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  • Silver Lining

    Debbie and John knew that, like all ill winds, the recession would blow over eventually. They made a choice to not let it dampen their spirits with some creativity, optimism and teamwork.

    It was just past 2pm, and Debbie Loh* had 45 minutes to spare before meeting her next client. So she decided to pop home, which was along the way, to recharge her mobile phone. She was taken aback to see her workaholic banker husband’s Armani shoes at the door. The first thought that crossed her mind was that John* was having an affair. As she pushed the door open slowly, she noticed him lounging on their large white calf-leather couch, flicking the TV remote distractedly. “Are you OK?” she asked, knowing that he had an annoying habit of never wanting to see the doctor. Then he mumbled the three words she had most feared to hear: “Got laid off.” Her heart skipped a beat. Although they had a total income of about $22,000 per month, they had hardly saved. She thought about cancelling her appointment, but thought better of it. That Morning Before John could settle into his Herman-Miller chair in the eerily quiet office that morning, his manager asked him to attend a meeting. With HR, I bet, John thought. As the crisis worsened, John’s team had been told to get rid of bad trades

    That Morning

    Before John could settle into his Herman-Miller chair in the eerily quiet office that morning, his manager asked him to attend a meeting. With HR, I bet, John thought. As the crisis worsened, John’s team had been told to get rid of bad trades on their books, but buyers had been thin on the ground. Thus far, two of his five colleagues had gone into “early retirement”. It was a matter of time before it was his turn.

    During the meeting with HR, the conversation started off with his performance, how he had missed the (absurd) target in the first quarter of the year, and that he had been seen spending too much time on personal activities. John argued that he had performed well over the last five years with the bank, and that he had exceeded most of the given targets. He insisted that the current target was a set-up for failure as it was almost double that of the previous year’s. However, the lady from HR kept very calm and serious, and offered him a grand total of $72,000. This comprised:

    • Three months’ salary to fulfil the notice period in his contract.
    • A week for each of the five years he had worked with the bank.
    • 10% over market price for his share options.

    John replied that he would think about it and let her know by the end of the week. She reiterated that this was an excellent offer and that she wasn’t sure if the bank would be as generous in a few days. John stared at her sulkily and left the room to collect his personal belongings. After a few short words with the remaining colleagues, John walked off the trading floor for the last time, to his metallic red BMW.

    Taking Stock

    That evening, after putting the children to bed, Debbie and John sat down to talk about their financial situation, and started taking stock:


    Condo $1,200,000
    Investments $100,000
    Cash $45,000
    Club membership $140,000
    (down from $190,000)


    Mortgage $800,000
    Unsecured loan $30,000
    Credit cards $5,000
    Car loan $90,000

    Monthly Expenses

    Mortgage $3,800
    Unsecured loan repayment $1,400
    Car loan & expenses $3,700
    Childcare $2,200
    Groceries & utilities $3,200
    Travel/ entertainment $2,100
    Insurance $2,500
    Domestic help $600

    The Plan

    Debbie’s income, which fluctuated based on her sales volume, was an average of $8,000 per month. This meant that without John’s job, they faced a shortfall of $11,500. Their savings would last at most another four months. After much discussion, they decided on the following plan of action: 1John spoke to a lawyer friend of theirs to help structure his retrenchment package. At the end of the week, he renegotiated with HR and received the following offer:

    • The agreed three months’ salary to fulfil the notice period in his contract.
    • In line with industry practice, one month, instead of one week, for each of the five years that he had worked with the bank.
    • That his share options would be exercised at the price at which his bank had been taken over rather than at current market prices, resulting in a $60,000 windfall instead of the offered $12,000.

    This worked out to a cash injection of $172,000, most of which was tax-free.

    The following day, Debbie called their banker to request a better rate for their loans, highlighting their prompt payment history and long-term relationship with the bank. The outcome was a reduction in their mortgage rate, which translated into a monthly saving of about $300. She also bargained the fee down to $500 from the initial quote of $800.

    With John’s redundancy package, he could now afford to go without work for another 15 months. He and Debbie agreed that he should take a break of up to six months to figure out his next move. During this period, John agreed to take on all the household responsibilities, including spending time with the children. Debbie notified the childcare centre that their girls would be attending only the half-day session, which reduced their childcare bill by $600.

    As they had promised the children a trip to Disneyland in Los Angeles, John spent the following two days digging out his password and navigating the frequent flyer website. He ended up booking premium economy seats and most of their hotel stays with the miles he had clocked up from his business trips. This meant a reduction of about $9,000 off their annual travel bill.

    The Aftermath

    Over the next four months, John looked better as he worked out at the gym or played golf every other day. With more time on his hands, John could devote more time to his hobby – trading sports memorabilia on eBay – which earned him about $1,500 every month. However, he was beginning to tear out his hair trying to figure out what to do with the girls every afternoon. The novelty of visiting the zoo had worn off after the 4th visit and he sorely missed adult conversation.

    Debbie, on the other hand, was upset that she hardly saw the girls. As the market worsened and customers became harder to come by, she had to put in longer hours. This meant that her younger daughter was in bed by the time she got home. She was also too tired to engage her elder daughter in conversation, and was often snappy with the family.

    That evening, over a bottle of Merlot, Debbie confessed her frustrations to John, and he pointed out that she could afford to take a pay cut to improve her work-life balance. He suggested they downgrade his car, seeing how the BMW was used only for zoo visits. Debbie felt relieved that John understood and supported her. He then revealed that he had been mulling over two offers: One, a role with another bank, but with a slight reduction in pay, and two, a consulting role which offered more flexibility and shorter hours. The lump sum payment for the consulting work would depend on the outcome of the project, but there were reasonable retainer fees for the amount of work he would need to put in.

    They both agreed that John’s quality of life had been much better since the redundancy, and that the consulting job would be more beneficial to the family. Debbie decided to look into hiring part-time help to reduce her time spent on paperwork, and to temper her aggressive personal targets. Also, given the modification they had made to their finances, they could still afford their lifestyle, even on a reduced income.

    Debbie and John knew that, like all ill winds, the recession would blow over eventually. They made a choice to not let it dampen their spirits with some creativity, optimism and teamwork.

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