When a single mother was laid off, her emergency fund kept her afloat — and now she has a plan for the future
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- Erin Ramos was able to deal with a stressful layoff by using her emergency fund to cover expenses.
- She made some purchases before losing her job that she would've waited on if she had to do it again.
- This article is part of "My Financial Life," a series helping people live and spend better.
Erin Ramos, a single mother, had worked at her company for 15 months when she got a Slack message saying she'd been laid off.
"I got a message in Slack from my supervisor," Ramos said. "It was basically like, 'Unfortunately, we are going to have to make some cuts, and your position has been impacted. Please acknowledge this Slack message, and then we'll give you a call in a few minutes. I was like, 'Oh, OK.' So that was that."
Luckily, Ramos was able to start a new job by the end of March, about three months after losing her job. Her emergency fund helped her support herself and her daughter until then. But looking back, she would do a few things differently.
The layoffs hit at a bad time
Ramos wasn't totally surprised by the layoffs. Her company had let go a small number of workers twice during her tenure, and she knew that the company was facing some money troubles. But she didn't expect the layoffs to happen during the holidays.
"They surprised us all on December 14," Ramos said. "I think it was 14 of us in all, just before Christmas." She received a two-week severance package.
Layoffs are sweeping the US, a worrying trend that has continued from last year. This makes the job market even more difficult for those who are laid off. "I have LinkedIn connections who have been out of work for a year," Ramos said.
She had an emergency fund of about $3,000, but she was worried about whether it would cover her expenses until she got a new job. "I don't have a year's worth of money saved up," she said.
Ramos has ovarian cancer, which means she needs to get an expensive immunotherapy infusion every three weeks. As a single mother, she wouldn't have a spouse's healthcare to lean on while she was unemployed, meaning she would have to pay out of pocket for healthcare.
With the help of an employment lawyer, she was able to get her former workplace to cover three months of COBRA payments. When you lose your job, the Consolidated Omnibus Budget Reconciliation Act lets you continue whatever health insurance your former employer provided — but you have to pay the full premium, which is often too expensive when you're no longer employed. This helped ease the strain on her emergency fund, but it gave her a tight deadline to find a job.
She wishes she had been more cautious leading up to her layoff
In the end, she was able to make her emergency fund stretch to cover her three-month unemployment period by supplementing it with her unemployment benefits, tax refund, 401(k), and a $500 loan from her parents. While the fund helped her stay afloat, she knew she could've done some things differently leading up to the layoffs that would have left her better prepared.
The July before she was laid off, she bought a house and made several quality-of-life repairs that took a lot out of her emergency fund.
"I wish I that I had been a bit more cautious about some of the work that I had done on the house, knowing that layoffs were a possibility," Ramos said. "I chose to build a deck. Did I really need to choose the deck? Probably not. I kind of wish I'd been a little bit more cautious. I think I would've had a bigger savings to fall back on."
She has a plan to rebuild her emergency fund
Before the layoff, she kept her savings in an Acorns Invest account. She found its round-up features helpful. It made it easy to save with every purchase, which helped her build up an emergency fund easily, she said.
It helped that the account was separate from her bank account. "It made it hard for me to dip into," Ramos said. "It wasn't something that I could go into and pull the money from; there was no check card attached to it, and if I wanted to transfer money into my account, it took, I think, three to five days."
Now she has multiple bank accounts. She still has an Acorns account, but she also has a SoFi Checking and Savings account specifically to for savings. Her SoFi account comes with a Money Vault feature that lets her save money toward specific goals and put it in a slightly harder-to-access area. "It's just this kind of extra layer of steps that's required to access that money," Ramos said. "And it will track the savings for whatever that goal is."
Her SoFi account has a high interest rate, helping her reliably earn more money on her savings. She's also putting more money away with each paycheck than she was before the layoff.