Personal Finance

I'm earning $700k in tech but could lose my job soon - should I aggressively pay down my mortgage or build up cash instead?

Christy Bieber

Published: May 18, 2025 7:15 am

A Reddit user is facing a difficult situation. The poster is earning $700,000 at his tech job, but he expects to lose that position soon because his company is going through multiple rounds of layoffs. He currently owns his house and owes $500,000 on it, and his wife is a stay-at-home mother to a toddler, and she is expecting another baby, although it is early in the pregnancy. 

He’s trying to decide whether to pay off the mortgage or whether he should be stockpiling cash instead. So, what’s the best move in anticipation of a layoff? 

Preparing for a layoff when you have a mortgage

Although it may seem like a logical move to pay off a mortgage so you can lower your housing payments when you are facing an impending layoff, the reality is that this is often not the best idea.

In this case, the Reddit user would need to come up with $500K to pay off the home loan in full — that’s a lot of money, even on a $700,000 income. If he stockpiled that money instead, he would likely be able to make the mortgage payments for a long time and have extra cash to cover other bills as well.

With a stay-at-home spouse and two kids, the Redditor is going to need to make sure he has plenty of emergency savings to see him through a layoff, so he should focus on building his rainy day fund up as much as possible. He should also start looking aggressively at other career opportunities sooner rather than later, as he may be able to find something more stable so he doesn’t have a prolonged period without income while he is trying to provide for his pregnant wife and child. 

A hefty emergency fund can see you through tough times

The reality is, most people are going to face an unexpected layoff at some point over the course of their career, as very few people today stay at their job for their entire working life. Being financially prepared for this is key to ensuring that a temporary setback does not lead to long-term financial disaster. 

It’s easier to prepare for a layoff when you have a high income, as you have more disposable funds that you can set aside for emergencies and that you can use to start building financial stability. If you can aim to keep your expenses to a reasonable percentage of what you make, you can save a lot of money and start making compound interest work for you.

Talking to a financial advisor can be an especially good idea if you want to make sure you are prepared for a layoff — especially if you feel like there is a high likelihood of losing your job soon. An advisor can work with you to ensure you are saving as much as possible in the right types of liquid investments so you’ll have a cash cushion going forward and can help you to look for cuts to make in your budget so your emergency fund lasts longer and gives you more time to find new work. 

The sooner you get this professional advice, the better prepared you can be for the future, so don’t hesitate to get help before you reach a crisis point. With the right advisor offering tips and suggestions, hopefully, that crisis point will never come.