20 Percent Pay Cut!! Where Do I Go from Here?

People all over are experiencing this type of cut back. My hubby's yearly bonus was 1/10th this year of what it has been--and now it will stay like that indefinitely.

My best advice to ANYONE having to adjust to a decreased income is always Dave Ramsay and the Total Money Makeover. Buy the book. Seriously.

I think it is easier to decrease your spending by 20% than to try to make it up with another job/business.

As for the question to stay or leave, only you can answer that. But I do know this...it's easier to find a job while you're working than when you're not. If I was in your shoes, I'd at least start looking.

Sorry you're going through this--so many are right there with you.
Best of luck!

5 moms found this helpful

My hubby works in the Newspaper industry (which is DYING by the way) and he took a 30% pay cut almost 2 years ago + he has had to take 3 weeks unpaid work furlough every summer since then! Talk about sucky!

It's hard. You have to cut back. 'Waste not-Want not' has become our family motto!

2 moms found this helpful

B.:

I can truly sympathize with you and your pay cut.

However, this is unions for you. The money and power go the bosses and the union chiefs - the employees that they are supposed to protect get the short end of the stick.

As to the burden - this is hard and will probably sound rude but live to learn within your means. If you knew a year in advance that this would be happening - EVEN PROBABLY - you should've started cutting back then - paying off all you could so that when the pay cut hit - you would be OKAY. No, it isn't easy - but it's life. There are people BEGGING for jobs - so be thankful that you have it.

If you have items that you can sell around the house - sell them on craigslist and ebay. you would be surprised at what you don't need. I've been purging my home for a while now - donating and selling on craigslist and ebay. In the last 4 months, I've made (sold) $750.

Bottom line - cut back. Use coupons. Make a menu for the week and stick to it. You will be surprised at what you can live without. Save money by not having the paper EVERY day - only on Sunday's so you can get the coupons. You are at work so you don't need to spend the extra money on the movie channels. Rent what you want to watch for $1 via Red Box.

Make sure you have a list for errands. Do the errands in order so you don't run all over town zig-zagging, etc.

If you have a grocery store that does online ordering - DO IT!!! You will save a fortune in impulse buying! If there is a grocery store that does delivery - take advantage of that as well. You save a boatload of money - and yes, you can use coupons!!! Last year - I forgot to turn my coupons in for my Thanksgiving order - when I did my next order, I turned them in after I paid. For Christmas? My $200 bill was only $19.20 from all the coupons I had had. No kidding.

If you have a nasty attitude about it - nothing will change. However, if you maintain a positive attitude, don't panic and do a mental list of all you don't need - you can save money, get some money in the door and not notice the pay cut. Be happy you have a job. Do your best while you are there - don't slack because you have a pay cut and you just might get noticed and rewarded.

2 moms found this helpful

I thought of another thing that may help! Reduce your withholdings on your w-4-you're making less, as long as it's not extreme you shouldn't have to end up paying out too.

I was laid off a year ago when I was 6 mo pregnant. As you can imagine I didn't have much luck finding a new job very quickly. My husband was also not working since he is in the construction business and we all know how well that field is doing currently.

We ended up making some extreme choices to get by-but in hindsight we learned a great deal and came out stronger.

I don't know what state benefits are like in MI, but in WI because of our family size (4) and our income, (his/none, mine/UC), we qualified for state help. We didn't want too-but we had babies too feed so it was time to set pride aside. We rec'd foodshare, (foodstamps), since I was pregnant we also recieved WIC and since we had no insurance qualified for state insurance. This all at least allowed us to survive month to month. We also had a lot of help from family.

My point is that since your family dynamic hasn't changed, but your pay has-you might qualify for a little help from the state until you can figure things out, get a different job, etc.

Also-it's the perfect time to negotiate with your creditors and oddly our bank let us refinance our house AFTER I lost my job. That saved us about $500/mo.

The other obvious things you have already thought of like....coupons, eating out less, etc..all help too.

It sucks-but at the same time it works out too. :)

1 mom found this helpful

Not yet, but this is likely going to be a reality for many. A 20% pay cut is on the horizon for us too. I won't be happy about it but the money that we get is from billing Medicare and since the gov't is plumb out of money and revenues are going to be down for the foreseeable future, something has to give. The truth of the matter is that for the working man (or woman), we will be seeing a decrease in the standard of living. Not just for a few years, but likely for our life time, and for our children and maybe even their children.... I'm not just talking about the bad economy, we have an energy crisis in the foreseeable future, and what is happening to our dollar is beyond repair. The government printing money is a tax on the people because inflation is a hidden tax. There is no mystery to inflation. Inflation = expanding the monetary system which is what we do when we print money. So wither by pay cut or inflation or both, a lower standard of living is going to be a reality in the West. You are not alone. Don't know what line of work, company, or arm of the government you work. So it is impossible for me to know if you are being unfairly treated or if your salary simply could not be sustained in the new economy. But I'm sure it sucks big time. The best advice I can give you is find what you can be grateful for because it can always be worse. And sadly, I think it is going to get a lot worse for Americans before it gets better. If you can feed, cloth, and shelter your family, you have something to be grateful for. Not that you shouldn't hope or strive for better. Just saying, "times they are a changing" and you still likely have it a lot better than others in this world. We are simply headed for a lower standard of living in this country. You are feeling it. As I've been made aware of the things that have weakened our nation (and the west in general), I have come to accept that money is going to be tight. So I'm not so sad about it and am choosing to focus more on family, God, and the simple things, while letting go some of my material aspirations (like owning a home). I am at peace with it and wish the same for you.

(just saw that you are from Detroit, one of the most depressed cities in the nation. You are lucky to have a job, and I'd consider relocating)

1 mom found this helpful

Same exact thing happened to me about 2 years ago. 20% decrease in salary, but still required to work a 40 hour week. It totally sucked, and was hard for a while, but we made it through. We didn't save as much as we normally did, and went w/o some things for a while. I have to say, after a few months, we got used to it and it was OK.

You will be OK, it will just take some adjusting.

1 mom found this helpful

I got laid off from my job 2 months ago. We needed that extra income, and without it we weren't able to make ends meet... so we had to move in with my in-laws. It sucked, but at least we aren't on the street! The good news is, that after we moved hubby got a better job than the last one he had, so now with his income and my in-laws letting us stay with them, I am going to be starting school instead of another job... hopefully to have a better chance in the future. :)

1 mom found this helpful

I would take a serious look at your finances. Find out where you can cut; where you do your shopping (kohls vs macy's meijer vs kroger, etc) use coupons, change your cell phone plan, change your cable service and/or plan, etc. I did all of these things and it has made a big difference. Also start a budget and stick to it. We use an envelope system. We have envelopes for gas, groceries, car insurance, car repairs, prescriptions, and fun money. we have a set amount that we put in each one every payday. Once the money is gone (like in the fun envelope) then we are done until the next pay. We don't borrow from the other envelopes, so when car insurance is due, we have the right amount and don't need to pull from savings. Try it, it has worked wonders for us. We ended up able to put money into savings this way, and we had never planned on that. good luck

My husband had the same issue at his work with a pay cut, it was really hard as it hit when I was prego with our second son. We just tightened our belts and watched our spending like hawks. If you have time and think a side business would work for you then give it a shot. I actually started a sewing business on the side 6-8 wks ago, it is keeping my extremely busy and is bringing in extra money. Good luck and just remember you have a job and be thankful for that.

check out daveramsey.com good luck!

I'm sorry your going through this. My family feels your pain. My husband just took his 5th pay cut and now works 24 hours a week at his 40 hour job. He took a 60% pay cut. I work part time 25 hours a week. We used our savings account, cashed out our kids fully funded college funds, cashed out 401 and any other that we could. We take it day by day. We've always paid our bills on time or ahead. We can't do that anymore. I called all the collectors before we got in this situation and then I called at every pay cut. We are trying to be pro active.

We are trying to do the Dave Ramsey method. At the moment we take care of our food, clothes and basics. The rest of the bills get paid when we can, it has to be that way. Not because we don't want to pay our bills. We can't. I have a college degree and can't find a full time job as I'm over qualified. We keep trying to see the light at the end of the tunnel. Our kids don't ask for candy bars and such at the grocery store anymore.

If you have anymore questions please let me know. Again, we feel your pain.

Like Denise said, you can cut back spending to make it up instead of trying to earn it. I know it is frustrating but at least you have a job.

While I realize it was a different time, when I left hospital nursing 16 years ago to work in an office for better hours I took a 25% pay cut with a 4 year old a newborn! Then about 10 years ago I quit work all together.
About 4 years ago, my husband left corporate america, by his choice and cut our household income in HALF. We've done fine.
You spend what you make. Others have already pointed out, and you even said yourself, this is the time to examine your spending habits and notice where the extra dollars go. It is amazing how little changes make a huge difference.

Mine started w/a pay cut, then came the unpaid vacation days ( so many a month), then came the lay-off w/the promise of a call back in a few months and them the call 3 months later that I no longer had a job. That was it, no thank you or anything. So, just a pay cut is not so bad. Take a look at your money are where your spending. I call all our credit cards and had them lower the interest rate. I called all utilities and asked what I could do to save money or what discounts they offered - phone, cable, etc... I plan on doing this every 6 months.... we saved money and it all helped. You dont get if you dont ask. Good luck

Cut back everywhere you can, use coupons, plan menus by what is on sale that week, stock up when you can get free or cheap food (combining coupons and sales), check deal blogs, use the library for movie rentals and books instead of paying for them, combine errands whenever possible, reuse all you can, adjust thermostat to 68* (wear layers inside), comparison shop and price match.

Definitely read Dave Ramsey's "Total Money Makeover!" ($10 right now here http://bit.ly/gmOELn or check it out from the library for free.)
~ and/or~
"The Complete Tightwad Gazette" by Amy Dacyczyn
~and/or~
"The Coupon Mom's Guide to Cutting Your Grocery Bills in Half: The Strategic Shopping Method Proven to Slash Food and Drugstore Costs" by Stephanie Nelson (of couponmom.com)

If you want to learn more ways to save, PM me. I have an email already compiled with TONS of websites that will help you learn to save! (There are even ways to get paid to shop.)

Evaluate whether it is worth it for you to work at this point. Ae you paying for child care out of this reduced salary? Could you cut costs by staying home. I'd take a hard, cold look at that. Maybe you could work part-time somewhere else and save money by being home most of the time.

Wish I had some advice, all I can say is that it is rough all over. My husband had to wait two years for a raise that went with a promotion, which ended up only making up for no cost of living raises for 2 years, and now, this year, he is being told another freeze is in place, and that there will be no bonus. His bonus is 10% of his salary, so with no raise and no bonus, he will be taking a 15% cut this year. Add that to the two years with no raise...Well. You get my point. His promotion, which was to help him finally get ahead,did nothing. It kept up going, but he is getting no where.

I am not sure there is anywhere to go. Wish I had some real advice, but like I said, I think it is rough all over.