Hard to Fire
Hard to Fire · Chapter 10 · Financial resilience worksheet

Household Income Risk Audit

Calculate the household's real monthly burn, zero-income runway, and how much recent income growth became spending.

The first runway pass assumes household income falls to zero. It is deliberately conservative. Don't subtract a spouse's pay, rent, side income, or anything else that might continue.

Current household

Use actual transactions, not a preferred budget. Divide annual bills by twelve.

Post-loss changes

Subtract immediate cuts. Add the real replacement-health quote, insurance, search costs, and anything else the loss creates.

Liquid assets

Keep retirement accounts separate. Add severance only when the written offer exists, using the after-tax amount.

Five-year comparison

Use the same monthly definitions for both periods or the ratio becomes decorative math.

Current burnNot calculated
Post-loss burnNot calculated
Baseline runwayNot calculated
Lifestyle inflation ratioNot calculated
Add the post-loss burn and liquid assetsThe first runway pass assumes household income falls to zero.
Add the five-year comparisonIf income did not increase, the ratio stays blank and the change in burn carries the answer.
Complete the inputs to produce the four-number audit line.

Runway bands

Baseline runway in months = liquid assets ÷ post-loss monthly burn

Under 3 monthsImmediate household risk
Protect housing, insurance, food, and required transportation first.
3 to under 6 monthsReal buffer, little tolerance
There is little room for a long search or a major surprise.
6 to under 9 monthsFunctional room
There is room to search, with pressure increasing as the balance falls.
9 to under 12 monthsMore negotiating room
There is more capacity to reject a poor fit or let a negotiation breathe.
12 months or moreStrategic room
This is decision time, not permanent safety. Keep updating the number.

These are planning bands, not guarantees. Search length, health costs, debt, caregiving, benefits, and local demand can change the posture. Runway buys time, not magic.

Lifestyle inflation detector

Lifestyle inflation ratio = monthly expense growth ÷ monthly after-tax income growth

Below 0.50Less than half became spending
0.50 through 0.75Lifestyle absorbed a substantial share
Above 0.75Most of the added income became burn

If after-tax income did not increase, don't calculate the ratio. Compare the change in burn directly. This is not a moral grade.

Sarah and James

The worked example uses $8,450 current burn, $8,535 post-loss burn, and $45,000 in liquid assets. That produces 5.27 months of runway, displayed as 5.3. Income rose $2,900 while burn rose $2,250, producing a 0.78 lifestyle inflation ratio.

Two promotions and five years of growth bought roughly thirteen extra days of runway. Raises do not build options when nearly all of the raise becomes permanent burn.

Don't turn guesses into assets

Use the actual replacement-health quote. Keep retirement money separate. Don't count unvested awards as cash, and don't add severance until a written offer exists. Payroll withholding is not the final tax calculation.

Whitman Rule: when after-tax income rises, send at least half of the increase to savings before expanding fixed costs. Build margin before lifestyle.