Be Prepared: A friend's story

I have a friend, we will call him Tom, who recently became unemployed. He found a week ago that he was being let go and was very lucky. He was given a one month salary severance so he will get paychecks for a month even though he is not working. It could have been a lot worse! He should also be eligible for unemployment after the salary stops.

Tom has been slowly turning his financial life around. He is realizing the power and security that having savings provides. He is now tracking his money through mint.com which is a huge step forward from his former paycheck and broke until next paycheck cycle. He has no credit cards and some smaller outstanding debts.

Tom has been in a lull for a while with displeasure of his job and other things going on in his life. I have been helping him as much as I can as a friend. He comes to me for money advice from time to time and I now thing he is turning the corner and is going to start to rebuild. This job loss was his wake-up call that he needed. He is approaching a financial bottom that a lot of people reach before making better decisions and habits.

Tom is ok for now but would certainly be a lot better off if he had an emergency fund. With zero savings he feels the pinch of needing another job and fast. He is limited on how selective he can be. He realizes this now. Living within his means is Tom's first step in the right direction. Adjusting spending habits is a constant work in progress for us all and his is just getting started. I hope a change of scenery and change of job will push him futher in the right direction and not back to the old ways.

Only time will tell if this really is the bottom for Tom. He seems like he truly wants to change his ways and I will support that as best I can as a friend. I have been through my financial bottom so I will give him advice as he asks for it. I find it is best in cases like these to let me find out on their own. Like most people (including me) Tom will learn the hard way. I wish him the best of luck!