Post Restructuring Cash Flow Review - Food Expenses Revisited (School Lunch)

I had done a review of our food expenses for the month, and I had neglected to include one category.  School lunches.  We were a very busy household and one thing we did was buy hot lunch for both of our kids.  This saved time and the kids seemed to actually eat their lunch whereas whenever I made lunch for them, most of the food came back.

Here's an updated table of our food expenses for the month before the restructuring and the month after.

	Before	After
Groceries	$580	$340
Eating out	$350	$100
School Lunches	$184	$184
Total	$1114	$624

Wow - we were spending a lot on food each month.  That's all I could think - Wow. 

School Lunches

As I reviewed our expenses, I thought that I should try to make lunch for my kids rather than have them eat hot lunch at school.   I looked at how much I could potentially save by making lunch.  A lunch consisting of a sandwich with peanut butter and jelly (or one made with turkey and/or salami) and multi-grain bread, a fruit strip, juice and another snack or fruit would cost around $2-$3/lunch.   Lunch at the schools generally cost between $4-5/lunch.

Was it worth it to make lunch?

I would be saving between $1-2/day.  But, what were the costs?  Time.  Waste.

We were still busy in the morning and it takes time to make lunch.  I was taking time away from other things that I needed to do.  Get kids breakfast, get them dressed, brush their teeth, organize their materials for the day, and then get ready myself.

Also, during the Summer, I made lunch for the kids every day, and they didn't eat much of the food that I prepared.  I worried about whether they were getting enough food and energy for the day and I worried that we were just wasting food.

Ultimately, we decided that it would be easier and better to just let the kids continue to get hot lunch at school.  It saved time and they enjoyed it.   The school lunches weren't like the ones we had when we were kids.  They were actually healthy and there was variety.    We gave certain parameters for lunch.  No candy.  Milk at least 2 or 3 times per week.  Fruit was a must.  They should only get what they thought they could eat. 

Also, to balance out the cost, maybe I would make lunch once or twice a week.  

Post Restructuring Cash Flow Review - Expenses (Food)

Now that I did a review of the expected income, I now had to do a review of the expenses, fixed and variable so that I can see if there is a gap.

I had listed some fixed and variable expenses. 

Fixed:

• Mortgage 
•  Daycare/Preschool
• Gas/Utilities
• Taxes (property and income)
• Food
• Insurance

Variable:

• Credit Card bills for daily and other expenses such as clothes, dining out, services (TV), and entertainment
• Savings - retirement, college and other

There were some expenses that were not going to go away or change, such as the mortgage, but I knew that even if some expenses were essential, that I could possibly make some changes to lessen the expense.

Target: Food Expenses

One area that I targeted was food.  While food was an essential expense, it was an area where I felt I could control the extent of the expense.   I did a comparison of food expenses before I found out that I was affected to my run rate afterwards.  The results were quite eye-opening. 

 

	Before	After
Groceries	$580	$340
Eating out	$350	$100

I didn't realize that I was spending close to $1,000 per month on food!  The groceries came from a variety of stores depending on what we needed.  I shopped at Whole Foods for some basic organic items like fruits, vegetables and meat, Trader Joe's for some specialty items that we enjoy and can't find anywhere else, Safeway for some basic things, 99 Ranch for the ethnic items and the local farmer's market.  Since I worked full-time, I was so tired at the end of the day that it was hard to think about cooking, so I think we ate out instead.   While I tried to plan a menu each week, we ended up not eating a lot of the food that I bought and we wasted so much food.  I felt so guilty about this, but I always had good intentions.

To buy or not to buy organic

After the restructuring, while I had to take a hard look at expenses, I still felt that some areas were not worth the compromise.  Since we had small children, buying organic was a must, such as with milk and meat products.  I was willing to make do without or do with less if it meant buying organic milk, for instance.   The Environmental Working Group (EWG) puts out a list of the fruits and vegetables with the most pesticides (and should be bought organic) and those that are the lowest in pesticides.  I generally use this as a guide to figure out what I should buy organic.

One way to control food expenses

Some use the envelope method to allocate how much should be spent on food each month, but I chose to get a gift card that I could reload. That way, I could put down how much I wanted to spend per month at that particular store.  This was one way to control the expense and also keep track of my run rate for that particular store for the month.   It was too hard to keep track of the overall food expense when everything went on the credit card and I wasn't disciplined enough each month to do an analysis at the end of each month and break out and calculate all of the food expenses. 

Eating out costs went down

One other thing that I noticed was the amount spent eating out went down significantly.  This was not surprising.  I had more time now.  I had more energy now.  While some healthy meals could be found at restaurants, it's not the same as cooking at home.  I could control how much oil, salt and fat was put into the food.   Not only that, but cooking was always an enjoyable experience for me.  It was almost like therapy.   Cooking is a creative process from picking all of the elements, putting them all together so that it all tastes good.   

While we still ate out a bit, it wasn't a regular occurrence anymore.  My kids seemed to miss it a bit, but when we eat in, we have more time.  We now have time to go to the local park or go out for some treat like frozen yogurt. 

Cash Flow Review - Unemployment Insurance Benefits

The most pressing thing to do was do a cash flow review.   I had to take a look at incoming income and compare it against expenses, and ultimately create a new budget. 

What income did I have coming in?

Income:

• Work - since my husband was still working, I could count his income in my calculations.
• Unemployment - through California's unemployment insurance program, I would be entitled to some benefit.  The question was, how much and for how long?
• Severance -  I got two weeks of pay for each year of service.  I could apportion part of the severance and allocate it weekly or monthly to meet any expenses.  If our income could support our current expenses (with adjustments to current outflow), then I could possibly save the severance and use it for unexpected expenses.
• Other - could I find any part time work? Would any investments pay any dividends?  

Luckily, my husband was still working and so that put a lot of pressure off, but I had to see if there was a gap.  We needed my income and I didn't know if we could adjust our outflow to conform to his income only.

Unemployment, although small, was at least something.  I had talked to some other former co-workers that were affected and they complained about how little it was compared to their former salaries.  I didn't understand this complaint.  It was something.  Something was better than nothing.

If a person loses a job through no fault of their own (such as in my case with a layoff), then the California Employment Development Department's (EDD) Unemployment Insurance Program would provide weekly unemployment insurance benefits.  This is meant to enable people to cover basic life necessities while they conduct an active search for work.  It is not meant to cover each person's salary.  This insurance program is paid for by employers and the EDD administers the program.

What did I need to do or know about this?  Before filing a claim, I had to be aware of a few things:

1.  Eligibility: in order to receive benefits, claimants must meet certain eligibility requirements, such as receiving enough wages during each claimant's "base" period (explained below), be partially or totally unemployed through no fault of their own, be available for work, be physically able to work, and be actively looking for work.

• Wages to establish a claim:  when I file a claim, the EDD checks with the employer and the employer reports wages to the EDD.  The EDD then uses this  this information to decide if an individual earned enough wages in a base period to establish an unemployment claim. 

• What is the "base" period?  A base period is a specific 12-month period.  There are two methods for determining the base period, the standard base period and the alternate base period.
• The standard base period is the first four of the last five completed calendar quarters prior to the beginning of the claim.  For example, if a claimant files a claim that begins in April, May, or June, the claim is calculated based on wages paid between January 1 and December 31 of the prior year.
• The alternative base period is only used if there aren't enough wages earned in the standard base period and one meets the other eligibility requirements.   The alternate base period is the last four completed calendar quarters prior to the beginning of the claim. For example, if your claim begins in January, February or March, the claim is calculated based on wages paid  between January and December of the prior year. 

• What would be the weekly benefit amount?  The weekly benefit amount could be as low as $40 to the maximum of $450.   The weekly benefit amount is based on the wages earned during the base period of the claim.  Generally, to establish a claim I would have had to have earned at least $1,300 in one quarter of my base period  or $900 in my highest quarter and total base period earnings of at least 1.25x my high quarter earnings.

2.  How to file.   There are 3 ways to file a claim.  Online, by telephone or by mail.

• Online:   since I had access to a computer, the easiest and fastest way to file a claim was to apply online.    I went online here and applied.  I had to gather some information (notably the wage information for the standard base period), but it was a relatively easy and simple process. 
• Telephone:  there is a toll free number that one can call between 8 a.m. and 5 p.m. (PST) Monday through Fridays, except holidays.  For English use 1-800-300-5616.
• Mail/Fax: to file a claim by mail or fax, an application can be accessed online at www.edd.ca.gov/Unemployment, then filled out online and printed and then mailed.   I don't understand this. If one has access to a computer, he/she could just file online.  There is a reason why one would mail an application (perhaps if they only had access to a public computer such as a library, they would want to mail it, but how would they print out the application?  I would presume that one could just call the EDD and have them send an application, but this would delay the process.

3.  How long would it take to receive benefits?  Generally, there is a 7 day waiting period before I would receive any benefits. The EDD now issues a EDD Debit card to deliver unemployment benefit payments.  I had to activate the debit card, set up an account and then I was able to transfer the funds to my bank account.  I could also use the debit card on its own if I wanted to.

4.  What are the other requirements?  I know that every 2 weeks during my claim, I would have to certify that I still meet the eligibility requirements. 

5.  How long will benefits last? While a claim is effective for a year (I have a year to claim benefits), I would be eligible to receive between 12-26 weeks of benefits.  The number of weeks may vary depending on earnings during the base period.  Unfortunately, in the event it takes me longer than 26 weeks to find a job, I will not be eligible for federal unemployment extensions.

6.  Other:

• Would my severance or vacation pay affect my benefit amount?
• Thankfully, receiving severance will not affect my eligibility to receive benefits.
• In terms of vacation pay, whether this would affect my benefits depends on whether I was given a date to return to work.  If yes, then the amount paid is deductible from my benefit. However, this was not the case for me, so any amounts paid for vacation pay would not be deductible from my benefit.

• Would income tax apply to the benefits?  
• California State Income Tax:  no California income tax would apply to my benefits.
• Federal Income Tax: federal income tax would apply to my benefits.  I was able to elect to have EDD deduct my federal income tax liability from my benefit amount.

I was able to derive much of this information from the EDD site.   It's not an easy site to navigate, but a lot of information can be found there.  I just summarized some points here that were pertinent to my situation. 

Unemployed - Cash Flow Review

Even though I got severance and wouldn't have to worry about health benefits for a few months, I still had to review my cash flow.  I wanted to see how much was coming in and how much was going out.

I used an excel spreadsheet to look at my past expenses and compared it to what I thought should be coming in. Luckily, my husband was still working, but would his income be enough to cover all of our expenses?

We currently live in an area with one of the highest costs of living in the country.  The median price of a house is well over $500,000 and the cost of basics such as fuel, food and transportation is also high.

I used an excel spreadsheet to list our run rate of fixed and variable expenses.

Fixed:

• Mortgage 
•  Daycare/Preschool
• Gas/Utilities
• Taxes (property and income)
• Food
• Insurance

Variable:

• Credit Card bills for daily and other expenses such as clothes, dining out, services (TV), and entertainment
• Savings - retirement, college and other

Then I did a review to see what, if anything, I could cut.  It made me think of what was a "need" versus what was a "want".  I knew that I couldn't take out basics such as shelter (mortgage) and food, but even within the category of "food" I knew that there were choices.  Would I continue to buy organic?  Would I change which supermarket I go to so that I can minimize this expense?  I had to take a hard look at everything and nothing was off the table.   All of these "choices" was really dependent on what our cash flow looked like and whether our income could cover our expenses. Where could I cut the "fat"?  Was there any "fat"? 

Losing my income was a blow, but when I took a closer look, I realized that if we made a few adjustments, we would be OK.  There had been a change in my mindset. 

Now Unemployed - Financial Review

Now that I was unemployed, I had to do a financial review.   I had to take a close look at all facets of my finances.  While I was still in a state of shock, I had to do a reality check to either temper my panic or see if I had the ability to take some time off.  What things did I look at or consider?

Cash Flow Analysis and Review

• Did we have enough income to meet our current obligations?
• Would we have to make certain adjustments?
• Where was our money going and what changes needed to be made?

Debt and Other Obligations

•  How much debt did we have and what were our payment obligations?
• What were our other expenses and what could we do?

Long Term Goals and Net Worth

• What was our net worth and what were our long term goals?
• Would we be able to meet our goals?

Restructuring Day +1

It had finally started to set in.  I didn't have a job.

I had so many mixed feelings.  Panic, anxiety, relief, happiness and even joy.  In some ways, I saw this as a blessing in disguise.  I had not been happy for a while and had thought about leaving, but it was just so hard to move on especially since I was comfortable.

What did comfort mean and how did it impede me?  It always takes a while to get used to any place, and I had finally gotten used to all of the processes and procedures, gotten to know key people in each department that could help me get things done, made some friends and even enjoyed what I was doing.  What made me unhappy? The commute, the feeling of stagnation and the feeling that there was no possibility of advancing my career.   When I looked at my job objectively and weighed all the pros and cons, I knew that I had to leave.  It was just a matter of when and where. 

It made think.  What did I really want?   I had talked about finding the right balance in life and it was a constant struggle.  There was an inner war between my ambitious career self and my mommy self.  My desire to advance in my career was at odds with my mommy self that wanted to take a step back and enjoy my kids.  I think feelings ebb and flow and there isn't just one trajectory, but I was going to stay on the path that I was on until something happened. 

Now that didn't matter.  The decision was made for me.  My ego was bruised a little bit knowing that I was thought of as fungible, but when I thought about it, everyone is fungible.   But, what restored my faith in humanity was the immense response I got from everyone.  Everyone was so supportive and seemed to care about me.

I think that in any situation you can look at things positively or negatively.  I could choose to see this as an opportunity or a calamity.   Granted, not everyone has the luxury of seeing things this way.  I wasn't a single mother living paycheck to paycheck and heavily dependent on this income.  I was lucky, and I realized that I had the luxury of seeing things this way.  In any case, a job loss is hard.  It forces one to do a reality check.

1.  I had to start looking hard at our finances and see if we could do without my income and for how long, even considering the severance. 

2.  We had to look at health care options.

3.  I had to look deep and assess what I wanted to do.  Is this the time for a new direction, do I try to find work right away or do I seize the opportunity and try to take some time off of work and try to enjoy time with my kids (of course this was dependent on an analysis in #1 above)?

 

Restructuring Day

What did I feel when I found out it was me?

Relief.

I finally knew.  After months of uncertainty and anxiety, it was good to finally know.

What else did I feel?

Shock.

I had thought it could be me; it's different when it is actually me.

Sadness.

I was going to miss my co-workers, all of whom were shocked and dismayed.

Happy.

I hadn't been happy for a while, and now I was free.  It felt strange to be happy.  Was it shock? Was it related to the relief? Either way, I was actually happy.

A bit Fearful.

What were the terms - severance (provided I signed a full release), and the company would pay the health care premiums under COBRA for a few months.  Overall, it wasn't a bad package.  The only thing I was really worried about was health care.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) would allow me to get coverage under the company's group health plan for a limited period of time, around 18 months after termination.  Generally, COBRA applies only under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, and other life events.   While I would still get access to health benefits, I would be responsible for paying the full premium.  It was really expensive.  While I always had to pay a contribution, it was shocking to see what the full premium would be.  This was when the fear started to creep in.  After the company paid period expired, what would I do?