The Importance of Buffers (partner has lost her job)

Discussion in 'Money Management & Banking' started by Propagate, 27th May, 2019.

Join Australia's most dynamic and respected property investment community
  1. Propagate

    Propagate Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,146
    Location:
    Melbourne
    It was only a short 12-18 months ago when we were sat watching the value of our small portfolio seemingly rocket in value month on month with no end in sight.

    My new business was (and still is, thankfully) doing well.

    Our PPOR was almost paid off, there was money in the savings pot and we were closely watching our finances, counting down the months & years to the point where we'd be overall mortgage free.

    Fast Forward a little to around April last year, the time was right to move up to our dream property and start looking at acreage. Decision was made, so it was time for a consolidation. We had to sell a UK property first followed by two in Western Sydney, we wanted to do that before even looking at listing our place and looking for our dream spot.

    The UK one was the worry, where we're from house just do not sell. We got VERY lucky and sold really quickly, then we lucked out again when a friend of a friend wanted to buy our PPOR at a crazy good price, the downside being we had to move fast and find our acreage quick smart so we upped our acreage budget.

    A very stressful few months followed as our PPOR sale couldn't go unconditional in time for us to do the same on the new purchase, luckily though, the first of the Sydney properties went to contract just in time and though some magic brokering by Peter T on here we managed to save the new purchase while we waited for the old PPOR to go unconditional and the second Sydney property to sell.

    As this all dragged on a few months, plus having hoarder tenants in the second property, we were late to the party getting the second Western Sydney property listed and caught the start of the down turn, so much so that we have just taken it off the market after having it's one and only offer (of about 20+% under peak value) fall over at the last minute on B&P clause. It was on the market from November 2018 to last week, so a good 6 months of slowly dropping the asking price every few weeks.

    We literally just finished a refinance on the new PPOR away from the expensive, (but necessary to get the deal done at the time), original financing that got us into the new place until the rest of the dominoes fell into place.

    We satisfied ourselves that the other Sydney place costs nothing to hold, so we may as well ride it out an hope the market has hit bottom.

    It was back to the spreadsheets, business still going well, bit less money in the bank after the moves, much bigger mortgage but all in all nothing too scary and figured the worst of it would be knocked over in the next 5 years or so.

    Planning begins on renovating the new house....

    ...then boom, last week with zero warning Emma's company has a "restructure" and they restructure her straight out of a job! 11 years of loyalty, hard graft and amazing results and her two new Directors decide they can save face with the CEO and meet their budget for next year by cutting Emma's wage and carving up her role to all the people under her instead (they've truly got no idea).

    So, as it stands now, we can't afford our outgoings based solely on my income.

    How quickly things can turn, one minute you're looking at the potential to retire in 3-5 years then next you've talked yourself into the dream and it suddenly starts to turn into a nightmare.

    Don't get me wrong, we'll be OK (probably) and there's people doing it very tough, but it has highlighted the importance of a good buffer and shows how quickly things can turn.

    We have enough savings to prop the shortfall and tread water for a year or so before we have to panic. It would be shame to have to go through the life savings though just on interest payments! If there's no sign of a new job in the next 6 months we'll be off loading the whole portfolio to mitigate further damage and hold on to as much savings as we can, but I'm hopeful it won't come to that.

    What it has highlighted to me though, is that we could have pulled this off without the savings back up, if we'd have followed our "dream", rationalized by the fact we pretty much thought Emma had a job for life, we could literally have been bankrupt within months, we'd have totally drowned with interest payments and be facing losing everything we'd worked our whole lives for.

    It really highlights just how quick things can change, it's a long road up but it's a bloody short dive down!

    In many ways we have been super lucky, if this had happened mid-way through the sales and purchases when we had so many balls in the air we'd have likely lost the new place and had to go through with the sale of the old.

    The other bright side is the company had turned noxious when the latest CEO took over, Emma's working life has been a misery the last few years so I am so glad she's finally out of there, regardless of the current financial hit. We'll look back in a few months and realize it was a blessing, no doubt.

    So, emergency finances have been implemented and the hunt is on for a new role (hit me up if anyone needs a gun high level manager / change manager, she's awesome), and there's extra incentive for me to keep growing my business.

    Sorry for the rant, I think I just needed to write some of this down, I've been trying to stay super positive for Emma but in turn don't really have anyone I can talk about this sort of thing to.

    TLDR:- Get your buffers up, when the brown and smelly hits the fast and spinny things can go very bad, very quick.
     
    marty998, jimmy, Mws and 23 others like this.
  2. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    4,092
    Location:
    Melbourne
    No need to apologise IMHO!

    Hopefully the other half's payout will keep you going 5months~ish?

    The Y-man
     
    EN710, Propagate and KayTea like this.
  3. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    4,112
    Location:
    The beautiful Hills District, Sydney Australia
    This is where not holding properties that eat up your cash flow is so important . Its the only way to build up buffers for unexpected events such as injury, illness, incapacity or redundancies.

    You'll never be in trouble if you have more coming in than going out .
     
  4. lightbulbmoment

    lightbulbmoment Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    914
    Location:
    nsw
    Welcome to the casualisation of the Australian workforce where your only put on for the duration of a specific contract and your boss is a young lady in a recruitment company office who has no idea about your job.
     
    Gladys and 2FAST4U like this.
  5. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,832
    Location:
    Qld
    As the old saying goes, “hope for the best but plan for the worst”.

    However, I have a strong suspicion you will look back in a year or two and think Emma’s retrenchment was all for the best. There is every chance she will go on to something better.

    Hubby was retrenched twice in his career, once when our kids were little and again when they were teenagers. Thankfully we had good savings, but the first tine I was a stay-at-home mum and his was our only income, the second time I had a small part time job.

    Both times he went on to bigger and better jobs.
    Marg
     
    conork, EN710, 2FAST4U and 7 others like this.
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    4,583
    Location:
    Melbourne, Nationwide
    @Propagate I agree with Marg, you'll look back on this in a few years and be grateful for the opportunities it manifested. Think back to what prompted you to start your business...

    It is funny how everything works out. The sales, the new house, getting the loans set up they way they need to in a constantly shifting environment. You guys are in a solid position, you'll come through this well.
     
    luckyone, MWI, EN710 and 2 others like this.
  7. KateSydney

    KateSydney Well-Known Member

    Joined:
    2nd Jan, 2019
    Posts:
    103
    Location:
    Seven Hills
    Thanks for sharing. Puts a human face on all the otherwise textbook recommendations like "have a buffer". Really useful to all.

    Bet she gets a better job within 3 months. It'll probably come by word of mouth.
     
    Marg4000, Terry_w and Propagate like this.
  8. Propagate

    Propagate Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,146
    Location:
    Melbourne
    Thanks everyone. I'm sure she'll find something, and as people have said, we'll look back on this and be grateful (I cant tell you what a poisonous environment it's been for her the last few years, you could wrote a book on it). Lets just say her old boss was amazing, as was the old CEO who left to join the board of the RBA and was since given an Order of Australia. The two of them essentially built the organisation form nothing to become the peak body that it was up to when the CEO left about 5 years ago.

    Em was in line to me made a Director, but instead the new CEO made Emma's boss redundant (the one that built the organisation), out of the blue. She and another took legal advise and was told they had a very strong case, but the organisation has deeper pockets, your choice. Since then, all the excellent people have left as the place is a shambles, the high level spots were filled with cronies. It's now a text book example of an Old Boy Network. None of the top class females have been able to advance, others have simply given up and left. The organization has ran a loss into the millions every year since the new CEO took over, yet the board have just renewed his contract. Unreal.

    Last year, rather than make Emma a Director they reshuffled and put her under TWO other Directors, which meant she simply couldn't get anything passed off.

    They've just spent hundreds of thousands on an outside analyst to try and come up with a restructure to stem the year-on-year losses of cash, most of the recommendations they have come up with were all in the business plans Emma has put forward for the last 5 years and been ignored! She really has had a shocking time of it lately. The main analyst got friendly with another of the "leadership" team and essentially shouldered her out, would shut her down in meetings and to all intents bullied her. With no back up from her supposed bosses she's just been at her whits end. These analysts ran over budget and 6 months over time in trying to deliver a project that Emma got fed up, so she delivered in herself, in 2 months and on top of her normal duties at zero cost to the Organization then flew all around the country to delver the training on it after producing all the training materials herself too.

    Turns out, the last recommendation the analysts made to the CEO and Leadership team to save money moving forward? Yep, cut Emma's role. Talk about vindictive, but just highlights the kind of place it is that they've taken the advice of an over budget, over run, under performing outside consultants advice over a senior staff member that's given 11 years of hard work and loyalty with proven results.

    Her departments all love her, she runs some fantastic teams of people who are all gobsmacked at what happened last week.

    We are shocked, but not at all surprised.

    I'm over the moon to be honest. There's been a few times in the last year where it's been so bad she's been in tears at the thought of going back into work the next day and we've sat down and I've essentially begged her to write out her notice and hand it in, but she's always sucked it up and battled on.

    I'm glad they have made the decision for her, as much as it feels like a slap in the face to her, (which I have said it absolutely isn't, the people there that matter know what she is and has done, the people there that have made this decision have no idea), so sure financially it sucks just now but emotionally she (and us), will be heaps better off moving forward.

    I've been retrenched 3 times in my career. First time in 1999 when the Offshore Yards closed on the Tees, we hadn't been together that long and I got a very small payout. Second time was 2 years later, we'd literally just bought our first house and things were super tight. The company went into administration, we were paid monthly, the administrators walked in out of the blue and marched us out on payday with all our holiday pay and wages still owing. The last time was 2010 here in Australia exactly the same thing, administration, marched me out with unpaid wages holiday and super.

    Each time we've come back stronger and I cant wait to see what the future holds this time around!

    Thanks for the words everyone, it really helps to talk about this sort of stuff, even virtually.
     
    luckyone, EN710, Joynz and 5 others like this.
  9. Gockie

    Gockie Problem solver Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    9,985
    Location:
    Sydney
    If she was in Sydney, I might like to see if she would fit in in my workplace.... we have awesome people, and love to work with people who get things done. The other things I want in my colleagues are friendliness, and ability to work well with people, tact, common sense and self drive.

    Throw in my organisation does good things for humanity in a few words.... (mental health counselling)... it’s a good organisation to work for.
     
    MWI and Propagate like this.
  10. Propagate

    Propagate Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,146
    Location:
    Melbourne
    These guys are idiots.

    She asked them last week for a list of people to hand her various projects and duties over to and they told her there wasn't anyone, no one to hand anything over to. I guess as they are so arrogant they genuine think that she didn't actually do anything? I guess that they think as they have made her role redundant there's no longer any work to do in that role?

    So, she has a meeting lined up with the pair of them tomorrow and has spent the end of last week right through to now listing out all of the things she does and runs that need to be handed off so she can start to hand it over to them tomorrow and hopefully finish it by the end of the week (it's along list!), along with lists of all the the things that are done at various times throughout the coming year (which again, is a ton of work that apparently no one now needs to do).

    She then requested to be finished this coming Friday in lieu of notice, seeing as there's apparently no role and apparently no one to hand over to.

    They were not at all happy with this request, they won't allow her Garden Leave, they want her to work her full notice right up to end of June.

    So which is it boys? Is there a job there to do or isn't there?

    HR is not at all happy with them and is sitting in on these meeting taking notes.

    Wish I could join in....

    Poor Em just wants to be done with it and out so she can concentrate on moving forward, but she's so paranoid about doing anything wrong by them in case they decide to give her a bad reference. That sucks, 11 years and this is how you are made to feel for it.
     
  11. inertia

    inertia Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    697
    Location:
    Newcastle, NSW
    that is just stupid. You cant force someone to do work they dont want to do, nor can you restrict their ability to earn a wage (hence why most non-compete clauses are useless). Emma sounds incredibly diligent, and that she has the best intentions for the company. It is a shame the bosses dont!

    Cheers,
    Inertia.
     
    Propagate likes this.
  12. Propagate

    Propagate Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,146
    Location:
    Melbourne
    Indeed @inertia and look, in my line of work I can understand a request to work notice. Being from a blue collar background and seeing my Dad in and out of work his whole life, notice to me has always meant the company is running out of work, there's probably 'x' weeks of work left then nothing for you to do so we are giving you fair warning than you're out of work by such and such date, the expectation being you work through your notice and complete the work that's left (unless you find alternative employment during, then you'd be let go to take up the new position).

    What annoys me in this situation is they've basically said we don't think you have a role, yet we're holding you to your full notice anyway, just because we can.

    EDIT to add: it'll be interesting to see what comes out of tomorrows meeting.
     
    inertia likes this.
  13. Propagate

    Propagate Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,146
    Location:
    Melbourne
    ....oh, forgot about this gem. When they called her in and gave her the news last week they actually had the cheek to ask her if she could think of a way to make her role "fee charging" they'd look at ways to keep her on.

    They are so detached from the way the organization runs they completely missed the point that two of the departments she is directly responsible for (Membership Services and Publications), account for something like 75% of the entire Organizations annual income.

    Members are leaving in droves (4000+ when the current CEO took over to just over 1000 now). Her departments are consistently rated as one of, if not main reason members stay yet the "Leadership Team" has spent the last several years trying to make these services chargeable as extras.

    They've no idea....without a membership base there is no organization.
     
    Last edited: 28th May, 2019
  14. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    4,092
    Location:
    Melbourne
    This may actually be a good deal!
    Have a serious think about this.
    A $ per hour contract can be very lucrative, and while not good for serviceability and security of tenure, it can give a lot of flexibility without the political overheads.

    I know of organisations who shed people in the name of headcount, but end up paying more for the same people on a contract basis (to the benefit of the contractors).

    The Y-man
     
    MWI, inertia, Propagate and 2 others like this.
  15. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    4,092
    Location:
    Melbourne
    If you ever go back to the workforce, please let me know which company it is so that I make sure I don't have any shares in it! :eek::D

    The Y-man
     
    Propagate and 2FAST4U like this.
  16. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    4,092
    Location:
    Melbourne
    If they have a decent coffee machine and internet connection.... well there's worse ways to be scouring Seek and popping out for lunchtime interviews.

    The Y-man
     
    inertia, Propagate and 2FAST4U like this.
  17. Islay

    Islay Well-Known Member

    Joined:
    28th Jul, 2018
    Posts:
    256
    Location:
    Newcastle
    This was my first thought too. We have done exactly this in the past
     
  18. 2FAST4U

    2FAST4U Well-Known Member

    Joined:
    3rd Jul, 2015
    Posts:
    1,353
    Location:
    Adelaide
    Sorry to hear that. I'm sure with your partners knowledge and experience she will find a better job that fulfills her potential. It's great that you had a buffer. That company sounds toxic and will probably go into administration by the sounds of it.
     
    Propagate likes this.
  19. Propagate

    Propagate Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,146
    Location:
    Melbourne
    @2FAST4U they also have a buffer, so won't be going anywhere for a while. They own a LOT of property which they are selling down to fund the organisations shortfall, I really don't understand the board. What board renews a CEO's contract after 5 years of year-on-year losses (immediately following many years if gains and amazing reputation?)

    @Islay @The Y-man they could offer her $1,000 an hour to stay and she wouldn't take it (and I'd encourage her not to). It's horrendous working for a place that don't respect you on that level. I've been there myself a few times too would you believe, in my early 20's I was severely bullied at work. Unfortunately I was young and clueless and had no idea how to deal with it other than get out at the earliest opportunity. Here in Aus, in my first Australian job I was asked to run a major, MAJOR project which we had no hope in hell of being able to deliver. I told them I wouldn't do it as we were essentially lying to the client about our capabilities and there's no way we could get the required talent we'd need to pull it off. I told them if they wanted to push for the project it would be without me. They said OK, we'll leave you out of it. Needless to say, they went for it, called me in and said they were looking good to get it and if they did I'd be sent into the city to oversea the startup. I walked back to my desk, wrote my notice out and handed it straight in. I had no other choice, they had fair warning and knew my stance yet completely ignored my input so what was left to do? Actually, looking back, they made me work my full notice too! My boss went form being my "best mate" to literally not saying a word to me for my whole notice other than he was "extremely disappointed", he didn't even look up from his desk when I poked my head in to say good bye as left on my last day. On my last day the Directors came down from the city ad took me out for lunch, handed me an envelope and asked my to stay for DOUBLE my salary (they'd lost the project anyway during my notice period). I politely declined and went on my way. EDIT - wasn't double now I think about it, it was a 50% pay rise, still, pretty significant). They no longer have an office these days.

    Looking back, if I'd took the easy option, sold my soul and took the money it wouldn't have lead to today, growing and running my own business (same field), with great staff that we look after well and an having an awesome reputation in our industry.

    I'm looking forward to the day Emma can also look back ion the current situation and realize it was absolutely for the best. She's having trouble seeing passed it at the moment, (another e-mail form her bosses late late night re-iterating a fully worked out notice period).

    Cheers.
     
  20. skater

    skater Capitalist -- www.skatepro.com.au Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    2,943
    Location:
    Sydney
    You'll get through this. Strong people always do. We went through a shocker of a time back in 2005, and could easily have lost the lot, but we managed to pull through. Here's our setback.


    The Importance of Having a Buffer
     
    Jaik2012 and Propagate like this.