing up the dotted line.

Why go to a Fee Only Financial Planner:

You Can Choose to go a Fee only Financial Planner, who will help you see your Financial landscape from strategic angle.

He or she will identify not only what is visible like you assets and liabilities, responsibilities and health but also help you see through your Emotional or Behavioral understanding and comfort level with your Financial Landscape. As Emotions do play a big role in our decision making process.

He or she will help you understand what you Want and what you Actually Need and what is the Reality...means the Big picture of your Financial Landscape.

He will chart the path for you to follow which will not only help you achieve your goals but will also save you from taking decisions Detrimental to you.

He will also lay an action plan for you which may or may not comprise of Buying or Selling certain financial products (as per the need ...your may not need any product sometimes).

Also the Financial Planners (Fee only or Fee based take it as their prime responsibility to educate the clients on personal finance...It is one of the Ethical responsibility they assume while being awarded the CFP certification).

Why go to an agent who sells financial product:

The last part, if you are choosing a Fee Only Financial Planner, they will not help you with the administrative job like filling the form and actually dealing in the financial products. Because that would have been the prime reason for you to choose a Fee Only Financial Planner...ie, No association with any Financial Services company hence No Conflict of interest!

So you are left with two options either you can take charge and deal in the products yourself as your Implementation plan is already being laid by your Financial Planner or you can take help of an Mutual fund advisor or Stock broker or Insurance agent or Lawyer or Tax advisor to help you with the administrative job. They do understand the nitigrities of the paper work and also some of them do have sound knowledge of the financial products they are dealing into...in any case you have your Financial Planner to go back to for any suggestion before acting upon finally.

Doing all this will take away a lot of burden off you! Before choosing any of the ways you can get in touch with Clients of Financial Planner or if you choose to go ahead with the other advisors, you can speak to their clients. But even to have these conversation you have to DIY

The second part...Financial Planning is not Investment Planning alone!! Choosing a financial product is the outcome of your financial plan. There may be times when you may NOT NEED any Financial Product at all.

Video: Myself as Financial Planning expert in Money Guru, live show on Zee Business, 18th August 2014

Dear friends,

You are invited to watch the following video featuring myself as Financial Planning expert in the Money Guru show on Zee business. This Live show was aired on 18^th August 2014.

Disclaimer: 

The advice given the show is limited to the details shared by the respected viewers (questions asked). Also the answers given during the show were limited by the time limit of the show. Hence I would request you to consult your financial planner before acting upon any of the advice. And as I always insist before taking any decision, please keep in mind two points:

1.       

Your Financial Landscape comprising of your personal, health, professional, financial situation and your responsibilities & liabilities, is Unique! Hence should take advice only when it is customized as per your landscape.

2

.       You and only you are will be affected by the decision taken by you, hence take charge of the decision making like choosing the your investment product, filling up the form and so on

How to have a Recession proof home!

Couple of days back, my 10 year old son used the word ‘Recession’. When I asked him if he understands the meaning, he confidently explained ‘We know it is recession, when people start losing their jobs’!

Hearing this from a Vth grader was my moment of realization! It made me realize that the word ‘recession’ is no longer confined to the books on Economics or business news papers. In fact, in past few years this word has appeared and been used so often in our lives that even kids can explain it. No part of the world, be it Asia, Europe or America, seems to have remained untouched from the effects of ‘Recession’.

So, what is recession?

What is Recession and what’s our role in it as an individual?

Recession is known by many words, like, Downturn, Slump, Slowdown or Economic decline. It is generally identified by two or more consecutive quarters of negative GDP growth. In simple words, recession is temporary economic decline during which trade and industrial activities are reduced.  It is marked by declines in productivity and investment and high unemployment.

As an individual we have very limited role to play in the country’s economy. Economic cycles and fluctuations are beyond an individual’s control. We only get to face the consequences of these cycles. High unemployment means many people ‘losing their jobs’ and thereby losing their income. It is one extreme effect of recession and is quite capable of upsetting our lives. There by it is important that we know if we are hit by recession? And most importantly what can we do to safeguard ourselves against it?

Here are some indicators of recession and suggestions to prepare for the battle against being hit by the recession.

1. When your company stops hiring:

When HR says ‘Let’s put them on hold’ for the resumes you were planning to hire…it means they know something you still don’t know! It may mean Recession is here and your company is facing dwindling revenue and falling profits. Therefore it is not interested in expansion at the moment so you must brace up yourself for lesser than expected bonus and salary raise.

For the individuals whose house run on the salary they bring home, bonus is very coveted. Bonus is often used to plan some big annual/one time expenditure like vacations, down payment for a house purchase, prepayment of loans, marriage, college fees. Getting less than expected bonus may disrupt our entire planning. To avoid such situation, focus on Goal based Regular Savings!

If your goal is near, do not depend fully upon ‘mere expectations’ of getting good bonus! Rather liquidate and consolidate your prior investments and keep the cash ready.

2. When you see lesser footfall in malls and restaurants:

Lately you see No waiting lines to get the seats in your favorite restaurant and the amazing dress you saw last week in sale is still there…are you wondering where are all the people gone? The reason may not be the sudden reluctance to entertain themselves or buy new things but the reluctance to ‘part with the money’ in the Recession hit economy.

Before you are also forced to cut down your expenditure haphazardly it is better to categorize your discretionary and non discretionary expenses. ‘Prepare a budget’ and ask everyone in the family (including kids) to suggest cost cutting measures. It will keep everyone ready for hard time called recession.

3. When your boss become unreasonably demanding:

If your boss is suddenly asking you to take up more responsibilities without hinting any promotion or salary raise then it may be the time to become alert! It may mean that company is planning to squeeze more work out of lesser number of employees ie possibility of job cuts.

Even though you are not given the pink slip yet…it will be wise to prepare yourself for any such situation. It is advisable to ‘Create an emergency fund, buy more medical insurance besides the one from your company, get income protection insurance and also home loan insurance’. If you have any loan, you can increase the tenure and keep EMIs to the minimum; this will put lesser burden on your current finances. Also start looking for back-up job options or explore alternative career options before even before it becomes absolutely necessary.

4. When your investments give you negative surprises:

If you were planning to liquidate your investments and were surprised to find out that you cannot even get back what you have invested, Do not panic! Like others you may have hit by looming Recession among other reasons. One big challenge of a recessionary economy is the ‘fewer buyers’ in the market. And everyone wants to run away selling whatever is left of their investments. Hence you may be offered less money for your investments than expected.

The fear of losing money is ‘real’ at such a time provided you ‘really’ need to sell/ liquidate your investments. According to IMF (International Monetary Fund), "Global recessions seem to occur over a cycle lasting between eight and 10 years." And if you look at the data for last 50 years it is visible that at the maximum any Recessionary period has lasted for NOT more than 18-20 months, ie. Not even 2 years.

As an individual you need to understand these economic cycles before taking any hasty decision, particularly if you have NO immediate need of money and were originally planning to stay invested for 5-10 years. Hence ‘It is important to evaluate if you really need to liquidate your investments’? In case you are doing it because everyone else is doing it then it may be the time to recheck the fundamentals on which you initially invested your money. If there is no real need then perhaps you can bear this notional loss since almost always the economy goes back into the recovery mode.

Also while investing, instead of ‘waiting to get the best returns’ on your investment, you should pre-decide on how much money you need for your goals. This will help you calculate returns you should get from your investments. It is advisable to keep consolidating your investments whenever you reach the desired amount. Rest is the Bonus!!

Finally:

The needs and aspirations of your family are defined, derived and fulfilled by not only what do you earn but also by how much do you save and how do you spend it. You may love to plan about how to “earn’ more money but it is equally desirable to plan about ‘how to nurture and use this money’. And in recent times it also depends on ‘how you keep your home recession proof’!