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On buyouts

On buyouts

I listen to the Dave Ramsey show, because I enjoy listening to people who are on their way out of debt or who have crossed the finish line. But sometimes people call in with other financial questions as well. One that always amazes me is “Should I take a buyout?”.

People call up after being offered $100,000+ to stop working at the place they work at, and they’re not sure what to do. I just don’t get it, because to me it’s a no brainer. I guess there might be extenuating circumstances, but…

I feel like if someone wants to PAY you to leave, then clearly they need to reduce their staff. Clearly they are also giving you a pretty hefty hint that staff reductions are in the immediate future.

So why not go now, with money rather than waiting around to potentially be laid off without a cent? (Severance is not a requirement, unless there is some type of contract or law in place that says otherwise.)

Better to leave on your own terms than on someone else’s. Better to leave ahead of the crowd. Better to leave with cash and (possibly) extended benefits. Better to leave and move on to a new opportunity, either on your own or elsewhere.

Maybe it’s just me, but I can’t think of a single downside to taking a buyout, with the exception of being someone who would be uninsurable without a full time job.

Am I missing something?

View Comments (7)
  • That’s a good question. I mean, if they love their job and want to keep it, I can see the trepidation, but otherwise I would take the money and get the heck out of there.

    Curious to see what other people have to say on this.

  • I too listened to dave ramsey for the same reason. In regards to buyouts, people won’t want to leave if they either live their job or fear they won’t be able to find another.

    My future father-in-law took a buyout but it also took him 9 months to find a new job, and I paid much less than he was making before. This was back in 2005-2006. Now he has a better job doing what he likes, but he’s also had to move 10 hours away.

  • I listen to Dave for the same reasons as you. I have also wondered why folks questions a buyout, I agree it is no brainer. It’s like working for a company and knowing your boss doesn’t like you, it is only a matter of time – take the buyout and run on to the next place you are meant to be.

  • I don’t think you’re missing anything – I would take that money and run. But I guess a lot of people fear change and the unknown and for them it is such a life altering change they don’t know how to approach it logically.

  • I must say your analysis is probably based on the majority of Americans work environment, in which case I would agree wholeheartedly. However, I work in a union environment at AT&T. If the company were to offer such a generous buyout package, it would be a difficult position to be in.

    For instance, the buyout will only granted to the top X number of ‘volunteers’. These same ‘volunteers’ have the most seniority, and therefore are those who have the most secure positions. To leave such a secure position in such difficult economic times with unclear prospects for the future would not necessarily be a clearcut decision. It would certainly be difficult to replicate the pay and benefits with such a specialized set of work skills if it were necessary to find another position.

  • Jeremy, but wouldn’t you be in that same difficulty if you were then laid off? Only without the money? That’s the part that confuses me. Although maybe it’s that you can’t be laid off due to the union? I’ve never been in a union, so I don’t know.

  • Bluntmoney, thank you for responding. You are right in saying it would be just as difficult in attaining a new job in the event of accepting a buyout or being laid off. You postulated that it is difficult to understand why someone would forego a $100,000 severance package.

    With severance packages being typically based upon years of service, that would only apply to employees with many years of service within the union environment. Outside of companies with unclear futures, i.e. GM, it is not ideal for an employee to accept such a buyout unless prepared to retire since layoffs primarily affect newer employees.

    I am merely trying to offer an instance in which accepting a substantial buyout is not a clear-cut decision.

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