How getting laid off was the best thing for my finances

After I graduated college, I began my career as a engineer in training for a mid-size civil engineering firm and made a nice $50k per year.  I didn't really care too much about money and personal finance at the time, although I did begin to get interested in the stock market mainly through investing with the 401k.  After I started trying to learn more about the market, I still didn't think I knew enough about investing to try and go on my own so I stuck with just using the 401k.

The Layoff Comes

January 2009 rolled around and I was told that I was being laid off, what a great late Christmas and birthday present for me.  I was pretty bitter at first after the layoff for 2 reasons.  One, less than a month prior, they had a pretty big Christmas party and now they're laying off about 20 employees.  And two, they made me go into work that day only to then lay me off at about 9 that morning.  I would have much rather they just done it the day before so I wouldn't have had to get up and drive to a place that no longer wanted me.

The first month or so of being out of work, I was pretty bitter and frustrated.  But knowing how bad the situation was, I was grateful that I had a huge emergency fund, even though I wasn't saving it up for that in the first place.  Luckily, I was never much of a spender and over the 1.5 years that I worked there I had saved up about $26k in my savings account.  Considering that I had only grossed approximately $76,250 that was a pretty considerable chunk of savings.

Learning about personal finance:

I have to admit that my first real introduction to personal finance through listening to Dave Ramsey's radio show.  His message was pretty straight-forward, NO DEBT!  It made perfect sense.  Why would I want to pay someone else with my hard-earned money just because I wanted to get something a little bit earlier.  I then started researching a little bit more about personal finance and found The Simple Dollar.  After following along with Trent for several months, I began thirsting for more knowledge on the subject of personal finance and searched for other blogs and books on the matter.  This put me on the path towards at least having control of my finances.  I still expected that I'd be working til 65 or maybe be able to call it quits early at the ripe old age of 60.

Daily Life while Laid Off:

Until about the 8 month mark of being unemployed I still tried to apply for just about every job that was remotely related to what I was doing before.  I went on several interviews where I thought I might have a real shot at getting the position, only to be let down without so much as a phone call saying they were going with someone else.  That was the most frustrating part.  I got to the point where I got annoyed enough with searching for a job and having no luck that I figured I'd take some time off to focus on myself.

I started working out every day and took our dog on daily walks.  I ended up getting into the best shape of my life when it was all said and done.  Of course, this just went on to reinforce that determination and staying focused will get you the results you want.  Once a week I usually would drive down to go see my grandparents and spend time with them and help them out around their house.  They aren't spring chickens by any means with my grandmother at 78 and grandfather turning 91 in February.  While at my grandparents, I would go do work in the garden and even started a small potted garden at my own house.  One of the other things I really focused on that went hand in hand with exercising was cooking.  I never knew much about cooking before that but by cooking 3 meals a day I now have the knowledge and confidence to cook just about any meal, or at least try it out once.

It was great getting to wake up every day and not have to fight traffic or deal with some new deadline from my boss.

Focusing on Reaching Early Financial Independence:

My extended unemployment gave me my first glimpse of what early financial independence could be.  But I had no idea how to get there.  One book that I had seen recommended was Your Money or Your Life by Joe Dominguez and Vicki Robin and I decided I'd give it a go.  I can't speak highly enough of this book because it really started to kick me into gear and push me towards the concept of financial independence.  The only problem was that the book recommends bonds as an investment, which at the time the book was written worked out well since interest rates were in the high single and low double digits, but that wouldn't work now.

So it was back to the internet to see if other people had done it or were working towards it.  The 3 biggest sites that I came across were all at different points and took different paths to get there but came with a pretty consistent theme of save as much as you can while spending only on things that you absolutely must have, food, or that truly enrich your life.  Those 3 sites were Early Retirement Extreme, Mr. Money Mustache, and Dividend Mantra.  Each one brought something else to the table.  ERE was already living in FI without having to go work.  He showed me that yes it actually is possible.  Their expenses are ridiculously low, which makes sense.  Why buy a new shiny object when I could put my money to work?  MMM taught me to quit making excuses and if I want to go get it I can and to just do it already.  DM was one of the big reasons that I chose DG investing.  It was another one of those situations where the light bulb just kind of got switched on.  I was never a big fan of withdrawing the principal of my savings to pay for my expenses because the market is too volatile.  If the market went up by 8% every year then it'd be easy to do, but in reality those years are -12% -10% and + 25% that works out to an 8% average (note I have no idea what those gain/losses will give you).

Where I'm at now:

It's now 2013 and I've made so much progress towards FI.  During my layoff, I couldn't put into practice many of the personal finance principals I had learned along the way, but it set me up for when I did find another job to start saving like crazy.  In July 2010 I started my new job after 1.5 years of being unemployed.  I was lucky to get into one of the few industries that was booming at the time, the oil field.  I'm now 2.5 years into this new job and it's great.  There's no deadlines because it's all based off of just drilling the well.  Sometimes it's 10 days sometimes 60.  I don't have to deal with office politics at all and I'm essentially my own boss when I'm working because our office has very little oversight on day to day operations in the field. On most days I have 12 hours to be able to devote to other things than my job, which most of it is towards learning about things that interest me, the stock market and developing this blog.

What I learned from my layoff:

The biggest thing I learned from being laid off was how little I need to spend to be able to still enjoy my life.  Over the course of 1.5 years I did go through my $26k in savings, however that's over a 18 month period, 547 days. The layoff was actually one of the happiest times in my life because I didn't have to do what anyone else wanted me to do and could focus on so many other things.

I wouldn't suggest that anyone try to get laid off in hopes of having some lesson taught to them, but in my case it worked out wonderfully.  The lay off came as quite a big surprise, but gave me a taste of what else there is in life besides getting up at 5:30 every day to go work for someone that could just decide one day that they no longer needed me.  There's much more important things in life than working a 9-5 til 65.  Why waste at least 1/3 of your day every day during the prime years of your life working?  

In the 2.5 years of this new adventure, I've grown my net worth from -$1,663.30 to +$178,667.34.  That's just a crazy amount of growth in that short time frame.  I now have a goal of reaching FI by 40 and a plan in place to get there.  Although I should hit it much earlier than 40 and then it'll be a matter of how much cushion my wife and I are comfortable with.  I had nothing invested in a taxable account 2.5 years ago and now it's up to around $82,000 with an income stream that's growing every month.

What led you to focus on dividend growth investing or pursuing early financial independence?