Chrysler announced today that they will offer buyouts of up to $100,000 to its hourly employees. Chrysler had just last year renegotiated their contract with the UAW to allow them to hire some new workers at a lower pay scale.
From a personal finance angle, would you take 2-3 years salary or keep your job?
For e it would be tempting as it would push me to start my own business, or buy one that I have been considering. With that sort of cushion behind me I could afford to take a bit of a risk...But it is still a risk.
There is a reason they are doing this. It isn't out of the goodness of their heart, just ask the 33% of white collar workers that were offed. They got basic severance. However the blue collar workers have a contract and the company can ill-afford a strike, nor the payout from violating the contract.
The US based manufacturers are getting leaner everyday, which will hopefully mean healthier, although a credit crisis won't/isn't helping.
If you did take the money what would you do? Would you be able to budget and manage your money, a lump-sum, over multiple years? Especially if you couldn't find work?
4 Comments:
I'm pretty sure I'd take the money. Like you mentioned, I'd either start a business or invest it in some rental real estate.
It's a tough one.
I haven't worked for anyone else for nearly 10 years, so it's hard to get back into the job mentality.
It was a huge decision back then, and this would be no different.
I didn't have anywhere near that amount of cash as a cushion. And over the next 10 years lost more than treble their payout - mainly due toi inexperience of starting a business.
It's easy to say once you've been there and failed, but anyone starting should really try and avoid the sort of mistakes I made.
Many or (is it most?) small businesses fail. Fewer fail on their second or even third attempt.
Mainly because they've now the experience to avoid those mistakes.
The text-book business start-up is rarely ever the way it turns out.
I think if I looked back, I'd have started differently - waited longer before getting an office and overhead, been more careful with recruitment as things grew.
Invested in systems more and documented the business process better.
And definitely been far more frugal and strict with cash management.
There's a fine balance to get. On the one hand, you need to be able to mentally lose everything when you start a business.
On the other though, you need the discipline to avoid this attitude which could lead you to be more frivolous and waste a valuable nest-egg.
If I had $100K to invest in starting a business now, I'd make darned sure that I ring-fenced 75% for personal salary and made do with just $25K as the maximum budget and therefore loss.
If the business couldn't get to income generation on $25K in the forecasts, then I'd choose another that did and not be tempted.
Mind you, it's very easy to say once you've got that failure under your belt.
If you haven't, then it's very easy to be drawn into the dream, and in that frame of mind, rational thinking is very often untempered by the bitter experience of failure!
The money will tempt most of them.
I only hope that they'll use the money responsibly.
100K is not all that difficult to burn off.
Chrysler should include counseilling togther with this offer.
@Fiscal - It would probably depend how close to pension you were with company, but it would be a tough call
@Ian - You story reminds me of the Microsoft one. At one pont MS was nearly broke over the Altair software and they were gonna miss payroll. Bill decided he never want to feel like that again and began one of the biggest cash hoards in history! You are next!
@Father Sez - I agree, it would be such a culture shock to be out after all of those years in one place.
Thanks all for reading and commenting! Keep it up!
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