RPF0390-Engineer_Your

00:00:00.000 | - Welcome to Radical Personal Finance,

00:00:03.120 | the show dedicated to providing you with the knowledge,

00:00:05.240 | skills, insight, and encouragement you need

00:00:08.240 | to live a rich and meaningful life now

00:00:11.560 | while building a plan for financial freedom

00:00:13.380 | in 10 years or less.

00:00:14.700 | My guest today is Sam from Financial Samurai.

00:00:17.240 | And Sam, primarily we're gonna talk today about your book.

00:00:20.640 | I wanna dig into it,

00:00:21.880 | as I think this is such a valuable topic.

00:00:23.640 | Your book is called How to Engineer Your Layoff,

00:00:25.400 | Negotiate a Severance and Be Free.

00:00:27.560 | But before we get to that,

00:00:28.720 | you have an interesting financial independence

00:00:31.440 | and financial freedom story of your own,

00:00:34.000 | which in my opinion, very much fits the tagline

00:00:37.080 | of this show.

00:00:38.080 | I'd love for you to share a little bit

00:00:39.240 | about your career history and how you moved

00:00:43.040 | from the place of an employee through the ranks

00:00:45.480 | and ultimately wound up becoming financially independent

00:00:49.680 | to set the context for our conversation today.

00:00:52.500 | - Sure, well, thanks for having me on the show.

00:00:55.040 | It's good to be here.

00:00:55.880 | Financial Samurai started in 2009

00:00:58.880 | during the depths of the financial crisis.

00:01:01.840 | I was actually working in the financial services industry.

00:01:04.900 | And basically I was losing all my money.

00:01:08.320 | I thought I did everything right.

00:01:09.600 | I had a diversified net worth.

00:01:11.640 | But my net worth was getting pounded,

00:01:13.800 | just like everybody else, by probably around 35%

00:01:16.600 | in a matter of 12 months, really,

00:01:19.720 | during the depth of the crisis.

00:01:21.500 | So I started Financial Samurai

00:01:24.280 | just to try to make sense of all the chaos.

00:01:26.200 | My career started in 1999.

00:01:29.360 | I graduated from college then.

00:01:30.860 | I joined an investment bank in New York City.

00:01:34.640 | And I was in the equities department,

00:01:37.360 | which is basically sales and trading,

00:01:39.480 | stocks, all that good stuff.

00:01:42.280 | And I knew from the very first month of work

00:01:44.440 | when I had to get in by 5.30 a.m.

00:01:47.520 | And I'd have to leave probably around 7.30, 8 p.m.

00:01:51.440 | 'cause I had to deal with the international markets

00:01:54.340 | that I don't think I would've been able to last very long.

00:01:57.400 | So I was like, well, there's no way

00:02:01.720 | after one month of doing this

00:02:03.860 | where I'm gonna survive for probably

00:02:05.360 | more than five to 10 years.

00:02:07.260 | So I better save my money aggressively now.

00:02:10.240 | So it was pretty interesting.

00:02:12.680 | It was ironic because I think that a lot of people,

00:02:16.080 | if they have a nice job, cushy, nine to five,

00:02:19.040 | not a lot of stress, not a lot of demands

00:02:21.240 | from clients and all that pressure,

00:02:23.880 | I think the desire for financial independence early

00:02:26.680 | is not really there.

00:02:28.400 | But if you just get pounded and beat by a stick

00:02:30.840 | every single morning from very, very intense people,

00:02:35.660 | you wanna get the hell out as soon as possible.

00:02:37.780 | So that was my thought from the very first month of work.

00:02:41.200 | I had to get out, so I saved as much as I could,

00:02:45.200 | like at least 50% of my income.

00:02:47.240 | I lived in a studio with a buddy of mine for two years.

00:02:52.240 | And just to try to save, save, save.

00:02:53.760 | And I would actually kind of welcome

00:02:56.240 | the seven o'clock time period

00:02:57.800 | because I could get some free dinner at my company.

00:03:00.760 | (laughing)

00:03:01.880 | - Did you find that others of your compatriots,

00:03:05.700 | new entrants into the investment banking world,

00:03:08.160 | were following a similar path and saving a lot of money?

00:03:10.680 | Or did you find that they were a little bit

00:03:12.960 | more liberal with their spending?

00:03:16.560 | - I think a lot of people would go out in New York City,

00:03:21.560 | you'd go to the clubs, you'd go spend on drinks, food.

00:03:25.200 | There's an endless amount of things

00:03:26.760 | to spend money on in Manhattan.

00:03:28.720 | It's just an amazing place with a lot of,

00:03:31.540 | I don't think you can ever feel too rich in New York City,

00:03:35.080 | let's just put it that way.

00:03:36.320 | So I think a lot of people did enjoy,

00:03:38.320 | once you get a paycheck, you wanna blow it on and stuff.

00:03:42.800 | But I just didn't take that route.

00:03:45.040 | I mean, my parents were always pretty frugal.

00:03:47.680 | Really middle class citizens.

00:03:49.560 | We lived in a townhouse when I was in high school.

00:03:51.760 | I went to a public high school and a public college

00:03:54.840 | because I was pretty aware that I didn't wanna

00:03:57.640 | burden my parents and frankly myself

00:04:00.320 | on paying private school tuition.

00:04:02.740 | And I knew that, so I went to the College of William

00:04:05.160 | and Mary in Virginia and the tuition there

00:04:06.740 | was about $2,800 a year.

00:04:09.400 | And contrary to the tuition my parents paid for my sister,

00:04:14.000 | that was about $20,000 a year.

00:04:15.680 | And so I knew that worst case,

00:04:18.080 | if I'd gone to a public school,

00:04:19.920 | if I ended up without a job, with nothing,

00:04:25.220 | I could just go back and work at McDonald's

00:04:26.680 | and pay my parents back 2,800 bucks.

00:04:29.160 | So I really had this kind of frugal mindset

00:04:32.160 | and hyper-awareness of our financial situation

00:04:34.840 | since I was probably 13, 14.

00:04:37.880 | - In working in stressful industries like you're describing,

00:04:43.240 | especially investment banking,

00:04:44.700 | I think it's great that it pushed you in that direction,

00:04:48.440 | but I don't know how we would confirm

00:04:51.800 | whether it does that for other people or not.

00:04:53.520 | It seems to me like it could have that benefit.

00:04:57.400 | It could be a blessing in disguise and demonstrate to you,

00:04:59.800 | hey, I don't wanna do this, so I need to plan to get out.

00:05:02.280 | But generally, the mindset that I've observed

00:05:04.800 | around investment banking, people who go into it

00:05:06.820 | are focused on the million, two million,

00:05:08.320 | three million plus a year payday at the end,

00:05:10.880 | once they get established,

00:05:11.800 | once they do a couple of big deals.

00:05:14.000 | And so they're looking at the grunt work

00:05:16.040 | as just simply the price of tuition

00:05:18.700 | to where they can get into the position

00:05:20.480 | of earning the big money.

00:05:22.000 | And oftentimes, people who are motivated

00:05:24.400 | by earning the big money,

00:05:25.520 | seems to me like they're motivated

00:05:27.280 | by earning the big money to sell and, excuse me, to spend

00:05:30.840 | and live that million bucks a year lifestyle.

00:05:34.240 | And so they can easily get sucked into the world

00:05:38.060 | of putting all of their money into appearances

00:05:40.160 | in the early days to meet that.

00:05:43.640 | I didn't work in investment banking,

00:05:45.040 | but I also worked in financial services,

00:05:46.280 | but on the retail side,

00:05:47.480 | working as a retail financial advisor.

00:05:50.400 | And I always felt that pressure where it was hard.

00:05:53.480 | Similar, I worked similar work schedule to yours

00:05:56.720 | in terms of a 12 to 16 hour day was not uncommon.

00:06:00.640 | And although it was in a different context,

00:06:02.660 | one of the temptations I often felt was,

00:06:05.160 | well, I'll always make more money in the future.

00:06:07.560 | This is a highly lucrative business,

00:06:09.060 | so everything's gonna work out fine.

00:06:11.000 | It's okay to just go ahead and spend now.

00:06:12.760 | And by the way, if I spend now and buy a fancy car

00:06:15.600 | and wear fancy clothes and engage in fancy activities,

00:06:19.100 | I'm paving the path to where I need to be

00:06:22.020 | so that I can make the big money in the future.

00:06:24.160 | I'll fit in at the country club,

00:06:25.320 | I'll be able to integrate with all of these rich people.

00:06:28.360 | And so my guess would be that that temptation is there

00:06:30.800 | in investment banking as well.

00:06:35.920 | - I think there's a perception issue

00:06:39.580 | with Wall Street and Main Street.

00:06:41.660 | One of the perceptions is that I think everybody

00:06:46.140 | is making the million to $3 million.

00:06:48.620 | And that's just not true.

00:06:50.680 | Maybe only the managing directors

00:06:52.660 | will start making a million dollars.

00:06:54.540 | And to get to managing director,

00:06:56.800 | I would think the median time frame to get there

00:06:59.900 | is 10 years of service at least.

00:07:03.260 | Or maybe not, maybe that's the median,

00:07:05.060 | 10 to 15 years of service,

00:07:07.900 | whether out of undergrad or business school.

00:07:10.500 | And I would say maybe half a percent of the people

00:07:13.860 | actually get to that level.

00:07:15.660 | So just to clarify,

00:07:19.540 | not everybody's making the million bucks.

00:07:21.260 | I mean, people will start off with pretty good salaries,

00:07:24.180 | but they're much less.

00:07:26.280 | In terms of the temptation,

00:07:28.980 | I definitely saw a lot of wealthy people.

00:07:33.300 | My firm, we went public in 1999,

00:07:36.260 | and suddenly a lot of the managing directors there

00:07:38.420 | were worth multi-millions of dollars.

00:07:40.920 | But I think what happened was

00:07:45.660 | I saw the people around me with a lot of money,

00:07:48.340 | and I didn't see them to be any happier.

00:07:51.620 | I just felt that they had put in their dues.

00:07:54.820 | They were much older, they were in their 40s and 50s,

00:07:57.860 | and they were wealthier, so that made a lot of sense.

00:08:00.060 | So the culture of the firm really instilled in us

00:08:03.700 | to pay our dues, to not expect to go straight

00:08:06.140 | to the corner office once we get in,

00:08:08.620 | but to say, look, there is a really strong meritocracy,

00:08:12.280 | and so if you do work hard,

00:08:15.000 | you do kill yourself for 15 hours a day,

00:08:17.500 | you do build a proper support network,

00:08:20.100 | you too might be able to ascend.

00:08:21.860 | So it was like always a decision.

00:08:25.980 | Oh, it's there for me,

00:08:27.680 | which is I think all anybody really wants,

00:08:29.620 | to be able to have a strong correlation

00:08:31.340 | with effort and performance and reward.

00:08:33.340 | But I don't know, I didn't see people as much happier,

00:08:37.260 | and I enjoyed when someone invited me to a party,

00:08:42.260 | or went for a ride, or whatever, that was nice.

00:08:45.420 | But I don't know, it was just never in me

00:08:47.220 | that I had to make the megabucks

00:08:49.660 | to live the high lifestyle.

00:08:51.460 | I think I would rather have just been happy

00:08:54.140 | being a fitter person with good health

00:08:56.980 | and having a lot more freedom.

00:08:59.540 | - So continue please to paint the arc of your career for us.

00:09:03.640 | - So '99 to 2001, New York City,

00:09:08.500 | the dot-com bubble started to collapse in 2000.

00:09:14.740 | And in 2001, I knew,

00:09:17.100 | I don't think I would have been able to survive at my firm,

00:09:21.160 | and a headhunter called one of my VPs,

00:09:23.820 | and she said, oh, I'm not interested in moving,

00:09:26.360 | but maybe you wanna talk to Sam.

00:09:27.740 | So I was like, okay, I'll talk.

00:09:28.900 | And so it was a competing firm in San Francisco,

00:09:31.980 | doing the same thing, Asian equities,

00:09:36.020 | which was pretty cool because the Asian markets

00:09:37.840 | are really growing by leaps and bounds,

00:09:39.840 | especially China in the early 2000s.

00:09:42.780 | And so I talked to the headhunter,

00:09:44.980 | and I said, hey, you know what?

00:09:46.660 | I don't think I'm gonna be able to survive

00:09:48.260 | at my firm in New York City.

00:09:49.900 | The layoffs are coming, I just took a chance,

00:09:52.180 | I took a leap of faith to go to San Francisco

00:09:53.940 | where I knew nobody, and to try to do something new.

00:09:57.860 | And so I never thought I would last

00:10:00.860 | in the investment banking arena for as long as I did,

00:10:05.860 | but being able to move to San Francisco,

00:10:08.420 | be with new people, have a different type of lifestyle,

00:10:12.140 | and work at a different firm really invigorated

00:10:14.380 | my desire and my career in finance.

00:10:17.260 | So I lasted until 2012, in which I ultimately

00:10:21.180 | engineered my layoff to do something else.

00:10:24.140 | - And since that time, you've essentially

00:10:27.780 | considered yourself to be financially independent.

00:10:29.720 | I know you've done some work and have pursued

00:10:32.240 | various sources of income, but when you

00:10:34.740 | engineered your layoff in 2012, did you feel like

00:10:37.580 | at that point in time you had reached financial independence?

00:10:41.300 | - Yes, I did.

00:10:42.420 | 2012, let's see, four and a half years ago,

00:10:44.700 | I was, yeah, 34 and a half.

00:10:46.460 | And what happened was I had been starting

00:10:51.740 | to build passive income and saving, investing

00:10:55.660 | since about 2000, like January 2000,

00:10:58.700 | when I first got my stub bonus from four months

00:11:01.760 | of work in 1999, because I wanted to get out.

00:11:04.260 | I knew I needed to have the optionality

00:11:06.460 | to get out because I just didn't think I would last.

00:11:10.780 | My parents lasted for multiple decades,

00:11:13.860 | and traditionally retired in their 60s.

00:11:16.260 | I just didn't think I could last,

00:11:17.780 | and I didn't know what else I could do.

00:11:20.540 | So by 2012, I had developed a passive income

00:11:25.100 | stream of about $80,000.

00:11:27.900 | And I knew that about 80,000, this was gross,

00:11:31.220 | was good enough to not starve in San Francisco.

00:11:35.500 | San Francisco's obviously a really expensive place to live,

00:11:38.100 | but I had locked down my mortgage,

00:11:40.260 | and I had been tracking about anywhere

00:11:43.880 | from 70 to $80,000 a year gross income and spending anyway.

00:11:49.340 | So I felt, you know what, $80,000 was enough

00:11:51.940 | of a passive income stream where I felt

00:11:54.100 | it would cover all my expenses and maintain

00:11:56.360 | the lifestyle I had in San Francisco.

00:11:59.140 | Meanwhile, I had started my site, Financial Samurai, in 2009

00:12:04.140 | and it started making a little bit of money here and there,

00:12:07.460 | which I never collected.

00:12:09.540 | It was just siphoned off and given to someone else

00:12:13.580 | because I didn't want to have any conflicts of interest.

00:12:15.300 | So I knew with Financial Samurai and the $80,000

00:12:17.940 | passive income, I would survive.

00:12:20.020 | So but my biggest fear of leaving was,

00:12:23.020 | well there's two things.

00:12:23.860 | One was giving up my deferred compensation

00:12:25.980 | in terms of cash and stock, which was gonna get paid out

00:12:29.080 | over a three year time period.

00:12:30.700 | And there was also some partner investments

00:12:32.780 | that were made during the financial crisis,

00:12:34.660 | which we paid out in 2017, believe it or not.

00:12:39.660 | And then my other main fear was that if I left,

00:12:43.220 | I'd look like an idiot, and people would think

00:12:45.740 | I'd just be totally stupid to throw away a 13 year career

00:12:49.580 | making what I was making.

00:12:51.620 | And that I would fail because there would be no correlation

00:12:56.140 | with the effort I put into Financial Samurai and the reward.

00:12:59.620 | That was my, frankly my biggest fear,

00:13:01.820 | that I would try and nothing would happen.

00:13:04.500 | - Right, right.

00:13:05.820 | Now, two things that I want to emphasize

00:13:08.900 | as we get to the layoff process,

00:13:11.460 | is first in what you just sketched out.

00:13:14.220 | You and your story is an example of one of the themes

00:13:18.540 | that I discuss on Radical Personal Finance,

00:13:20.540 | that it is possible in a decade or so,

00:13:23.460 | to build a plan for financial independence.

00:13:26.560 | And as you described that if you began building

00:13:30.260 | passive income in 2001,

00:13:32.020 | and you entered into the workforce in 1999,

00:13:35.220 | you saved and worked towards that end.

00:13:38.660 | And in 2012, you considered yourself to be

00:13:41.260 | financially independent with an $80,000 a year

00:13:43.580 | passive income stream.

00:13:45.100 | So that's about a decade and a half.

00:13:47.300 | And so it is possible to do.

00:13:49.420 | And since then you've gone on to build more.

00:13:52.140 | And there was no magic secret to it.

00:13:54.140 | You saved aggressively, you made wise investments,

00:13:57.100 | and you worked hard and built your career.

00:13:59.420 | So I think it's a great, it's an important story

00:14:03.680 | for people to recognize that it is possible.

00:14:08.340 | Before I go on to the second point,

00:14:10.580 | have you had people, I mean,

00:14:13.140 | do you feel like you've gotten that message out there

00:14:15.860 | in the things that you've written to demonstrate

00:14:17.460 | that yes, you can with a career, with frugality?

00:14:21.420 | I mean, you were riding a bus to work,

00:14:22.740 | even though you're working as a high dollar investment

00:14:26.100 | as an employee in the financial services industry.

00:14:28.740 | Have you gotten that message out there enough, do you feel?

00:14:32.120 | - I think so.

00:14:33.380 | I started tracking my passive income progress,

00:14:37.420 | and I would do it once a year.

00:14:39.740 | And I think through tracking the progress,

00:14:42.100 | and just telling my mistakes and my wins,

00:14:45.900 | people just kind of got the message,

00:14:47.180 | oh, it can be done, but it's not an easy and quick path.

00:14:50.300 | So if I started in January 2000,

00:14:52.900 | and I finally left in 2012 to get $80,000 in passive income,

00:14:56.820 | that's 12 years to get to 80,000.

00:15:00.700 | I saved 100% on all my bonuses,

00:15:02.840 | and then I saved even more, I maxed out my 401k,

00:15:06.420 | I lived in a studio, and then I lived in this really crappy

00:15:09.400 | two bedroom, one bath apartment at the edge of Chinatown.

00:15:12.320 | You know, there were sacrifices to be made.

00:15:14.120 | And then I went to business school part-time

00:15:17.680 | to try to accelerate my career as well,

00:15:19.760 | during the 60 to 70 hour work week grind.

00:15:22.960 | The thing that people need to realize is that

00:15:27.160 | 10, 15 years ago, everybody could easily get

00:15:31.000 | around a 4% risk-free rate of return,

00:15:33.640 | either through the 10 year bond yield or a CD.

00:15:37.400 | But now, interest rates, the 10 year bond yield

00:15:39.880 | has gone down to under 2%.

00:15:42.120 | So it actually takes even more effort

00:15:44.040 | to generate that passive income.

00:15:45.700 | So throughout the years, I talk about this,

00:15:48.960 | and I think people really kind of get the math behind it,

00:15:51.840 | the economics and the importance of looking at

00:15:54.280 | different types of investments to boost that income

00:15:57.360 | in a risk-adjusted manner.

00:16:00.140 | - One thing I've appreciated over the years,

00:16:02.480 | because of your background in the investment markets

00:16:04.440 | and the financial services industry,

00:16:06.280 | your website features a level of sophistication

00:16:10.560 | when discussing markets, market sectors,

00:16:13.240 | appropriate diversification of a portfolio

00:16:15.480 | that's often lacking in personal finance websites.

00:16:18.320 | You don't just give the approach,

00:16:19.560 | put it all in an index fund, it's gonna be okay.

00:16:21.680 | You look at CD rates, you keep cash on the side,

00:16:24.160 | you discuss what the risk-free rate is,

00:16:26.040 | you discuss how various things are affecting,

00:16:29.680 | you discuss your portfolio where you're shooting

00:16:31.980 | for big wins, but you also discuss the conservative base

00:16:36.080 | and I really appreciate that about your writing.

00:16:39.040 | I wanna talk about layoffs now.

00:16:41.280 | And the first thing that I wanna mention

00:16:44.880 | is the timing of the layoff.

00:16:46.120 | Now, in your story, I've picked up that you went

00:16:49.440 | to San Francisco because you were concerned

00:16:51.820 | about being laid off, but then while you were

00:16:54.680 | in San Francisco many years later,

00:16:57.080 | you engineered a layoff.

00:17:00.480 | This can be a challenge because in some cases,

00:17:05.360 | getting laid off is a benefit.

00:17:07.480 | And in a moment, I want you to talk about the benefits.

00:17:09.800 | One of the biggest is severance, just different things.

00:17:11.840 | There are a lot of benefits to getting laid off,

00:17:13.700 | but one of the major disadvantages could be that

00:17:18.700 | in being laid off, you might be perceived

00:17:21.240 | as not a valuable employee, depending on the market,

00:17:24.720 | depending on the industry, and also you could be getting

00:17:26.960 | laid off at the wrong time in the market cycle.

00:17:29.300 | In some cases, if you perceive that layoffs are coming,

00:17:31.560 | it's better to be an early mover and leave

00:17:34.840 | and go ahead and get a job while you don't have

00:17:38.520 | a lot of competition.

00:17:39.360 | So talk about even the timing and the advisability

00:17:42.160 | of working to engineer a layoff for yourself

00:17:44.820 | versus moving quickly and going ahead and quitting

00:17:47.400 | and moving on to something else.

00:17:49.320 | - Right, so you make some good points.

00:17:52.440 | To be able to engineer your layoff takes a lot

00:17:55.360 | of self-awareness and just awareness

00:17:58.580 | about your surroundings.

00:18:00.960 | So in 2008 to 2010, it was a horrific time

00:18:04.960 | for I think most investors and just most Americans.

00:18:09.880 | There was a lot of uncertainty in their investments.

00:18:12.760 | A lot of their friends were getting laid off.

00:18:15.560 | My firm had four to six rounds of layoff

00:18:19.000 | in 2008, 2009, and 2010.

00:18:22.140 | So someone who is self-aware recognizes

00:18:26.120 | there's trouble ahead.

00:18:28.200 | And for myself, the reason why I wanted

00:18:31.280 | to engineer my layoff was two things.

00:18:34.240 | One, the financial services industry

00:18:37.920 | became public enemy number one.

00:18:40.860 | Even though I had nothing to do with the mortgage

00:18:43.160 | financial crisis, with someone not paying their mortgage

00:18:46.040 | or whatnot, it didn't matter.

00:18:48.960 | I was the bad person.

00:18:50.920 | And that didn't feel good.

00:18:52.280 | I felt I was a good person.

00:18:53.600 | My mom always told me I was a good person

00:18:55.120 | and I'm trying to help people and serve as clients.

00:18:58.720 | So that was one thing.

00:19:00.400 | And then the second thing was there was a lack

00:19:05.040 | of correlation with effort and reward anymore.

00:19:08.280 | I had done well in my business,

00:19:11.000 | but I was being asked to subsidize the departments

00:19:13.440 | that didn't do well.

00:19:14.280 | And I understood that, because it's one team, one dream.

00:19:17.400 | There's good and the bad, and we have to be in it together.

00:19:20.060 | But instead of complaining or just feeling down,

00:19:23.040 | I just said, you know what?

00:19:24.480 | That's totally fine, I get it.

00:19:26.040 | But I would rather not complain

00:19:27.720 | and I would rather work something out.

00:19:29.680 | So when you want to engineer your layout,

00:19:34.080 | you need to be serious about your desire to move on.

00:19:37.900 | Okay, this is a proactive step everybody must take.

00:19:41.880 | This is not a reactionary, oh my gosh,

00:19:43.600 | come to the HR department office.

00:19:45.720 | Oh my gosh, I'm getting laid off.

00:19:46.820 | Pack your bags, see you later.

00:19:47.800 | No, no, no, no, no.

00:19:48.760 | The way I've been writing and thinking and advising people

00:19:53.360 | is to really be proactive in thinking ahead

00:19:56.480 | about what could happen.

00:19:57.840 | Create some scenarios in your mind.

00:20:00.200 | Be very methodical and analytical

00:20:03.060 | about your future and about your finances.

00:20:05.440 | So I knew for myself that the pay

00:20:08.680 | was never gonna be as it was.

00:20:11.000 | I knew that I would continue to subsidize other departments.

00:20:14.100 | And I knew that I had a different interest in my life,

00:20:17.000 | which was writing online and building Financial Samurai.

00:20:19.680 | I just loved it, whereas I no longer love

00:20:21.680 | the financial services industry.

00:20:23.340 | And so to take that step is to be aware

00:20:27.280 | that there are layoffs, there were layoffs,

00:20:29.520 | and there are layoffs to come.

00:20:32.640 | And one of the steps that I recommend everybody do

00:20:34.840 | who works in a larger company is to simply Google

00:20:39.640 | the WARN Act, W-A-R-N Act,

00:20:44.480 | because companies of larger size,

00:20:46.200 | generally it's 1,000 or more,

00:20:48.760 | will have to file with their local, with the state,

00:20:52.480 | to warn the state that they're gonna do mass layoffs.

00:20:56.020 | And if you see your company on that list,

00:21:00.080 | then you know, okay, a layoff is coming.

00:21:04.040 | So what you wanna do is be proactive

00:21:05.760 | if you have decided that you wanna do something else,

00:21:08.680 | is to try to get on that list

00:21:10.400 | and be first on that layoff list,

00:21:12.440 | because the people first will get the most benefits

00:21:14.880 | and the people last will get the least.

00:21:17.640 | - Obviously the advice of how to get laid off

00:21:20.200 | is counterintuitive.

00:21:22.000 | Most people are saying how not to get laid off.

00:21:24.120 | In fact, I've done a series of shows

00:21:25.960 | on how to not get fired in the coming recession.

00:21:29.320 | So make the case as to why I would actually want

00:21:34.320 | to be laid off and why I would want to be laid off

00:21:36.960 | in an early round if possible.

00:21:39.240 | - Sure, so in the past, like perhaps our parents

00:21:42.120 | or our parents' parents, they would have pensions.

00:21:45.880 | They would work until 60, 65,

00:21:48.600 | and then they would get a pension for life

00:21:50.440 | and be set for life.

00:21:51.280 | So they didn't actually really have to save.

00:21:53.460 | Whereas now we have to save through our 401k, our IRA.

00:21:57.120 | The company match average is only like 3%

00:21:59.240 | of your contribution or your salary.

00:22:01.120 | So it's really not that good.

00:22:02.040 | So the onus has been put on us

00:22:03.880 | to take care of ourselves financially.

00:22:06.080 | Sure, there will be Social Security.

00:22:07.320 | I believe at least 70% of the payout

00:22:09.040 | from Social Security will be available to us

00:22:10.960 | when we retire for those under 40, 45.

00:22:13.700 | But it's not something to count on.

00:22:16.160 | So why do we want to engineer our layoff?

00:22:18.480 | There's a couple things.

00:22:20.800 | One, you know there's something else better you wanna do.

00:22:23.920 | In my case, it was I already built $80,000

00:22:27.480 | in passive income over the past 12 years

00:22:30.000 | and I had something to do,

00:22:30.880 | which was write on Financial Samurai.

00:22:33.040 | The other case might be you just,

00:22:35.720 | you hate your job and you wanna find a new job.

00:22:38.500 | But a lot of people will say, you know what,

00:22:41.320 | they think that the honorable thing to do

00:22:43.520 | or the easy way is to just quit

00:22:45.440 | or give their two weeks notice.

00:22:49.280 | And I think that is the absolute wrong way.

00:22:51.500 | You should never quit.

00:22:53.320 | You should always get laid.

00:22:54.260 | That's the tagline.

00:22:55.100 | Never quit, get laid.

00:22:56.220 | And the other idea is,

00:22:59.240 | getting laid is much better than quitting.

00:23:03.040 | And then there's this whole other movement

00:23:04.880 | we hear online about people who want to travel the world

00:23:08.240 | and do all this kind of stuff or whatever.

00:23:10.520 | That's great.

00:23:12.400 | But no time in our history is now

00:23:14.760 | have so many people been able to choose

00:23:16.920 | what they wanna do in their lives.

00:23:18.040 | Like 100, 200 years ago, people had to farm,

00:23:20.380 | had to do whatever.

00:23:21.220 | They were just stuck.

00:23:23.200 | So these are some reasons

00:23:24.720 | why you wanna engineer your layout.

00:23:26.880 | And the other thing is,

00:23:28.800 | let's say you've been a relatively low employee,

00:23:32.240 | been there for five to 10 years.

00:23:34.300 | Let's say you work at a startup.

00:23:36.360 | And startups, they pay stock over time.

00:23:40.800 | You get vested over usually a three to four year period.

00:23:44.360 | If you quit, you get none of that.

00:23:46.120 | If you're a long-term employee

00:23:48.640 | at an investment bank, for example,

00:23:50.920 | you have deferred cash and stock as well

00:23:53.800 | because nobody pays you all cash anymore.

00:23:56.720 | If you get laid off, here are some of the benefits.

00:24:00.900 | One, you might get a severance.

00:24:04.240 | A severance, let me be clear, is it's discretionary.

00:24:09.560 | You must negotiate that severance.

00:24:11.280 | A lot of great firms have already

00:24:12.920 | a standard boilerplate severance package.

00:24:15.920 | Maybe it might be one to three weeks per year worked.

00:24:20.080 | Second benefit, you get WARN Act pay, W-A-R-N Act pay.

00:24:26.200 | So the law states that if you're gonna do a mass layoff,

00:24:31.360 | you must pay the employee

00:24:34.120 | either one to three months worth of pay,

00:24:38.480 | and then you can pay someone their severance as well.

00:24:42.340 | The other benefit is you can get COBRA in healthcare

00:24:46.200 | for anywhere from three to six to 12 months.

00:24:50.040 | And it can be fully paid by your company

00:24:52.440 | or you just basically pay your normal premiums.

00:24:56.600 | And that's really important,

00:24:57.640 | especially for people who have a gap

00:24:59.400 | in what they plan to do in between their job or whatever.

00:25:04.680 | The other benefit is you can get unemployment benefits.

00:25:07.140 | If you are laid off,

00:25:08.200 | you have a right to unemployment benefits.

00:25:10.680 | Unemployment benefits, I think in California, for example,

00:25:13.800 | are $900 every two weeks or $1,800 a month.

00:25:17.760 | And you can receive that, as you can in most states,

00:25:21.000 | for 26 weeks.

00:25:22.620 | There's no more, I think, federal unemployment benefits

00:25:26.240 | as there once was during the crisis

00:25:27.780 | where you heard about the 99 weeks.

00:25:30.320 | But again, this is another nice cushion

00:25:33.200 | for you during your transition period.

00:25:35.560 | Because if anybody who's ever been laid off, fired, or quit

00:25:40.560 | knows the transition period between jobs

00:25:44.640 | is a really disconcerting and stressful time.

00:25:48.080 | So the whole idea of how to engineer your layoff

00:25:50.960 | is to be very analytical, practical,

00:25:53.980 | and to build the longest financial runway possible

00:25:58.980 | until you discover something

00:26:01.660 | that you really, really wanna do.

00:26:03.020 | Too many people leave something

00:26:04.720 | and because of financial uncertainty,

00:26:07.360 | they panic and then they say,

00:26:08.880 | I'm gonna take the first thing that comes to me.

00:26:10.840 | And then they go in this endless cycle

00:26:12.680 | of doing something they don't like to do just for money.

00:26:15.600 | - Tell you a quick comment on that 99 week thing.

00:26:19.480 | That was an incredible time.

00:26:22.000 | I had one client who had transferred

00:26:24.600 | their 401k account to my stewardship.

00:26:27.600 | But this client spent the entire 99 weeks traveling

00:26:32.720 | and just living off of the unemployment benefits.

00:26:35.640 | - Oh, there you go.

00:26:36.480 | - Took a two year vacation on the government dime.

00:26:39.160 | It was remarkable to see.

00:26:41.560 | - But one thing people need to be aware of

00:26:44.340 | is that the company pays

00:26:46.360 | into the unemployment benefit system.

00:26:48.720 | So as a company owner now, I pay a percentage of my wages

00:26:53.720 | and someone else's wages into the unemployment system.

00:26:57.880 | Therefore, people need to recognize

00:27:00.080 | that it's not just free money.

00:27:03.320 | They've actually paid into it, just like Social Security.

00:27:06.280 | - Right.

00:27:07.560 | So did we finish your list of benefits?

00:27:10.360 | You said big reason, severance.

00:27:13.080 | You can get severance, Warrant Act pay,

00:27:15.120 | COBRA and healthcare paid by the company,

00:27:16.860 | which that can be an extremely substantial benefit,

00:27:19.360 | especially given that those premiums

00:27:21.760 | that can be paid for you,

00:27:23.480 | you're not generally gonna be paying tax

00:27:25.700 | on the cost of those premiums.

00:27:27.160 | And then number four would be--

00:27:29.080 | - Unemployment benefits.

00:27:30.560 | Anything else on the reasons to consider getting laid off?

00:27:34.000 | - And then of course, if you have deferred cash

00:27:36.720 | or stock compensation or stuff like that,

00:27:41.080 | that gets lost 100% if you quit.

00:27:44.040 | But if you get laid off,

00:27:45.400 | think about it as an act of kindness from the company to you

00:27:49.400 | where they will let your unvested stock and cash

00:27:53.200 | vest over the schedule

00:27:56.080 | that if you were still employed with them.

00:27:59.520 | - Now Sam, you're coming at this from the perspective

00:28:01.360 | of the financial industry,

00:28:03.280 | where you had six figure white collar salaries,

00:28:06.960 | you have complex deferred compensation,

00:28:09.720 | bonus programs, incentive programs, things like that.

00:28:12.880 | How applicable is this advice or approach

00:28:15.360 | to somebody who's more of a blue collar worker?

00:28:18.040 | Someone's a drywall hanger

00:28:20.000 | and their company construction industry starts to decline

00:28:23.440 | and they're gonna go in and they know that,

00:28:24.920 | well, the boss is gonna be laying us off

00:28:26.240 | because business is down.

00:28:27.240 | Are these strategies applicable to that type of worker?

00:28:30.040 | - It is.

00:28:32.240 | And I start off the book by talking about

00:28:34.760 | relationship building,

00:28:38.480 | developing a high emotional quotient.

00:28:41.040 | Engineering your layoff

00:28:44.280 | is about building strong enough relationships

00:28:46.800 | so when the time comes,

00:28:48.600 | you can have an honest and frank conversation

00:28:51.680 | about why you wanna get laid off.

00:28:56.200 | Turn it around and think about it

00:28:57.800 | from a manager's perspective.

00:28:59.320 | And I think maybe most people are non-managers,

00:29:01.720 | just by the numbers,

00:29:03.200 | but I can tell you as a manager of several people

00:29:05.720 | in my previous career

00:29:07.280 | and by speaking to other managers and leaders at a company,

00:29:11.240 | laying someone off is one of the most difficult things

00:29:14.920 | someone can do.

00:29:16.520 | It doesn't even really matter

00:29:17.800 | if the person was a real pain in the ass while at work.

00:29:20.880 | To be able to tell someone to their face,

00:29:24.880 | I'm sorry, your services are no longer needed,

00:29:27.440 | is brutal.

00:29:30.080 | Think about breaking up with a girlfriend or a boyfriend

00:29:33.680 | or just telling anybody some bad news.

00:29:37.080 | Telling people bad news is brutal.

00:29:39.440 | So one of the strategies I talk about in the book

00:29:42.480 | is how you wanna cultivate the relationships you have

00:29:45.200 | with the decision makers, with HR,

00:29:47.560 | and be aware that maybe the business is not doing so well

00:29:52.520 | or be aware that impending layoffs are coming

00:29:55.840 | to take the step to actually help alleviate a manager

00:29:58.920 | or an HR personnel's stress and fears

00:30:02.080 | about laying someone off by saying,

00:30:03.200 | "Hey, let's have a discussion

00:30:05.320 | "because I'm thinking about doing something else."

00:30:07.920 | You don't need to choose who to lay off.

00:30:11.920 | I can be the one.

00:30:13.520 | I can save you the grief and the misery

00:30:15.560 | of telling someone the bad news.

00:30:17.400 | But let's work out a plan.

00:30:19.080 | Let me stay on for the next three months

00:30:20.960 | to help train someone to be my replacement,

00:30:24.320 | if that is necessary,

00:30:25.920 | or let me do whatever it is you want me to do

00:30:28.160 | so that I can get laid off with that severance,

00:30:31.000 | with those benefits, so I can move on.

00:30:33.320 | Because no manager wants someone

00:30:35.320 | who doesn't wanna be there either.

00:30:37.320 | So it's a real win-win scenario that you can create.

00:30:40.360 | But a lot of people just have this tremendous fear,

00:30:42.880 | it's like David and Goliath,

00:30:43.880 | that the corporation, the manager,

00:30:46.360 | he or she is untouchable, they have lawyers, all that.

00:30:50.000 | What people also need to realize,

00:30:51.400 | besides the difficulty that managers have laying people off,

00:30:55.120 | is that any corporation has a reputation to protect.

00:30:59.480 | The larger the reputation, the more at risk things are.

00:31:04.480 | So think about it this way.

00:31:07.520 | And again, you have to be aware,

00:31:08.640 | how much does your company make?

00:31:10.160 | How many employees does it have?

00:31:11.520 | Where it is in the cycle?

00:31:13.680 | You know, there was this one article,

00:31:15.320 | or one New York Times expose

00:31:17.440 | about this disgruntled Goldman Sachs employee

00:31:19.640 | who said, "Why I left Goldman Sachs."

00:31:21.520 | And he just went straight to the New York Times

00:31:24.760 | to blow them up.

00:31:25.720 | And that caused a tremendous amount of headache

00:31:30.720 | for the company, bad PR,

00:31:33.080 | they probably had a more difficult time hiring people,

00:31:37.520 | winning deals, all people were talking about

00:31:39.280 | was the reputation.

00:31:40.960 | You know, in retrospect, all the company had to do

00:31:43.680 | was probably say, "Here, here's half a million dollars,

00:31:47.520 | "or a million dollars,"

00:31:48.920 | to save themselves a lot of heartache.

00:31:50.800 | Just be aware that company reputation is everything now.

00:31:54.080 | Reputation is everything to individual and to a company.

00:31:59.080 | And if you can be more proactive and strategic

00:32:03.460 | in talking to your managers,

00:32:05.120 | and building those relationships, good things will happen.

00:32:08.360 | - The first thing that I think of

00:32:10.280 | when somebody says how to engineer your layoff

00:32:12.840 | without reading your book,

00:32:14.680 | just simply considering a question like that,

00:32:18.080 | would be, "Okay, I'm gonna start showing up to work late,

00:32:21.200 | "I'm gonna start being a jerk around the office,

00:32:25.080 | "I'm gonna make people not like me,

00:32:26.520 | "I'm gonna be flaky and not produce on my work, et cetera.

00:32:31.520 | "And that way I'm gonna go ahead

00:32:33.540 | "and become a non-valued employee

00:32:35.440 | "and I'm gonna get laid off."

00:32:37.040 | But what you're describing,

00:32:38.280 | the approach you're describing is not that.

00:32:40.320 | It's very different.

00:32:41.360 | - Yeah, I mean, you can take two approaches.

00:32:44.560 | You can take a more honorable approach, I guess,

00:32:48.520 | which is the way I talk about being aware,

00:32:51.880 | having an open discussion about why it is

00:32:55.720 | you wanna move on,

00:32:57.240 | but creating a win-win scenario as to how you move on.

00:33:00.580 | And I do talk about in the book,

00:33:02.880 | the strategies on creating or planting seeds of doubt

00:33:06.760 | in your manager's mind about whether you

00:33:10.400 | are the right employee to remain for the next one, two,

00:33:14.360 | long-term years.

00:33:16.320 | And so, yeah, you can definitely start showing up late.

00:33:19.560 | You can definitely take all your sick leave,

00:33:21.480 | all your vacation days, which you should,

00:33:24.040 | but the culture in America is that you shouldn't.

00:33:26.820 | And you can do all sorts of stuff.

00:33:30.280 | But I really wanna emphasize

00:33:31.960 | that there is a better way to do it,

00:33:34.620 | which is to really focus on life,

00:33:39.120 | focus on your family,

00:33:40.660 | you focus on the health of your parents.

00:33:43.880 | One strategy a reader wrote into me,

00:33:46.680 | and I published a post on my site,

00:33:49.280 | by the name of Samurai,

00:33:50.480 | is using the Family and Medical Leave Act

00:33:52.560 | as a way to plant that seed of doubt,

00:33:56.140 | or to make the manager aware that,

00:33:59.760 | hey, you know what?

00:34:01.280 | Joe or Jack or Jill has other things going on,

00:34:04.680 | and actually laying them off

00:34:06.320 | might actually be a benefit to both of us,

00:34:08.960 | because if they're gonna take

00:34:09.800 | the Family and Medical Leave Act,

00:34:11.320 | they're gonna be gone for three months,

00:34:13.440 | or whatever, maybe we can have a discussion

00:34:16.120 | where we just kind of lay them off

00:34:18.640 | so that there's no gaping hole during the three months,

00:34:21.240 | and we can move on and hire their replacement.

00:34:23.760 | - How big of a factor do you think

00:34:27.760 | personal situations are versus market conditions?

00:34:31.680 | Let's pretend that I'm working at a job,

00:34:34.200 | and I recognize that I am,

00:34:37.060 | this job is not a good fit for me,

00:34:41.120 | I've got something else I wanna pursue,

00:34:43.160 | and thus I'd like to go ahead and leave this company,

00:34:46.240 | but I don't wanna just walk in and quit

00:34:47.760 | for the reasons that we discussed.

00:34:49.720 | But I also don't see any headwinds on the horizon,

00:34:52.360 | our company's booming,

00:34:53.320 | and they're not laying people off, they're hiring.

00:34:56.520 | Is it possible, or do you have any ideas or strategies

00:34:59.240 | to engineer a layoff in that circumstance,

00:35:01.360 | or do we need to be facing headwinds of some kind,

00:35:04.400 | such that the managers and leaders of the company

00:35:07.420 | are considering layoffs?

00:35:09.120 | - All right.

00:35:09.960 | This is a good question,

00:35:11.760 | a lot of people who are skeptical of the strategy

00:35:15.800 | think, "Well, why would they lay me off?

00:35:17.200 | "I'm such a great employee and star contributor," right?

00:35:20.380 | But if you're already asking how to engineer a layoff,

00:35:24.920 | your heart and your mind is somewhere else,

00:35:26.700 | you wanna do something else.

00:35:27.720 | And I think most people realize a job is a job,

00:35:30.040 | and I would think, the surveys say more than 50%,

00:35:33.080 | maybe 70% of the people are not engaged at work,

00:35:36.000 | they wanna do something else,

00:35:36.840 | they're not doing what they really wanna do.

00:35:39.280 | So do we need headwinds?

00:35:40.480 | No, but headwinds help because it makes it easier, right?

00:35:44.600 | There is a layoff coming, okay, good layoff.

00:35:47.320 | Let me participate.

00:35:48.600 | But any good company constantly is calling

00:35:53.600 | kind of the bottom five to 10%,

00:35:55.640 | and it's kind of like the Jack Welch at GE way.

00:35:57.960 | They're trying to figure out ways

00:35:59.240 | to always improve productivity

00:36:02.160 | and upgrade their employees, all that stuff.

00:36:04.960 | So know that even in the most booming times,

00:36:07.600 | there are always people that management

00:36:11.080 | is looking to lay off and to upgrade.

00:36:13.800 | And no manager, again, wants an employee

00:36:16.000 | whose heart and mind is not in their jobs,

00:36:18.960 | especially if it's a hyper-competitive environment,

00:36:21.960 | like whether it's tech, internet, banking,

00:36:23.920 | consulting, startup, whatever,

00:36:25.680 | it's all focus, focus, focus, give me everything you got.

00:36:29.320 | So if you don't wanna be there,

00:36:30.760 | they don't want you to be there.

00:36:33.200 | But I think the best strategy in a good environment

00:36:37.280 | is to really utilize personal reasons

00:36:40.960 | that everybody can relate to.

00:36:43.400 | And those personal reasons are things

00:36:45.520 | such as the health of your aging parents.

00:36:48.180 | It can be your spouse and how she gave up her career

00:36:55.480 | to be with you in San Francisco or New York City,

00:36:59.320 | but she is from Austin, Texas.

00:37:03.000 | And how you wanna do the right thing

00:37:05.640 | and now do some sacrifice for her instead.

00:37:09.680 | These are the things that any manager

00:37:12.840 | and any person, decision maker,

00:37:15.400 | regarding your promotion or your layoff

00:37:18.040 | can empathize with because he or she also has parents,

00:37:21.540 | significant others, and family.

00:37:25.260 | And everybody knows that, I think, family's first.

00:37:29.060 | So utilizing your family and other more, I think,

00:37:34.920 | noble reasons for why you want to move on

00:37:38.400 | is a great way to start the discussion.

00:37:40.360 | - So pretend for a moment that you were doing

00:37:44.560 | personal coaching of some kind.

00:37:47.280 | You had a friend that came to you and said,

00:37:49.280 | "Sam, I've got some of these personal reasons.

00:37:52.160 | "My parents are aging and I feel like

00:37:54.280 | "I've neglected my kids.

00:37:55.620 | "I really would like to have a different situation.

00:37:58.540 | "But these circumstances are pressing in

00:38:01.040 | "and I can start this process.

00:38:04.040 | "But I don't know how long it's gonna take."

00:38:06.520 | If you were coaching somebody,

00:38:08.040 | I know that you couldn't be,

00:38:10.920 | I don't think you would make the claim

00:38:12.520 | that you could get anybody laid off.

00:38:13.960 | I think this is a strategy that can work some of the time

00:38:17.220 | and you can work it with the hopes that it'll work.

00:38:18.960 | But my guess would be,

00:38:21.040 | feel free to disagree in a moment if you see differently.

00:38:23.320 | My guess would be you wouldn't make any kind of claim

00:38:24.960 | that this is absolutely doable by all people.

00:38:27.640 | This is one of those things that you can work at

00:38:29.400 | and there are a lot of benefits if you can get it,

00:38:30.720 | but it may not work and ultimately you might have to quit.

00:38:33.320 | But with regard to timing,

00:38:34.800 | if I came to you and you were coaching me

00:38:39.100 | and I gave you a scenario like I just did,

00:38:41.400 | could you give me an idea of how long you would guess

00:38:46.080 | it would take or that I would need

00:38:47.720 | to be able to start to make progress

00:38:49.800 | toward my goal of getting laid off?

00:38:51.160 | Is this something that I could make happen in a month,

00:38:53.880 | in a year, in five years?

00:38:55.520 | What kind of time scale are we talking about?

00:38:58.200 | - Yeah, so two things.

00:38:59.280 | Time scale and the feasibility of engineering your layoff.

00:39:03.080 | Let's talk about the feasibility

00:39:05.200 | of engineering your layoff first.

00:39:06.920 | People need to not be confused with the terms

00:39:09.760 | getting fired and getting laid off.

00:39:11.960 | Getting fired is through cause,

00:39:13.800 | such as sexually harassing a colleague,

00:39:17.000 | punching your manager in the face,

00:39:20.040 | stealing company secrets, all that stuff.

00:39:23.080 | That is grounds for getting fired.

00:39:25.560 | And when you get fired,

00:39:27.440 | you can get like a black mark on your record,

00:39:29.440 | especially in the finance industry.

00:39:31.200 | Getting laid off is a benevolent term.

00:39:37.020 | It is through really no fault of your own.

00:39:41.000 | Usually it's through company-wide layoffs,

00:39:45.160 | a change or a shutting down of a department and so forth.

00:39:48.720 | Yes, there are circumstances where people who are laid off

00:39:51.720 | might be because of underperformance,

00:39:54.280 | but please recognize that companies

00:39:57.080 | who wisely follow protocol

00:40:00.480 | basically have records,

00:40:03.660 | you have your six-month review,

00:40:06.640 | your quarterly review, whatever.

00:40:08.600 | To be able to get laid off,

00:40:10.440 | you have to have a consistent record of underperformance.

00:40:14.960 | And so unless you're completely clueless,

00:40:17.440 | and this goes back to being aware, self-aware,

00:40:20.240 | you kind of know that the writing is on the wall.

00:40:24.160 | So in terms of feasibility,

00:40:26.060 | I think the feasibility is very high,

00:40:29.080 | and it's much higher than getting promoted

00:40:31.360 | to president of the company or whatever,

00:40:34.440 | because you cannot get fired without cause.

00:40:39.440 | And if you start slacking off at work and all that,

00:40:43.400 | you will probably eventually get laid off,

00:40:47.120 | but that's kind of due to your lack of performance.

00:40:49.040 | But the idea is you can get laid off if you want to.

00:40:53.440 | I strongly believe that.

00:40:54.280 | I think there's probably an 80% chance

00:40:57.200 | that everybody can get laid off if they want to.

00:40:59.760 | Whether they can get that amazing severance

00:41:02.640 | or all that other stuff, that's a different matter,

00:41:04.880 | and that takes much more negotiating and skill.

00:41:07.640 | - Let me ask you a question,

00:41:08.480 | interrupt you to ask the question.

00:41:10.200 | Do you believe that you can get laid off if you want to?

00:41:13.120 | Do you believe you can get laid off honorably

00:41:16.360 | if you want to?

00:41:17.200 | For example, I'm not willing to pursue the strategy

00:41:20.280 | like slacking off.

00:41:21.840 | That goes against my moral code,

00:41:23.800 | and I'm not willing to do that.

00:41:25.200 | Do you believe that you can get laid off honorably

00:41:27.480 | if you want to, or only if you're willing to engage

00:41:30.880 | in some of those other tactics and techniques?

00:41:35.400 | - Oh yeah, I mean, if you talk about honorably,

00:41:37.680 | it's talking about having a conversation,

00:41:39.780 | being proactive and talking about

00:41:43.120 | why you want to get laid off.

00:41:44.560 | And if you want to do it, quote, less honorably,

00:41:49.120 | then you can do what many, many, many, many

00:41:51.360 | employees do, and that is not put their full effort

00:41:55.200 | into their job while they're there.

00:41:57.240 | I mean, it's so funny.

00:41:58.680 | I actually crave, I don't crave,

00:42:01.260 | but I like the Monday to Friday time period,

00:42:04.840 | because that's when the traffic

00:42:05.840 | on the financial samurai is the most.

00:42:07.920 | And why is that?

00:42:09.080 | Because everybody's slacking off at work.

00:42:11.040 | On Saturday and Sunday, the traffic dips by 20 to 30%,

00:42:14.200 | because people are enjoying their lives.

00:42:16.600 | So I think the use of the word honors is a little tricky,

00:42:20.840 | because at the end of the day, the employer pays you

00:42:24.440 | because you provide more value

00:42:25.760 | than your salary and benefits.

00:42:28.240 | - But the reason I say honorably is,

00:42:30.240 | for example, if you're being paid on,

00:42:32.620 | every job would be different,

00:42:33.740 | but if you're being paid on time,

00:42:36.280 | which most of the highest earning professions

00:42:40.700 | are not being paid on time,

00:42:41.840 | but if you're being paid on time,

00:42:44.000 | if you steal time from your employer,

00:42:45.640 | you're stealing time.

00:42:47.200 | And so you can't, I don't see that as being honorable

00:42:50.700 | to go in where I'm being paid for an hourly wage

00:42:52.840 | and now I'm gonna take and start stealing time

00:42:54.780 | from my employer by slacking off so that they'll fire me.

00:42:57.560 | That's different than many other circumstances,

00:42:59.960 | but I don't think it's wrong to use the word honorable.

00:43:03.520 | Theft is theft, whether you're stealing time

00:43:05.200 | from your employer or stealing a stapler

00:43:06.660 | from the conference room.

00:43:07.800 | If you're being paid for your time,

00:43:09.440 | you need to be producing and working

00:43:12.400 | to the best of your capability during that time.

00:43:14.800 | - I think it's a gray area,

00:43:17.560 | 'cause anybody who's worked has seen people not get in

00:43:21.940 | at 7 a.m. and work nonstop and take a 30 minute break.

00:43:26.040 | So yeah, it's a gray area.

00:43:29.100 | That's my opinion.

00:43:30.620 | You can do it honorably if you want.

00:43:33.500 | You can do it less honorably,

00:43:35.820 | but I strongly believe,

00:43:37.020 | unlike trying to become a managing director

00:43:39.860 | or a vice president of the department or whatever,

00:43:42.160 | it's much easier to get laid off than to ascend.

00:43:45.300 | But the big irony is that there's so many,

00:43:50.300 | that's just not an irony.

00:43:51.960 | It's really logical,

00:43:53.000 | but there's so many books and articles

00:43:56.000 | and stuff on how to make money,

00:43:57.200 | how to get paid, and how to promote it.

00:43:59.520 | I really don't see anything on how to get laid off.

00:44:02.640 | But the irony, I think, is that if you get laid off

00:44:05.960 | and engineer your severance, a severance package,

00:44:08.720 | a negotiated severance package,

00:44:09.880 | you could actually get paid way more

00:44:12.060 | than someone who just stayed there.

00:44:13.920 | And not only that,

00:44:15.240 | one of the things I talk about in my book

00:44:16.840 | is how you could actually double dip.

00:44:19.540 | So most of the time,

00:44:22.560 | let's say you get laid off on June 1st,

00:44:26.520 | and because you have to get paid your Warnack pay,

00:44:29.440 | let's say it's two months in California,

00:44:32.200 | you'll get salaried for June and July.

00:44:35.400 | And let's say you get your severance too,

00:44:37.040 | let's say it's half your salary

00:44:38.720 | and your salary is 100,000, so it's another 50,000.

00:44:40.880 | So you get two months of pay

00:44:42.360 | plus your $50,000 severance.

00:44:44.240 | But meanwhile, you don't even have to go to work.

00:44:46.720 | They don't want you to go to work.

00:44:47.840 | Actually, part of the deal is you don't come to work

00:44:50.200 | unless they agree to it.

00:44:52.300 | So from June to July, and actually six more months,

00:44:55.720 | 'cause your severance is equal to six months of your pay,

00:44:59.040 | you can either do nothing,

00:45:00.440 | go travel, start a business, do whatever,

00:45:02.800 | or you can actually find another job

00:45:04.600 | and earn double the money,

00:45:07.320 | which is something quite interesting

00:45:08.720 | that several of my clients have done.

00:45:10.680 | - Indeed.

00:45:11.520 | You were answering a two-part question.

00:45:13.280 | One was feasibility and the second was timing

00:45:15.120 | when I interrupted you.

00:45:16.120 | What are your thoughts with regard

00:45:17.120 | to the amount of time necessary to engineer a layoff?

00:45:19.840 | - I think the minimal amount of time is probably one month.

00:45:24.560 | And a probably sweet spot is three to six months.

00:45:29.600 | So during this time period,

00:45:31.040 | you need to be aware of your company's stance

00:45:34.080 | on hiring and laying people off

00:45:36.400 | and the whole business cycle.

00:45:39.240 | And during this time period, you need to actively

00:45:42.160 | be building the strongest relationships you can

00:45:46.040 | with your hiring manager and the HR department

00:45:51.440 | if there is one close by who's in your office.

00:45:55.340 | So basically, I would say a sweet spot

00:45:58.600 | is probably three to six months.

00:45:59.960 | I started thinking about it about a year

00:46:01.480 | before I got laid off,

00:46:03.760 | and I really started thinking about it

00:46:07.320 | about three to four months after bonuses were paid.

00:46:10.280 | And I was thinking to myself,

00:46:11.760 | this is maybe not worth it anymore.

00:46:15.120 | - One of the areas that I pay attention to

00:46:20.520 | and I think is helpful is if you can get the business cycle

00:46:24.360 | to work in your favor.

00:46:26.320 | And here we're talking about facing difficult times,

00:46:29.160 | so that's probably gonna lead to layoffs.

00:46:31.440 | That would be easier to get laid off

00:46:32.920 | when the company is doing layoffs

00:46:34.480 | than if the company is growing and hiring all over the place.

00:46:37.920 | And as we record this here in August of 2016,

00:46:41.920 | I think that very possibly over the next upcoming years,

00:46:47.680 | we'll be facing a downturn and who knows,

00:46:50.760 | could be a significant downturn in the business cycle.

00:46:52.920 | Now that's purely my opinion and guess,

00:46:55.560 | take it for what it is.

00:46:56.980 | But in that context, I would expect to see

00:47:00.120 | a significant number of jobs lost.

00:47:03.440 | I would expect to see significant numbers of layoffs

00:47:05.760 | as you go into recession, that's generally the trend.

00:47:07.640 | And depending on how long or deep the recession indicates,

00:47:10.600 | how long or deep the cuts are.

00:47:12.880 | And I think that recessions can be opportunities.

00:47:15.800 | They can be challenges, but they can also be opportunities

00:47:17.820 | where if you're looking for a good time to take a sabbatical

00:47:20.560 | and take time off and if you've got money

00:47:22.320 | and you don't need the income,

00:47:23.660 | then perhaps taking that time off during a recession

00:47:25.880 | is a really good way to do it.

00:47:27.680 | And so I'd love for my listeners to be thinking about that

00:47:30.940 | because some of them have been wanting

00:47:33.060 | to do certain activities,

00:47:34.820 | want to take a couple of years and travel the world

00:47:36.760 | or to start a new business or start a hobby

00:47:39.080 | or spend time with aging parents, things like that.

00:47:41.200 | So pretend for a moment that my guesses were accurate

00:47:45.300 | and I had listeners who were thinking,

00:47:47.620 | in the coming years, it'd be nice to get laid off

00:47:50.620 | in the next recession so that I can attend

00:47:52.620 | to these other areas.

00:47:54.180 | Give my listeners some practical steps,

00:47:56.940 | a checklist of sorts of some of the things

00:47:58.920 | that they can be doing proactively now

00:48:01.100 | so that they're first on the chopping block

00:48:03.580 | to get laid off with maximum benefit

00:48:05.460 | in coming changes in the business cycle, please.

00:48:09.640 | - Sure.

00:48:10.480 | I guess step one is to calculate your net worth

00:48:15.700 | and calculate your cash flow

00:48:17.300 | and calculate how much you have in the bank

00:48:19.740 | in terms of living expenses.

00:48:21.660 | That's obvious.

00:48:23.140 | The more you have, the better it is.

00:48:25.720 | Step two, I think you should probably reach out

00:48:28.040 | to people who have been laid off,

00:48:30.860 | take them out for coffee or lunch

00:48:33.460 | and ask them in a, I guess, casual way,

00:48:38.460 | how has it been like since you were laid off

00:48:40.820 | and what type of benefits you got?

00:48:42.300 | You need to understand what you're playing for.

00:48:44.820 | The way I found out was actually having

00:48:48.380 | a really good conversation with my HR manager

00:48:51.980 | who basically explained to me what the benefits were

00:48:55.820 | and what I could expect going forward.

00:48:59.720 | So once you know what you're playing for,

00:49:01.840 | then you can make even better calculations

00:49:03.880 | about your financial future.

00:49:05.380 | The other step is to really develop strong relationships

00:49:12.080 | with your immediate manager.

00:49:14.980 | Bite your tongue, see how you can help out more,

00:49:19.700 | just be a good team player.

00:49:21.980 | People like to help people who they like.

00:49:26.900 | It's very simple.

00:49:27.780 | And again, I talk about in my book

00:49:31.100 | how it's really a relationship business.

00:49:34.500 | The more you can get to know someone,

00:49:36.620 | the better and easier it is to tell someone

00:49:40.300 | your true thoughts and feelings and have them be accepted

00:49:44.140 | and have that someone understand and empathize

00:49:47.180 | and work towards helping you.

00:49:50.120 | Because again, nobody wants to have an employee

00:49:52.720 | who doesn't wanna be there.

00:49:54.500 | And if you can help that person you're developing

00:49:57.060 | a good relationship with who has the power,

00:49:59.940 | make an easier decision come layoff time,

00:50:02.560 | then you're actually helping him or her as well as yourself.

00:50:06.660 | And also, it depends on what you wanna do,

00:50:11.280 | whether you wanna travel, start a business,

00:50:13.480 | take time off, or find another job.

00:50:15.780 | You should be thinking, you should be having a test run

00:50:20.000 | on what it is you wanna do.

00:50:21.780 | So if you wanna travel or if you wanna relocate

00:50:25.000 | and live in Mexico, maybe the next vacation

00:50:26.980 | should be in Mexico for one week

00:50:28.760 | where you absolutely pretend you don't have a job

00:50:30.800 | and you're living in Mexico in some apartment you rent

00:50:34.240 | in obviously not the Four Seasons or whatever.

00:50:36.960 | If you wanna start a business, throw up a website.

00:50:40.080 | Test out some ideas.

00:50:42.320 | Ask friends what they think.

00:50:44.920 | And ask strangers what they think even more

00:50:46.800 | because they'll probably be a little bit more honest.

00:50:49.640 | In my case, Financial Samurai was a labor of love

00:50:52.480 | where I was trying to make sense of the chaos

00:50:54.420 | during the financial crisis.

00:50:56.120 | And I just wrote because it was my personal journal.

00:50:58.240 | I didn't really have a business plan.

00:50:59.320 | I just wrote, wrote, wrote, wrote,

00:51:00.920 | and tried to build a community.

00:51:02.000 | And then I realized, oh, you could actually make some money

00:51:04.040 | if you actually focus on the financial aspect

00:51:06.880 | of running a online media company.

00:51:09.600 | But I had been testing for two and a half years

00:51:12.800 | before I actually pulled the trigger

00:51:15.440 | and negotiated my severance.

00:51:18.440 | So I think those are the things that you need to think about.

00:51:20.920 | Always think about the scenarios.

00:51:23.760 | What if it happens?

00:51:25.380 | What would you do if it happens?

00:51:28.220 | But before that happens, I read so many stories

00:51:32.320 | about people, I quit my job and I'm gonna be an entrepreneur.

00:51:35.480 | But they've only been testing for like one month.

00:51:37.800 | And a lot of times people just end up going back to work.

00:51:41.500 | And I give them credit and I give them full props

00:51:44.880 | for having the confidence to just leave

00:51:47.240 | without a financial runway, without extensive testing

00:51:51.360 | and extensive trial period.

00:51:53.080 | But I don't think that's the wise,

00:51:54.760 | fiscal way to go about things.

00:51:58.080 | People should really, really ask as many people as possible

00:52:01.680 | who've done it so they don't regret saying,

00:52:04.080 | I wish I knew then what I know now.

00:52:05.840 | - Yeah, no question.

00:52:08.680 | I've been laid off twice in my life.

00:52:11.280 | The first time I'd worked at the job for about a week.

00:52:13.520 | And then after a week, we quickly realized

00:52:17.200 | that the job I thought I was hired to do

00:52:19.360 | and the job that I was actually doing were very different.

00:52:21.960 | And it was a kind of a mutual parting of ways

00:52:24.200 | where we realized we had accomplished a poor negotiation

00:52:28.520 | and it was not working out.

00:52:31.600 | But the second job was I had been there

00:52:33.040 | for a couple of years and I was laid off out of the blue.

00:52:37.000 | It was a total surprise to me.

00:52:38.880 | And it wasn't due to non-performance.

00:52:42.080 | My evidence of that was that I had received

00:52:44.680 | glowing reviews from my superiors

00:52:48.040 | and my, what do they call it, the corporate world,

00:52:49.440 | 360 reviews and things like that.

00:52:51.000 | And I had just received an 8% pay raise

00:52:54.440 | some few months earlier.

00:52:56.840 | And so I knew it wasn't for cause

00:52:59.720 | of my own personal performance.

00:53:00.920 | It was a company reorganization.

00:53:02.440 | And they decided to eliminate the middle tier of my job.

00:53:07.440 | The analyst position that I was in

00:53:09.780 | was being eliminated in favor of more entry level people

00:53:12.820 | and more senior people.

00:53:14.340 | Because the job description in and of itself

00:53:16.360 | wasn't working out.

00:53:17.200 | And so me and all of my coworkers at the middle level

00:53:21.120 | were laid off.

00:53:22.960 | But it was a total surprise to me.

00:53:24.360 | And I was not aware.

00:53:26.960 | And it took me a while to figure out

00:53:29.040 | what was even happening in the meeting

00:53:31.400 | where I'm sitting there in the layoff meeting

00:53:33.720 | and I didn't know what was--

00:53:34.560 | - The folks were dancing around

00:53:35.400 | 'cause it's tough to tell you.

00:53:36.240 | - Yeah, and they're like,

00:53:37.200 | and it's that exact thing where they're trying to say it,

00:53:40.460 | but they're trying to use euphemisms and be polite,

00:53:43.900 | blah, blah, blah.

00:53:44.740 | And all of a sudden it dawns on you,

00:53:46.340 | wait a second, I'm being laid off right now.

00:53:48.540 | (laughing)

00:53:50.500 | But I was caught in that circumstance really flat footed.

00:53:53.860 | And thankfully, and they gave me

00:53:55.340 | a couple months of severance and it was nice.

00:53:57.020 | Everything worked out fine.

00:53:58.060 | And that was my first time being laid off

00:53:59.500 | from a corporate job where I got those benefits.

00:54:01.540 | And they treated me fairly.

00:54:02.820 | I have no complaints.

00:54:03.660 | But I was caught flat footed.

00:54:05.600 | And I didn't know what to negotiate.

00:54:10.420 | I didn't know how to negotiate.

00:54:11.580 | I didn't know what my rights were.

00:54:12.980 | I didn't know what any of those things.

00:54:15.020 | I was just completely unprepared.

00:54:17.240 | If you were seeking to prepare some of my listeners

00:54:20.820 | who could be in that situation

00:54:23.140 | and try to equip them with some knowledge

00:54:24.700 | of what their rights are,

00:54:25.980 | you talk about these things as being negotiable.

00:54:27.940 | If one of my listeners tomorrow goes into their office

00:54:31.300 | and has a circumstance like mine where they realize,

00:54:33.940 | wait a second, I'm being laid off right now.

00:54:36.080 | What can they do to come out better

00:54:38.320 | on the other side of that meeting

00:54:40.000 | than they would otherwise?

00:54:42.120 | - Right, so one is to prepare

00:54:44.620 | by knowing what you're playing for.

00:54:46.240 | And to know what you're playing for,

00:54:48.080 | there's precedence, right?

00:54:49.400 | In the law, in law of the land,

00:54:51.360 | you look at previous cases to set precedence

00:54:54.800 | for what you wanna argue.

00:54:56.640 | So to set precedence is to simply ask people

00:54:58.680 | who've been laid off before.

00:55:00.460 | To set precedence is to ask

00:55:02.040 | if you have a good relationship,

00:55:03.200 | which is what I want people

00:55:04.600 | to build better relationships internally.

00:55:06.520 | To talk to HR, maybe, but be aware

00:55:08.980 | that if you talk to HR,

00:55:10.460 | HR has a high likelihood of telling their manager

00:55:13.080 | because HR is actually there

00:55:14.720 | to protect the corporation first

00:55:16.880 | and then its employees.

00:55:18.320 | So remember that.

00:55:19.320 | HR is there to protect liability risks for the corporation

00:55:22.640 | and then to solve conflict internally.

00:55:25.280 | I recommend everybody read their employee handbook.

00:55:29.500 | I think the majority of people do not do that.

00:55:31.400 | Man, when I got my employee handbook,

00:55:32.960 | it was thick.

00:55:34.400 | And through that employee handbook,

00:55:35.920 | I realized, hey, I didn't realize this,

00:55:38.320 | but the company pays for my MBA if I get in.

00:55:42.920 | And if I get a B or above,

00:55:44.440 | they'll pay 100% of it.

00:55:46.960 | And so guess what?

00:55:48.480 | That's exactly what I did.

00:55:49.480 | I went to get my MBA at Berkeley and they paid for it.

00:55:52.180 | And nobody else knew that.

00:55:53.940 | They're like, what?

00:55:55.040 | They pay $28,000 a year to get your MBA?

00:55:58.100 | I can't believe it.

00:55:58.940 | I'm gonna do the same thing too.

00:56:00.360 | I told everybody to read the handbook

00:56:01.400 | and they said, well, gosh, be darned.

00:56:03.960 | And several other people got their MBA as well.

00:56:06.800 | So read your employee handbook.

00:56:08.440 | It is by law that you as an employee

00:56:11.000 | need to have all your rights laid out for you.

00:56:14.360 | Whether you read them or not is a different matter,

00:56:16.300 | but you will find everything from 401k contribution matching

00:56:20.400 | to continuing education to COBRA,

00:56:22.920 | to short-term disability to long-term disability,

00:56:27.060 | and all that good stuff.

00:56:28.360 | These are the things you will understand

00:56:29.860 | what you're playing for.

00:56:31.840 | And then finally, one thing I wanna let you know,

00:56:34.440 | and I want readers to realize,

00:56:36.120 | is that there's a very big difference

00:56:38.560 | between Warren Act pay and severance.

00:56:40.400 | A lot of people who actually are in your situation,

00:56:43.880 | like two years, one to, let's say one to three year,

00:56:46.620 | they get laid off and they say they got a severance

00:56:50.640 | of two months of pay.

00:56:52.760 | The reality is, is that wasn't a severance.

00:56:55.040 | That was mandatory by law, Warren Act pay.

00:56:59.400 | The severance is on top of that Warren Act pay.

00:57:01.800 | So please be aware of that.

00:57:05.160 | - Interesting, that's a good point.

00:57:06.460 | I have no idea if I received Warren Act pay

00:57:09.560 | or severance pay, I have no idea.

00:57:11.460 | - Well, what did you, are you free to say

00:57:13.240 | what you got, like in terms of--

00:57:15.180 | - Yeah, just two months, I just got two months salary.

00:57:17.460 | They continued to pay my salary.

00:57:18.980 | They didn't pay it out in a lump sum,

00:57:20.300 | they just continued to pay my salary

00:57:21.620 | on the standard schedule for the two months

00:57:23.380 | following my last day of work.

00:57:25.080 | - And following your last day, right?

00:57:26.660 | So you didn't go in

00:57:27.500 | while you were getting paid the two months.

00:57:28.740 | - No, I walked out, after that meeting,

00:57:30.340 | I went back to my desk and took my things out to the car

00:57:32.980 | and that was it.

00:57:34.620 | - Right, so that is Warren Act pay.

00:57:36.540 | - Interesting.

00:57:37.460 | - Yeah, that's not a severance, that's Warren Act pay,

00:57:39.580 | which is fine, at least you got two months, right?

00:57:41.460 | - Sure, sure.

00:57:42.300 | - That's a good running away.

00:57:43.120 | - Yeah, I got on an airplane and went to Columbia.

00:57:45.060 | - There you go.

00:57:45.900 | So I think that's the power of my book,

00:57:49.960 | is actually educating people on what they're fighting for

00:57:53.580 | and to not really be confused with all these words

00:57:58.040 | and these rules and all that.

00:57:59.860 | The Warren Act pay is different from severance pay

00:58:02.140 | and let me tell you an example.

00:58:04.820 | I tried really hard with one client to get a severance,

00:58:08.620 | but she couldn't get a severance,

00:58:10.980 | but she was miserable at her job,

00:58:12.060 | she was there for 10 years.

00:58:14.000 | So what we did was, we had a really,

00:58:19.680 | she had a come to Jesus moment,

00:58:20.780 | I said, "Hey, look, are you serious

00:58:22.340 | "about wanting to move on?"

00:58:23.340 | She said, "Yes, I am.

00:58:24.900 | "I cry every week at my job, I hate it,

00:58:26.760 | "this is pathetic."

00:58:28.220 | And I gave her the confidence to have that discussion

00:58:31.020 | with her manager and this was in August.

00:58:35.540 | And the manager was surprised, generally they are surprised,

00:58:39.260 | but empathetic 'cause they had a good relationship

00:58:41.740 | and he said, "How about this?

00:58:43.780 | "Can you come on board, can you work until January?"

00:58:48.900 | So this is August, right?

00:58:49.900 | So August, September, October, November,

00:58:53.380 | so it was four or five months, right?

00:58:55.220 | And look, we'll still pay you 100% of your salary,

00:58:58.980 | but how about just come in three days a week?

00:59:03.380 | So really, that's kind of, if you do the math,

00:59:06.280 | three days, but you're getting paid for five days,

00:59:08.620 | you just got a huge raise.

00:59:10.780 | And then she said, "You know what?

00:59:12.740 | "It's not gonna really fly,

00:59:13.780 | "I'd rather just have my severance

00:59:17.520 | "just like the people who got laid off

00:59:19.680 | "due to a reorg a year ago did."

00:59:22.460 | And I think they got like one or two weeks per year work.

00:59:25.340 | And so they had talks with the bigger boss

00:59:27.980 | and they're like, "No, no, no, no, no, we can't do this

00:59:29.800 | "'cause you're a good employee."

00:59:31.420 | And then she said, "How about this?

00:59:32.520 | "How about this?

00:59:33.660 | "Instead of three days a week,

00:59:35.000 | "I'll come in for the next five months,

00:59:37.320 | "I'll come in two days a week."

00:59:38.780 | (laughing)

00:59:40.460 | So they said, "Okay, two days a week,

00:59:42.480 | "that's better than nothing.

00:59:43.320 | "You're a valued employee, we love you, you're a manager."

00:59:47.060 | So she came in two days a week.

00:59:48.620 | She decided Monday to Wednesday,

00:59:50.500 | and sometimes she decided Monday to Tuesday

00:59:52.380 | so she can have a long weekend to do whatever.

00:59:56.020 | And they paid her full benefits.

00:59:57.220 | So if you're working two days a week,

00:59:58.900 | but you get paid five days,

01:00:00.960 | so you're kind of like getting 150% raise.

01:00:04.180 | And then still she was so happy

01:00:05.660 | 'cause she felt like she was winning

01:00:07.340 | 'cause she was proactive.

01:00:09.100 | And she didn't get that severance that she wanted,

01:00:11.220 | which was like 20 to 30 weeks.

01:00:14.100 | But for five months, she was able to have

01:00:16.260 | this carefree lifestyle where she made max money.

01:00:18.660 | And then they gave her the two months of Warn Act pay.

01:00:22.540 | And here's the kicker.

01:00:23.640 | She did so good in the transition

01:00:27.340 | that they hired her back as a consultant 10 months later.

01:00:32.580 | (laughing)

01:00:33.420 | For 35% more.

01:00:34.880 | - Do you remember what her salary was,

01:00:38.880 | or ballpark what her salary was

01:00:40.620 | when she was working there as an employee?

01:00:42.620 | - Yeah, so she was making like 125 base,

01:00:46.140 | and then she had like maybe $15,000 a year in bonus.

01:00:48.940 | - Okay.

01:00:49.780 | - So now her run rate is like 170,000.

01:00:54.580 | - Okay, so I wanna put some numbers

01:00:57.020 | to what you just said and point out

01:00:59.180 | for my audience to learn the lesson

01:01:00.820 | that in negotiations, when you have a negotiation like that,

01:01:04.340 | you have a much bigger opportunity

01:01:06.000 | to make a huge financial impact

01:01:08.260 | than you do at many other times,

01:01:09.880 | which is why you gotta take negotiations seriously,

01:01:12.340 | whether they're hiring negotiations

01:01:14.260 | or firing negotiations.

01:01:16.140 | - Or buying a house.

01:01:17.220 | - Right.

01:01:18.060 | - Or buying a car, anything, negotiation is key.

01:01:19.820 | - Anything, so let's put some numbers to it.

01:01:21.580 | So just focusing on that 20% difference,

01:01:23.860 | 'cause they offered her three days a week

01:01:25.080 | versus two days a week.

01:01:26.340 | If she was making $140,000 a year

01:01:29.680 | with 125 plus 15 of bonus,

01:01:32.680 | that comes out to $11,666 a month.

01:01:36.900 | And then if we were gonna calculate five months of that,

01:01:39.900 | that comes out to $58,333 total.

01:01:43.780 | And her difference between two days a week

01:01:46.260 | and three days a week is a 20% difference

01:01:49.500 | of total work days,

01:01:51.180 | meaning between two days a week and three days a week

01:01:54.160 | versus five days a week.

01:01:55.120 | So let's just take 20% of that $58,000 number.

01:01:57.980 | That's an $11,666 basically free money

01:02:02.980 | just by pushing back and saying,

01:02:05.060 | well, I'm not so sure.

01:02:06.500 | That's an extra $11,600 in her pocket

01:02:09.700 | by just pushing back and getting it down to two days

01:02:11.740 | instead of three days.

01:02:13.100 | - Yeah, and I mean, if you wanna say

01:02:15.940 | she's getting paid five days for only working two days,

01:02:19.580 | I mean, the math is even more.

01:02:20.940 | It's like she's getting more and more and more,

01:02:22.540 | and then she got the two months of salary,

01:02:24.380 | which is another 20-something thousand,

01:02:26.060 | and then she got all her vacation days paid,

01:02:28.260 | which was like a month's worth.

01:02:30.320 | Oh, one tip I need readers to realize,

01:02:34.100 | and this was a mistake I made,

01:02:35.580 | was that I took a five-day Hawaiian vacation

01:02:40.380 | during my sevens negotiation period,

01:02:42.520 | and I made a mistake.

01:02:45.180 | I shouldn't have done that.

01:02:46.100 | Instead, I should have just taken sick days.

01:02:49.340 | I think we have something like seven to nine sick days

01:02:55.100 | a year, and I never took them.

01:02:56.620 | Well, no, no, sorry.

01:02:57.460 | I took one or two days a year maybe on average

01:02:59.340 | for my 11 years at that place.

01:03:01.620 | Because I didn't take my sick days,

01:03:05.340 | I didn't get five days worth of vacation pay,

01:03:08.580 | and each day of vacation pay is equal

01:03:10.580 | to one day of your salary,

01:03:11.880 | something to be aware of.

01:03:15.340 | But that might cross the gray area,

01:03:18.020 | 'cause you're not sick if you're in Hawaii.

01:03:19.380 | - Right, right.

01:03:20.220 | One more question on this layoff,

01:03:23.500 | and then I wanna come back to your financial

01:03:24.740 | independence story, and we'll be done.

01:03:26.580 | In the corporate environment,

01:03:30.100 | these things are more standardized.

01:03:32.300 | You have a handbook that's gonna lay these things out,

01:03:36.140 | and the farther you go up the chain,

01:03:41.140 | in terms of if you're the CEO of a large Fortune 500 company

01:03:46.260 | and they're trying to fire you,

01:03:47.780 | your lawyers and their lawyers are gonna be negotiating

01:03:49.700 | over your severance package for a long time,

01:03:51.340 | 'cause it's all pre-negotiated,

01:03:52.500 | and we're talking millions of dollars

01:03:53.580 | of severance package for them to get you out of there.

01:03:55.340 | - It's disgusting and crazy.

01:03:57.020 | - It's amazing.

01:03:57.860 | And so in the corporate environment,

01:04:00.700 | things are very, very structured,

01:04:01.840 | and I think you have, my opinion,

01:04:03.820 | feel free to disagree in a moment,

01:04:05.500 | my opinion is you have a bit of an advantage there,

01:04:07.100 | because when the manager who cares about you,

01:04:09.420 | or the human resources representative who cares about you

01:04:11.980 | is negotiating with you, it's not their money,

01:04:15.100 | they're the steward of it, but it's not their money,

01:04:16.900 | so they're more likely to say,

01:04:19.380 | okay, I wanna help you out,

01:04:21.700 | we'll give you a little bit extra here,

01:04:23.140 | because it's the company's money.

01:04:23.980 | - And they'll get an upgrade for someone

01:04:24.980 | who hopefully will wanna be there.

01:04:26.460 | - Right, right.

01:04:27.540 | Now, when you're in the small business scenario,

01:04:30.980 | and that's where the majority of Americans work,

01:04:32.780 | is with small businesses, where the business owner

01:04:34.980 | is involved in the day-to-day operations of the company,

01:04:37.780 | most likely, if you're getting laid off,

01:04:39.220 | you're gonna be being laid off by the business owner.

01:04:41.740 | And is there a difference of negotiation here,

01:04:46.240 | of the strengths that you have,

01:04:48.500 | and the weaknesses that you have,

01:04:49.860 | and if so, or if not, but if so,

01:04:52.380 | how would you approach it differently

01:04:54.020 | if you're working in a small business

01:04:55.240 | with eight employees versus 800?

01:04:57.860 | - I would approach it quite similarly.

01:05:02.020 | Small business is much more intimate,

01:05:04.540 | and hopefully everybody has a better relationship

01:05:07.540 | with their managers and bosses and owners in that case.

01:05:10.660 | So, probably what you have to play for will be less,

01:05:15.940 | and it's all relative to size of that small business

01:05:19.100 | versus a large corporation.

01:05:21.060 | And small businesses aren't subject

01:05:23.060 | to the Warren Act mandatory pay,

01:05:25.300 | but they operate under similar guidelines.

01:05:27.900 | It's important to recognize that, actually,

01:05:31.320 | a small business might care about its reputation

01:05:33.380 | relatively more than a big business,

01:05:35.700 | because a bad reputation, let's say a bad Yelp rating,

01:05:39.420 | or whatever, might really hurt that small business.

01:05:42.900 | And so, what they want to do

01:05:44.940 | is treat you as a good employee

01:05:47.880 | if you treat them as good employers.

01:05:50.180 | And they want you to move on in a happy manner.

01:05:54.200 | Every single company is terrified of employee lawsuits,

01:05:58.440 | discrimination suits, whatever.

01:06:00.100 | They have it all the time.

01:06:01.740 | This costs legal fees, time, money, stress.

01:06:05.340 | These are things that small businesses do not have time for

01:06:08.980 | and probably can't afford as much as a large corporation.

01:06:12.540 | So, the way to approach a small business

01:06:16.280 | is to do the best you can

01:06:18.140 | and to have the most honest conversations you can

01:06:21.260 | about why you want to move on.

01:06:23.100 | And so, the example I gave with my friend

01:06:25.940 | who negotiated two days of work a week for five months,

01:06:29.760 | and then the two months of Warnack,

01:06:31.900 | she didn't get a severance.

01:06:33.260 | She worked at somewhat of a small business,

01:06:36.620 | it's a private business, but it's not that small,

01:06:38.340 | but it's small, blur, it's in those big corporations.

01:06:41.820 | And they work something out like that,

01:06:43.420 | where, okay, transition period, we need someone,

01:06:45.860 | we need your help, we've got clients to deal with,

01:06:48.020 | we don't want to hurt the business,

01:06:49.820 | we'll still pay you this, but here, you can have less time.

01:06:51.940 | So, small businesses actually can provide you

01:06:54.340 | even more flexibility, right?

01:06:56.580 | So, it's all about time and money.

01:06:58.420 | They might not be able to give you as much money,

01:07:02.120 | but they might be able to give you more time.

01:07:05.280 | And I actually value time much more,

01:07:07.720 | much, much greater the older I get.

01:07:09.880 | - Yeah, that's a fundamental basis of negotiation

01:07:11.840 | is you always want to negotiate separately

01:07:15.560 | different terms of the contract.

01:07:16.860 | And what most beginning negotiators,

01:07:19.080 | one mistake they often make is by spending all the time

01:07:22.400 | focusing on money, but money and terms

01:07:25.640 | are two very different things.

01:07:26.880 | And many times in various negotiations,

01:07:29.820 | if you can negotiate more favorable terms,

01:07:32.820 | that could be much more valuable to you than money,

01:07:36.160 | than the specific dollar figure.

01:07:37.520 | And here, when you talk about time,

01:07:39.300 | we're just talking about an additional term

01:07:40.880 | of the agreement that's not just the dollar figure.

01:07:43.440 | Go ahead.

01:07:47.120 | - I was just saying, so, yeah, that's exactly right.

01:07:49.920 | And the time that you negotiate or the terms,

01:07:53.180 | you need to know what's important to you.

01:07:55.600 | And if you need time to go see the world, awesome.

01:07:58.200 | If you need time to go find another job

01:08:00.060 | or spend time with your family, great.

01:08:01.920 | Figure out what that term is most valuable to you.

01:08:04.420 | I'm in the world where it's very trendy and popular

01:08:09.680 | to quit your job, start an online business,

01:08:12.400 | travel the world, all that stuff.

01:08:14.040 | But what people don't read about and hear about

01:08:18.980 | are the people who do all that stuff on a whim

01:08:21.720 | and who come back and kind of regret

01:08:24.160 | their financial decisions and their spontaneity.

01:08:27.760 | There's no articles really about that.

01:08:31.120 | But I've seen that many, many times.

01:08:33.520 | And hey, the good thing is that a lot of people

01:08:38.440 | kind of just end up landing back on their feet.

01:08:40.440 | They might have a huge hole in their financial well-being

01:08:44.600 | because of their spontaneity.

01:08:47.280 | But I really want people to think about

01:08:50.000 | never quitting, getting laid.

01:08:52.080 | Never quitting, getting laid.

01:08:53.760 | And getting to some agreeable terms

01:08:56.760 | that can be a positive for both sides.

01:09:00.080 | - So that brings us as an ideal transition

01:09:02.060 | to the last thing I wanted just to mention

01:09:04.040 | to you quickly here, which is about your personal path.

01:09:08.040 | You mentioned that since about 2012,

01:09:11.080 | you've considered yourself to be,

01:09:12.960 | excuse me, yeah, about 11 or 12,

01:09:15.080 | you considered yourself to be

01:09:16.680 | basically financially independent.

01:09:18.280 | So that's going on five plus years now

01:09:21.140 | of financial independence and you've been

01:09:23.000 | building Financial Samurai and you've had

01:09:24.680 | various other consulting and employment opportunities.

01:09:27.240 | I wanna ask you, many of my listeners are working towards

01:09:32.240 | a lifestyle like you've built and achieved.

01:09:36.800 | What is the best thing that you are so grateful for

01:09:40.520 | about your current lifestyle?

01:09:42.040 | - The best thing, the freedom to choose.

01:09:48.000 | The freedom to choose is all someone ever wants.

01:09:52.560 | Whether it is to choose your own mistakes

01:09:55.640 | or to choose your own victories.

01:09:58.960 | It is just unbelievable to be able to make choices

01:10:03.960 | based on your own core beliefs.

01:10:07.140 | And it's also a thing where you don't have

01:10:12.280 | to hang out with people or do things

01:10:15.020 | because you're beholden to anybody because of money.

01:10:18.840 | It actually feels terrible now that I look back upon it

01:10:22.840 | that you bite your tongue, don't speak up

01:10:25.240 | for things you believe in because you're afraid

01:10:27.840 | that if you piss off someone who decides

01:10:30.740 | your career, paycheck, livelihood, that they'll screw you.

01:10:35.740 | So achieve financial independence first for yourself

01:10:40.960 | so you can have the freedom to choose.

01:10:43.520 | And then once you have the freedom to choose

01:10:45.200 | and you have this money coming in

01:10:48.480 | that will help you live a more free life,

01:10:50.840 | then you can use that time and money to help other people.

01:10:54.080 | Whether it's through writing a blog for free

01:10:57.520 | to just teach people concepts and pitfalls

01:11:00.960 | that you've gone through so they never ask

01:11:03.560 | if I knew then what I know now.

01:11:05.760 | And I think about it from a family perspective.

01:11:07.640 | If you're financially independent,

01:11:08.880 | you can spend so much time with your children,

01:11:11.200 | your spouse, things such as stress at home

01:11:15.600 | because one parent is always stressed at work

01:11:18.300 | in a way and one parent is staying home

01:11:20.560 | to take care of the kids.

01:11:22.100 | That stuff kind of really dissipates

01:11:24.520 | when you have that financial freedom.

01:11:26.520 | So one of the things I ask my readers is,

01:11:30.480 | is not wanting to be rich, is not wanting

01:11:33.960 | to be financially free greedy?

01:11:36.740 | And that's something that people have discussed

01:11:39.480 | where it's like hey, the sooner you get

01:11:41.720 | to financial independence, the sooner you can help

01:11:44.000 | other people and that's kind of the way

01:11:46.480 | that I've been thinking about things

01:11:47.800 | for the past four or five years.

01:11:49.400 | - It's funny you talk about freedom.

01:11:53.400 | Every time I get a nasty review on my podcast,

01:11:57.640 | I just think to myself, I appreciate,

01:12:00.800 | I think to the reviewer, I appreciate the comments,

01:12:03.120 | usually 'cause I say all kinds of things

01:12:04.440 | that make people angry with me.

01:12:06.360 | And I always think, okay, I appreciate the comment,

01:12:09.160 | but you have no idea what I gave up

01:12:11.360 | in order to achieve the independence

01:12:13.360 | to be able to speak my mind no matter what it is

01:12:16.640 | without worrying about somebody else's brand,

01:12:19.080 | without worrying about my job, et cetera.

01:12:21.120 | If you think that I'm gonna go back

01:12:25.400 | to having to think about, well, how is this

01:12:27.200 | gonna position my firm, blah, blah, blah,

01:12:29.480 | and do I need to protect this person's reputation, et cetera,

01:12:33.360 | if you think I'm gonna go back to that

01:12:34.720 | just to meet your idea of what I should or shouldn't say,

01:12:37.080 | no chance.

01:12:38.480 | The freedom to live the way that you want to live

01:12:42.360 | is incredibly, incredibly valuable.

01:12:46.600 | - Sam, what is the thing that when you were working,

01:12:49.160 | hustling 12-hour days, saving like crazy,

01:12:53.360 | that you just thought, man, if someday,

01:12:55.400 | if someday I can quit, it's gonna be just so awesome

01:12:59.040 | because I can do X.

01:13:01.840 | And then you achieved it after a while

01:13:04.760 | and you thought, you know, I was really excited about this,

01:13:07.200 | but frankly, it's not quite as good as I thought.

01:13:10.880 | What were the things that you thought were gonna be great

01:13:12.960 | that in hindsight now haven't turned out

01:13:15.600 | to be quite so great as you thought?

01:13:17.400 | - I think the biggest downside to early retirement,

01:13:24.320 | financial independence, whatever, is boredom.

01:13:26.720 | Because especially the younger you are,

01:13:31.120 | I would always kind of wake up by 6 a.m. every morning

01:13:35.240 | because the markets open at 6.30 a.m.

01:13:37.680 | And I was trained to do that biologically

01:13:40.400 | for the past 11 years.

01:13:41.920 | So I'd wake up at 6 a.m., brush my teeth, drink some water,

01:13:45.720 | and then maybe do some writing and work,

01:13:49.280 | and I'd be done by like 9 a.m. almost always, maybe 10 a.m.

01:13:54.280 | And then I'd wanna like go out and play.

01:13:57.400 | So I would call my friends, and there were no friends

01:14:01.600 | who could go out and play at 10 a.m. or 11 a.m.,

01:14:04.000 | so I had to figure out new people to hang out with.

01:14:06.240 | I was like a tennis bum in the park

01:14:08.000 | where I would just hang out with people

01:14:10.880 | who were traditionally retired

01:14:12.680 | or outside my demographic or whatever.

01:14:15.120 | So it can get lonely.

01:14:16.280 | It can get boring when you have all this free time.

01:14:20.840 | So that is something that I was surprised about

01:14:25.840 | because I'm kind of masochistic in the way I think.

01:14:31.480 | Like I believe work makes vacations a little bit better.

01:14:37.840 | And after one and a half years of just doing my own thing,

01:14:41.020 | I decided to consult for one of these FinTech startups

01:14:46.800 | here in San Francisco, there are many,

01:14:49.180 | and to work just 20 to 25 hours a week.

01:14:50.940 | And I found a lot of great things going on.

01:14:54.960 | You know, I was back in the environment.

01:14:57.240 | I shot the shit with people.

01:14:59.440 | You know, I was getting paid.

01:15:00.800 | I was learning new things.

01:15:02.000 | It was really, really fun.

01:15:03.420 | So I think a lot of people have to guard against,

01:15:07.500 | I guess, boredom, but I think everything

01:15:09.720 | is pretty rational and logical.

01:15:11.080 | If you're bored, you're gonna find something to do.

01:15:13.260 | And if you're unhappy with work,

01:15:15.160 | you're gonna find some way to get out.

01:15:18.080 | So that was the biggest surprise.

01:15:20.520 | But the upsides are way better, way, way, way, way better.

01:15:24.680 | I mean, I'm sitting here in Lake Tahoe right now

01:15:27.440 | talking to you and I'm gonna go jump in the pool

01:15:29.280 | and go in the hot tub.

01:15:30.800 | I love that, I mean, that's awesome.

01:15:32.340 | And I never take that for granted.

01:15:34.720 | So it's worth it.

01:15:36.440 | It's worth the struggle.

01:15:37.640 | It's worth the sacrifice.

01:15:38.960 | It's worth not buying a stupid car.

01:15:41.360 | It's worth not living in a fancy house

01:15:43.040 | so that you have, you know, sacrifice a little bit

01:15:46.960 | and live like a king or queen forever.

01:15:49.440 | Why not?

01:15:50.280 | - Sam, thanks for coming on.

01:15:52.240 | Tell us about your website where listeners can buy the book

01:15:55.960 | that we've been discussing, How to Engineer a Layoff,

01:15:58.640 | and any follow-up calls to action

01:16:00.280 | that you'd like to make for my audience.

01:16:03.080 | - So I write at financialsamurai.com.

01:16:07.360 | And if you wanna buy the book,

01:16:08.720 | it's in my menu bar at the top right.

01:16:10.560 | It's called Freedom Book.

01:16:12.400 | And you can read about it.

01:16:13.860 | And my site is really about

01:16:15.400 | achieving financial independence sooner rather than later.

01:16:20.360 | You can see a lot of the top posts

01:16:22.040 | on the right-hand side column if you scroll down.

01:16:24.880 | And it really talks about everything from your career

01:16:30.480 | to real estate investing, to stock market investing,

01:16:33.080 | to asset allocation, to economic terms,

01:16:37.520 | to early retirement.

01:16:39.080 | And it also tries to motivate and challenge you

01:16:42.320 | to get better financially so that ultimately

01:16:46.060 | you have the money to be free and also to be happy.

01:16:50.380 | It's just about happiness at the end of the day.

01:16:52.860 | And so if you wanna be happy

01:16:54.340 | and if you wanna achieve financial freedom sooner,

01:16:56.320 | then check out financialsamurai.com.

01:16:58.720 | - And I'll finish just with another endorsement of it

01:17:01.560 | that I've probably been reading your site.

01:17:04.280 | I don't read every day,

01:17:05.120 | but I've read your site off and on

01:17:06.900 | since a year or two after you started probably.

01:17:09.120 | And I've always appreciated

01:17:11.240 | the experience that you bring to it.

01:17:12.880 | So many of my listeners appreciate

01:17:14.400 | Radical Personal Finance because of my experience

01:17:17.160 | in formal financial planning.

01:17:18.840 | It brings a different tone and flavor to the content

01:17:21.680 | than a podcast host who doesn't have background

01:17:25.840 | in formal planning.

01:17:27.160 | And I'll say the same thing for you

01:17:28.880 | is that your experience in financial planning

01:17:31.880 | and investment management, excuse me,

01:17:34.040 | brings a different level of analysis

01:17:35.840 | and different level of analysis and content

01:17:39.560 | to your writing than many other financial blogs.

01:17:42.280 | And so if my listeners appreciate the ideas

01:17:45.040 | that I bring from financial planning,

01:17:46.720 | you'll appreciate the ideas that Sam brings

01:17:48.320 | to his writing from financial services.

01:17:51.360 | So Sam, thanks so much for coming on.

01:17:52.560 | I really appreciate it.

01:17:53.760 | - All right, thanks Josh.

01:17:54.640 | And thanks guys.

01:17:55.480 | I'll see you guys on Financial Samurai.

01:17:57.440 | - Hey Radicals, it's me again.

01:18:00.220 | Just real quick, after the interview with Sam

01:18:02.420 | because his book is an e-book,

01:18:04.080 | I went and asked him if he offered

01:18:05.660 | an affiliate program for his book.

01:18:08.120 | An affiliate program is where you sign up

01:18:10.880 | through some kind of system and you become an affiliate

01:18:13.640 | where you get to earn a commission

01:18:14.580 | when you promote other people's products.

01:18:16.120 | And he does have that program.

01:18:17.320 | So I went ahead and signed up for it.

01:18:18.740 | If you're interested in purchasing Sam's book,

01:18:20.960 | How to Engineer Your Layoff, Negotiate a Severance

01:18:23.200 | and Be Free, I would appreciate it

01:18:25.440 | if you consider using the affiliate link

01:18:26.760 | that I've established.

01:18:27.720 | The link that I'll put in the show notes for today's show,

01:18:30.360 | which pull up on your phone or on the website

01:18:32.400 | at radicalpersonalfinance.com.

01:18:33.960 | That link will take you through my affiliate link.

01:18:36.400 | And if you buy the book through that link,

01:18:38.200 | then I'll receive a commission for that.

01:18:39.960 | Thank you very much.

01:18:41.000 | If you're just thinking of this later,

01:18:45.200 | just remember and use the link

01:18:46.600 | radicalpersonalfinance.com/layoff.

01:18:49.760 | radicalpersonalfinance.com/layoff.

01:18:53.040 | and that link will pass you through my affiliate link.

01:18:55.320 | Thank you so much.

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