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Discussion Starter · #1 ·
Well it seems the economic recession finally hit Honda Manufactruing plants. They are offering buyouts to select employees. Basically, they'll give you 17K cash out the door, + a year's salary (paid out over 12 months), + 1k for each year of service to date.
So in my case, I'd have 24K out the door, plus 5k a month for the next 12 months, during which I would be seeking another job.

My trouble lies here: the 24k (after tax) would pay off the remainder of the WRX, + the GTO. In addition, the 5k a month would pay off my wife's Pilot in less than 3 months. I already own my house.
While it sounds great to be completely debt free, I'd be losing a hell of an insurance plan, and a pension.

I don't know what the economy is going to do, and if it gets worse (which I wonder about) I'll have the security of no bills and cash on hand.. but if it does recover, would I have pissed away a great career?

So help me out guys.. I wanna hear some opinions.
 

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Speaking as someone who got hit early and hard during the beginning of the recession, I say try to weigh your options.  Mainly your viability.

Can you perhaps take some of that money and commit to going back to school to expand your certificates or acreditdations in your field?  Or, perhaps taking what education you already have and augmenting it into a different degree in a new field (Such as taking a mechanical engineering degree and tweaking it for a Medical Technology degree... a field that is actually expanding in this market...just as an example)?  Or, perhaps you can take the advantage of going to school when you didn't have a chance before?

This may be the perfect chance to expand or even change you career field if you are so inclined.  The extra chunk of change could help if you can formulate a viable plan of attack and a way to keep your head above water in the mean time.  Also, would finding another job influence the amount of cash you're going to be getting as part of the bailout, or are there restrictions on where you can work after the buyout money has been paid out to you?  This could be important.  For example: Former employees of Disney are NOT allowed to work for ANY company affiliated with another studio for TEN YEARS following a contract termination.  This can even mean not working at Spencer's Gifts since they are owned by Universal Studios, or for The Sports Athourity because Fox Studio's is an investor in the company.  If a person DOES work for one of these companies, Disney has a right to sue them for contract infringement and that could cost you MILLIONS.

It's a hard one...all I was offered was a swift boot to the door and a box for my office supplies.
 

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Discussion Starter · #3 ·
Speaking as someone who got hit early and hard during the beginning of the recession, I say try to weigh your options. Mainly your viability.

Can you perhaps take some of that money and commit to going back to school to expand your certificates or acreditdations in your field? Or, perhaps taking what education you already have and augmenting it into a different degree in a new field (Such as taking a mechanical engineering degree and tweaking it for a Medical Technology degree... a field that is actually expanding in this market...just as an example)? Or, perhaps you can take the advantage of going to school when you didn't have a chance before?

This may be the perfect chance to expand or even change you career field if you are so inclined. The extra chunk of change could help if you can formulate a viable plan of attack and a way to keep your head above water in the mean time. Also, would finding another job influence the amount of cash you're going to be getting as part of the bailout, or are there restrictions on where you can work after the buyout money has been paid out to you? This could be important. For example: Former employees of Disney are NOT allowed to work for ANY company affiliated with another studio for TEN YEARS following a contract termination. This can even mean not working at Spencer's Gifts since they are owned by Universal Studios, or for The Sports Athourity because Fox Studio's is an investor in the company. If a person DOES work for one of these companies, Disney has a right to sue them for contract infringement and that could cost you MILLIONS.

It's a hard one...all I was offered was a swift boot to the door and a box for my office supplies.
No restrictions regarding the buyout money have been placed at this point.

I don't know that addtional schooling would be an option, I would have to have a full time job w/insurance to replace this one, and might not have enough money after paying off all debt to complete a course in another trade.. I won't rule it out, I'd just hate to get back in debt to pay for another degree that may or may not pan out.
 

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My trouble lies here: the 24k (after tax) would pay off the remainder of the WRX, + the GTO. In addition, the 5k a month would pay off my wife's Pilot in less than 3 months. I already own my house.
While it sounds great to be completely debt free, I'd be losing a hell of an insurance plan, and a pension.


:D IF you decide to take the buyout, DO NOT pay off all your cars and bills !!!! Put the money in the bank and continue to make the monthly payments and draw interest. OK, so you only get 1/2% maybe, but from one that has also lost their job,,,,,, sometimes it takes a lot longer than you think to get back in the market. If you dump all your $$$$$ on the cars now you may have nothing left when you really need it....... If you wait until you are back on the job, then consider paying off the vehicles..... Just my $.02 worth.

Personnaly, with you making $60K a year and probably fairly good insurance,, i would just sit tight.........
 

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I had the same thing happen in 1983. I had a good job working for Penn Central but was at the bottom of the seniority list for the whole 13 years I worked there. Every year I got laid off for 2-6 weeks, but the pay was good and I had great insurance. They offered $17,000 in lump sum or paid out over 18 months. Some guys took the money and paid off bills. The problem was the country was in a bad recession so finding a new job was tough. I took the money over 18 months and went back to school. First I research what jobs were going to be in demand and then found a field that I liked and had an aptitude for. I had the option of getting an Associates degree in Computer Technology or as a Respiratory Therapist. I was 32 at the time and finished the 2 year program for Computer Technology in 18 months taking summer classes and loading up each semester. I'd opt for the money spread over time since you take a smaller hit on taxes over two years instead of one. I got a job within a month of graduation and have been working as either an analyst or
manager for over 25 years. Something in the medical field will be in demand for a long time. The money comes and goes, the eduction you have forever.
 

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If your choice is to stay employed or take the buyout then stay employed. Are you close to retirement? Do you loose health benefits for good? IF they are saying take the buyout or we lay you off or fire you anyways then take the buyout. If you even have the inkling that you may be out of wrok with them anyways in the next 1-2 years then take the buyout.
 

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Well he is only 33, and on the National news this morning it said that Honda will be closing plants and consolidating in the U.S.

Wish him the best of luck in these times whatever his decision may be.
 

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So what's the alternative? You lose your job and get $0? Can you talk to a higher-up to see if you're in danger of the latter before you make your decision?
 

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I am not in your position, so I can't tell you with any authority. but, there is a ALOT to be said for being debt free (dave ramsey fan here, look him up if you don't know him). If you took the buy out, and stayed debt free, you are in a much better position to face hard times because you don't owe anyone anything. if you take the buyout, and then save and invest the money, then need it, you will need a lot more each month to pay off creditors.

as far as whether or not to do it, a sure thing in this economy is alot better than the unknown. buyouts almost always preceed massive layoffs. If they think you are a good candidate for a buyout, chances are you are a good candidate for layoffs in the future.

but what do i know?!
 

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bomber you have "some" good points, but, Pay off all your bills,,,,,, now you can't find a job. how do you buy food? you paid off the truck with that money.... How do you pay the utility bills? You paid off the car with that money...... If the car does break down, how do you go get a loan without a job, and Oh Yeah, you paid off some more bills with that money...... Just my $.02 worth, Money in the hand is worth a lot more than wishing in the other later.
 

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Maybe to clarify, while you have a job and doing well, Yes, than try to stay as debt free as possible, but if you are thinking of giving up a job, one should hold onto as much cash as possible.... EVERY financial expert I have listened to says that one should have a minumum of 6 months income stashed for bills in case of lay-off. Which I guess is my final suggestion on this matter. That he go to a financial expert and ask his advice. I'm sure the financial people have dealt with this issue a lot more than we have. Again, Good Luck.
 

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bomber you have "some" good points, but, Pay off all your bills,,,,,, now you can't find a job. how do you buy food? you paid off the truck with that money.... How do you pay the utility bills? You paid off the car with that money...... If the car does break down, how do you go get a loan without a job, and Oh Yeah, you paid off some more bills with that money...... Just my $.02 worth, Money in the hand is worth a lot more than wishing in the other later.
sell one of the cars
 

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I don't know what the economy is going to do, and if it gets worse (which I wonder about) I'll have the security of no bills and cash on hand.. but if it does recover, would I have pissed away a great career?
Are you willing to move? If Honda is closing plants you have no guarantee that yours will stay open. If you are not willing to move, take the buyout.

If you are willing to move: You could either stay with honda wherever it takes you, or take the buyout and move to wherever Toyota or Ford takes you.

About the insurance: How much would COBRA be? Is the insurance guaranteed to stay good: Is it in a contract, or is it possible that the company might cut costs by reducing their insurance benefit?

How much is the pension worth?

If you took the buyout and paid off your debts etc, how long would the remaining salary last you? Could you maintain your lifestyle and live for 2 years off that 45,000? I'm assuming you could since you are removing 3 car payments from your monthly obligations. 2 years is time enough for the economy (and the auto industry) to decide what its going to do. If it gets better, you will find a new job and continue in your career. If it gets worse you'd probably lose your job anyway.
 

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bomber you have "some" good points, but, Pay off all your bills,,,,,, now you can't find a job. how do you buy food? you paid off the truck with that money.... How do you pay the utility bills? You paid off the car with that money...... If the car does break down, how do you go get a loan without a job, and Oh Yeah, you paid off some more bills with that money...... Just my $.02 worth, Money in the hand is worth a lot more than wishing in the other later. EVERY financial expert I have listened to says that one should have a minumum of 6 months income stashed for bills in case of lay-off.
The original post says it woudl take 3 months to pay off the last car, which means he has 9 months of 5k coming to him. 45,000 is more than enough to cover 6 months of bills/food etc when you don't have a mortgage or a car payment.
 

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Well, he does need to reduce his debt load, that much is obvious. Perhaps (and this is just me throwing theory out there) if you can pay off the auto with the highest monthly payment and/or highest interest rate, and then use the remainder to use as resource money until a new job comes into focus, that could hedge some potential lost monthly income and keep the lights on, food in stock, etc while reducing your monthly bills. Then, if you do find a new Full time gig, you can take the remainder of that savings and put it towards the other autos. Sort of a compromise between the two theories.

Just an idea...

Either way, that just sucks to be in that position :cantlook: When I lost my job, I simply had to sell just about everything when I got back to Phoenix.

Besides, financial "experts" have this annoying habbit of not working in the real world. I've had a financial "expert" try to consult me on my current credit when I sold my house in Flagstaff after I got laid off, and he insisted that I hold onto the property because of the "booming" market that is lying in wait....and when I decided to sell anyways, he called me a "artsy-fool living on ideals and not much logic". 2 months after the house finally sold, the stock market crashed big the first time round and the housing market in Arizona dropped values by as much 65% in the area my house was. I only lost $15k in value. If I waited till the "expert" said, I would've lost $75k... and THEN I would've been ruined. I simply lost my downpayment a few months mortgage payments.
 

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he called me a "artsy-fool living on ideals and not much logic".
but aren't you? :tongue2:
Yeah, but not an idiot. I made it out with SOME semblance of a credit line! That "expert" was insistent that Northern Arizona ski-town property was "Recession-Proof" (his words) and that I didn't understand the value of secured property that was a sure thing :cantlook: Granted my chances of buying a house with my credit these days is impossible unless I land another $42k/year job...but I don't see that happening in my field again anytime soon. Hell, I was elated to land a $13/hr gig PART TIME at a local theater...
 

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Discussion Starter · #18 ·
Thanks for the responses guys.

If I take the buyout, I won't be able to go back period, even if/when the market recovers. I am fully vested in 401k and pension, which is based on hours worked with the company.
At this point, Honda has not closed any auto plants, or laid off any permanent workers, but this buyout is a first, so who knows.
The reason I'm eligible is because I have seniority and could jump ahead of others if I chose that option. Although I'm 33, Honda (in AL) is a young company, and I was among the first hired.

However, no where in the area will pay what I'm making without a masters degree or better, and moving isn't really an option for the time being. I aslo get full coverage (medical, dental, vision, life) for 5 bucks a week.

If I stay, and Honda recovers from all this, then I will have an opportunity to double my salary in a short time. If I leave, I may have thrown away a good career.

The option of being debt free is extremely tempting, and with eveything paid off I could live on a smaller income and still be comfortable, but finding a decent job in the next few months would be difficult. I would have enough cash to last me for about a year, but after that, I don't know. I hate decisions like these.
 

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Thanks for the responses guys.

If I take the buyout, I won't be able to go back period, even if/when the market recovers. I am fully vested in 401k and pension, which is based on hours worked with the company.
At this point, Honda has not closed any auto plants, or laid off any permanent workers, but this buyout is a first, so who knows.
The reason I'm eligible is because I have seniority and could jump ahead of others if I chose that option. Although I'm 33, Honda (in AL) is a young company, and I was among the first hired.

However, no where in the area will pay what I'm making without a masters degree or better, and moving isn't really an option for the time being. I aslo get full coverage (medical, dental, vision, life) for 5 bucks a week.

If I stay, and Honda recovers from all this, then I will have an opportunity to double my salary in a short time. If I leave, I may have thrown away a good career.

The option of being debt free is extremely tempting, and with eveything paid off I could live on a smaller income and still be comfortable, but finding a decent job in the next few months would be difficult. I would have enough cash to last me for about a year, but after that, I don't know. I hate decisions like these.
you know, i think that if you stand to do really well if you stay, and if you could afford to live on your wife's income for awhile if you did get laid off, I think I might take the gamble. but thats just me, and of course i am a gambling man.

Honda seems like a good company, and they are a lot better off than the other auto makers. They might just have a chance to remain strong while riding out this storm.
 

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OMG I hate this, but I have to agree with BOMBER (LOL) After your last explanation of the situation, I think I too, would just sit tight and take the chance..... in the mean time though, start squirreling away all the cash you can....... just in case.... at least you have some kind of warning here. Good Luck. \
 
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