Pay Cut Hits Home

It really isn’t a surprise.  After all, Husband’s company has been laying off people like crazy, and is hemorrhaging money every month.

The company is doing better than it was, and once they move to their smaller digs next month they’ll be hemorrhaging a little  less.  Still, it’s not enough to keep the company viable, to keep Large Conglomerate from pulling out  the rug.

So, when Husband and the rest of the staff received a memo yesterday announcing the lease on the new office and mentioning that each staff member will be met with to “discuss your role as we move forward into this year,” we all knew what was coming:  PAY CUT.

Husband and I talked about it, and we figure we can take a 20% cut and still keep me at home.  It would be tough, we’d have to cut every ounce of fat out of our budget, but we could do it.  Sure, I could go back to work, but we truly believe Son is better off, and our family is better off, with me at home.


Well, Husband just called and it’s not as bad as we feared.  The pay cut is about 7.5%, which is definitely easier to bear  than 20%.  It’s not permanent; three months in the black and pay will be reinstated (though not retroactive to today).  They also told him how much he is valued, and that he gets the job done.  Which he all true, even if telling him today was a blatantly manipulative effort to lessen the blow.

And we’re lucky he still has a job.  Darn lucky.

So, we’re going to trim the budget as if the pay cut was 15% and put more money into savings.  We still need to be out of here before August, and  there’s lots of work to do.

Recession?  What recession?   Gee, I hope GWB is enjoying his.


I am a Stay at Home Mom. Here’s How I Finagled My Finances to Make It Happen.

The biggest decision Husband and I have made regarding our lifestyle and finances was for me to stay home with Son. That meant a 50 percent cut in our income, but we thought about it quite a bit before Son was even a twinkle in Husband’s eye, and we planned ahead.

Here’s how we made it happen:

1. We did the math. We thought out what expenses we’d be able to cut/save if I stayed home and which would go up. Daycare was easily the biggest expense we’d be able to forgo. We’d also save on gas to and from work, eating out (lunches and dinner) dry cleaning and income taxes (hello lower tax bracket!). We’d see an increase in electricity, water and groceries (now that I’d be cooking more), not to mention all of the new expenses for the baby (healthcare, food, diapers, etc.). Having more than one child can have a huge impact, too. My income was such that we’d still be losing a huge chunk of income, but for some people I know staying home made very little difference in their bottom line. Check out this great second income calculator to help you figure out how much your second salary really brings.

2. Cut unnecessary expenses. I stopped getting my nails done and cut out my daily Dunkin’ Donuts coffee stop. We both started bringing our lunch to work more, and we looked to cut our cable bill and other bills to get what we wanted, but not more than we needed.

3. Started to live just on Husband’s income. Since we knew we wanted to start trying for kids right away we began doing this a few months after we were married (I wish I’d started sooner). We did (do) dip into it occasionally, but we wanted to get used to the idea of living just on his income.

4. Changed our insurances. Instead of the better PPO health plan we went with the HMO, saving us several hundred dollars per month. And we pray for no serious health issues.

5. Paid off or set aside money for big recurring expenses. While I was still working we paid off some life insurance we had so we wouldn’t get that bill when I wasn’t working, and we got a discount on the premiums by doing so (and an extra tax bill, but still worth it). We set aside three years’ property tax payments and a few other once-a-year payments (just in case).

6. Made sure cars and appliances were in good condition. We didn’t want to be saddled with a car payment or large appliance replacement at least for the first three years. We had our mechanic check our cars (which were paid off), bought a new dishwasher and set aside money to replace our AC unit (we did have to replace it) and our dryer (still kicking).

7. Decided to stop adding money to retirement plans. Except for Husband’s 401k (he gets matching funds, and we never throw away free money), we stopped contributing to our IRAs. We decided we’d likely need the money to live on, and when son went to school and I started working again during school hours we’d be able to make up for the lost time.

8. Get more freelance work. Husband is a graphic designer, an occupation very conducive to freelancing. This extra income would (has) allow us to make up for any shortfalls, and give us treats such as vacations and iPods and flat screen monitors.

9. Found alternative sources of income. When opportunity knocks we invite it in. I find bargains and re-sell them, take surveys, participate in market research, and took a temporary job working for Husband’s Uncle (very lucrative, but only lasted a few months, dadgummit!). A friend of mine makes extra money providing after school care for neighborhood kids. We also speculated that Husband would be getting a raise or two, but we didn’t count on it. He has gotten several raises and bonuses (though his Christmas bonus this year was a bit unsatisfying), and they’ve certainly helped!

Thanks to this plan we were able to put much of my salary into savings, creating a nice cushion for what we knew would be “the lean years”. Now, nearly four years later, it’s been a rousing success.

If becoming a Stay at Home Mom or Dad is what you want to do, take a look at your own life and see what’s possible.

I highly recommend it.

Counting Chickens and Eggs and Christmas Bonuses

Husband works for an advertising agency that specializes in real estate. Not surprisingly, business is bad. With all of the foreclosures in our market and everywhere, no one can afford the million dollar homes that are this agency’s specialty.

Business is reeeeeeeally bad.

So bad that they have laid off about 25% of their workforce, and are scrambling to increase their presence in other industries (something Husband and I have many times discussed is oh, about five years overdue). Really not a great idea to put all one’s eggs in one basket, is it?

Christmas Bonus time comes around. Because Husband is very good at what he does, is very reliable and has an excellent work ethic, his bonuses have always been…commensurate with his contribution. Last year spectacularly so.

As a result, when I was pondering the viability of buying Husband the new Apple MacPro computer he wanted as his Christmas gift, I factored in the probability of a nice bonus again this year. I shrewdly did not expect it to be as abundant as last year, but in my consideration hoped for it to be even half. Even if it wasn’t, I reasoned, we do have the money in savings, and he will get more freelance projects to replace what we use within a few months.

When Husband told me in mid-December that bonuses weren’t going to be paid until the mid-January pay period, I wasn’t upset at all. In fact, it is better for our tax bottom line in 2007 to defer that income until 2008. Rock on.

I went ahead and bought the new computer, and all is right with the world.

Then, today, Husband calls and tells me he got his bonus. It is 1/10th of what it was last year.

I was completely flabbergasted. There must be a mistake! No? The injustice!!!!

Then I was embarrassed. Given the state of the company, we’re lucky he got a bonus at all. Many people don’t.

Given the state of the company, we’re lucky he has a job at all.

Mea culpa.

No more counting my chickens before they hatch, even if I leverage them.

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