We complain about the AC being too cold, or the coffee machine spewing drain-water. The lifts are slow. The benefits shrink. The increments thin. We groan about Monday mornings. But take that job away and there is sudden sound of silence. The routine is gone. The reason for getting up in the morning is alarmingly not there. And the monthly ding on the phone that announces the salary credit is eerily missing. Unless there is a resolution, over 16,000 jobs are at stake as Jet Airways suspended operations on 17 April 2019. Thousands of families of the Indian mass affluent will now struggle with rent, EMIs, school fees, groceries and premium payments. The writing has been on the wall for months of impending doom, and many families were already dipping into their savings as salaries have been delayed for a few months. How to handle this crisis? Do you have a sudden job loss protocol in place?
The sudden job loss protocol is like this. Make a basic needs budget to see what you need every month to live. Rent, home loan payments, school fees, utilities (yes, broadband is a utility now, but maybe cut out the Netflix or Tata Sky?) food, life and medical insurance premiums must be funded. Cut out the discretionary spends harshly. Next, find out what you have to fund these expenses for at least six months. If you have an emergency fund, this is the time to dip into it. Ideally, you should have had at least six months of spends in your emergency fund. Don’t have that money? It is time to audit all your resources. Use the money in savings bank accounts first. Then look at fixed deposits and recurring deposits. Take that half percentage point hit on the return and break the deposit. Use gold funds if you have them or sell the gold bars you had bought. Selling jewellery is usually a bad idea, unless it is totally the last resort. Next tap into your mutual funds—use debt funds first. Then use equity funds. If you have shares, sell those. And no, it does not matter if you are selling at a loss. This is about survival. That’s why you have these assets—to help you when you need the money. Don’t fall into the borrowing trap. Rein in credit card payments very tightly.
What if the home loan EMI is too big to sustain? If you live in the home that you are paying the EMI on, then it is worth using your Provident Fund money to pay off the loan. A roof over your head and some basic necessities is what it takes to recover and re-enter the work force. Start the process to withdraw this corpus. But if you have an EMI for a home that you bought for investment—it could be time to sell. Selling a house will take at least a few months. Begin the process.
Next, stop all investments, whether it is a recurring deposit or a systematic investment plan (SIP). The two things you should try and maintain are the life and medical covers. Maintain the pure life term cover that insures your life and is not either a unit-linked insurance plan (Ulip) or a traditional plan. If you have such products, speak with the insurance firm for a premium holiday. Some firms may work with you for such a holiday. Your medical cover is a key financial product now. Find the money to pay that premium. If you don’t have this product, go and buy it fast. Refer to Mint Secure Now Mediclaim Ratings if you want help with this crucial decision.
This is a good time to audit your life and see what new skills you need for the job market. Use the time out of work to renew your skill set. There are lessons for everybody in a job from these instances of a business going out of business. As robotics and AI take over more and more jobs, it is good for everybody to be prepared. The time for not reinventing yourself every few years is over. Having a plan B or C is a good idea for generating income, even if you feel totally secure in your job. Be prepared.
Monika Halan is consulting editor at Mint and writes on household finance, policy and regulation