When It Goes South: Losing Job, Stress, Housing Loan
I’m a full time employed IT engineer based in Kuala Lumpur. My friends call me a mercenary because, in my 12 years of working experience, I have jumped into five different companies. The average years I’ve stayed in a company is around 2.5 years.
By jumping job frequently, I get to experience the different working culture, opportunity to work on different technologies, higher salary (obviously) and it gets me out of my comfort zone. These are the good stuff. What about the bad stuff?
Well, one of the bad stuff is the constant worry of job security. In almost every company I’ve worked in, there is a constant rumour of retrenchment or the department or company is either closing or moving away to a different region. You’ll find these scenarios in most outsource IT companies.
In some extreme cases, colleagues were asked to leave immediately without any prior notice. Personally, I’ve never gone through this. The worst I’ve faced is salary deduction by 10%. The company I was working for at that time wasn’t doing well financially.
A salary deduction is nothing compared to losing your job abruptly. Employees with family and especially with a housing loan are the most vulnerable during this period. I can only imagine the stress I’ll have to go through trying to secure a new job with the same salary immediately.
Just from one bad event of losing a job, now I’m confronted with four new pains. First to support the family, second to service my housing loan, third to secure a new job and fourth the stress of going through these ordeals.
From all the four above, stress is the one element we can’t see or quantify in these situations. It’s the silent killer that lingers in your head and the weight it lays on our shoulders is enormous. So how can we reduce or better still eliminate financial stress in this scenario?
This is where our savings in EPF Account 2 comes to our rescue. EPF allows us to apply for “Housing Loan Monthly Instalment” withdrawal. For more information please refer to the official EPF link here. Before I proceed, just a remark. EPF savings are mainly meant for retirement. Ideally, I wouldn’t suggest using it for servicing housing loan or for any other purpose. However, in extreme cases such as losing your job, short term survival is far more critical than sticking to a retirement financial plan.
So, here is an example of how we can utilize the saving in EPF Account 2. Assume currently there is:
1. RM24,000 balance in my Account 2
2. My monthly housing loan is RM1,000
3. I require financial assistance for 6 months
In this scenario, EPF will transfer RM1,000 monthly for the next 6 months to my personal savings account. Then it is my responsibility to transfer the amount to service the housing loan. There is a huge penalty if I’m caught not doing so. The monthly withdrawal amount will never be more than the monthly housing loan amount, in this case, RM1,000. Also, I can extend the withdrawal up to 24 months since there is a balance of RM24,000 in my Account 2 (RM1,000 * 24 months).
My personal preference is to have 2 years’ worth of monthly housing loan in my Account 2 at any given time. In the event I lose my job, I know I can utilize my Account 2 savings to service my housing loan. If I’m desperate I may take on a lower paying job temporarily till I find a better paying job. Although I’m paid lower, I can still service my housing loan for the next two years. By having this option available, one major stress is eliminated during a personal financial crisis.
I am aware some will disagree with this option, saying we should not touch our EPF savings and the best option is to ensure we have 6 months or one-year worth of expenses saved for these sorts of scenarios. Some will even suggest taking part-time jobs to generate more income. While I agree, we should realize everyone is different and it’s always easier said than done.
A part-time Malaysian blogger writing his thoughts online. Interest in both personal finance and economics, mainly the behavior aspect of them. I consider myself Poyo since I do not have any significant credentials in both fields, so readers beware. Thanks for reading.