Day 26 of 33 Days And 33 Ways To Save Money And Reduce Debt: Give Yourself A (Pretend) Pay Cut

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Day 26: Give Yourself A (Pretend) Pay Cut

What would happen if your boss came into your office tomorrow morning, and told you that your salary had been reduced by 15%?  Furthermore, what if he told you that a new law had been passed and you couldn’t change jobs for one full year – and you couldn’t borrow any money, for any reason?

What would you do?  You would probably freak out – then go home and tell your family – and then you would sit down and figure out what to do.  You would begin to examine your spending habits – and you would force yourself to make some changes.  In a year’s time, you would still be alive, and somehow you would have managed to live on 85% of your original salary.  You might have had to give up some of your favorite things – going to the movies, eating out, taking vacations – but you would have survived.

But, we all know that your boss (more than likely) isn’t going to come into your office in the morning and tell you those things.  Nope, you’re life will go on, much like it has for the past few months – you’ll make the same salary, you’ll be able to borrow money, and you will be free to look for a new job.  But, what if you decided to make the spending changes anyway?  What if you decided, today, to live on 85% of your salary? or 75%? or 98%,? or even 60%?  What if you went crazy and “gave yourself a pay cut”.  Not a real pay cut, mind you, but a pretend one.  What if you decided to live on 85% of your salary, instead of 100%?

Sit down with your spouse and discuss what the two of you might do if household income were decreased by, say, 15%.  Then, go out and do HALF of those things – and I’ll bet you’ll be amazed at how quickly you can reduce you debt and save money.  It is amazing how much money we spend on things that are “unnecessary”.  Most of us, if we would focus on the truly necessary things, could fully fund our retirement accounts, live debt free, and enjoy abundant lives.

If you have voluntarily “down-shifted” – given yourself a pretend pay cut – leave a comment.  Or perhaps you’ve given yourself a ‘real’ pay cut – left a job that you didn’t like for a lower paying job that you love – leave a comment and let us know about the changes you’ve made.


Click here to read all of the 33 Days And 33 Ways To Save Money And Reduce Debt posts.

(Final note:  I realize that many of the folks who read my blog find themselves in difficult financial situations.  Some of you have lost your jobs – due to downsizing, health issues, or disability.  I further realize that many of you have already made tremendous cuts in your budgets and that you can’t “squeeze blood from a turnip”.  The inspiration for this post comes from the lady I saw at the grocery store, who was complaining that her credit card was maxed out, as she’s getting into her brand new Lincoln Navigator.  There is a difference between “voluntary simplicity” and “involuntary unemployment” – and I truly sympathize with those who are struggling to make ends meet.)

NCN

http://www.ncnblog.com

No Credit Needed is a personal finance blog about debt reduction, saving money, and simple living. Thank you for visiting the site and please consider subscribing to No Credit Needed by Email. Have a blessed day!

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18 thoughts on “Day 26 of 33 Days And 33 Ways To Save Money And Reduce Debt: Give Yourself A (Pretend) Pay Cut
  1. Mrs. Micah

    Cool. I think Mr. Micah and I may do this already. We just use all the money he earns for savings and debt repayment. None of his goes into the monthly budget. Then we live off what I make.

     
  2. ~Dawn

    It’s not pretend for me, my FT job has let me know that we are not getting bonus’ (5% of salary) and that we may get smaller or no raises for this year.

    I’ve gotten over the anger and am now figuring out ways to deal.

     
  3. Marie

    We are a family of four living on 75% of a 21K salary. I wish I could say we are saving all the excess but we have mondo student loans that we are chipping away at before graduation. In the eight years we have been in college they are quite big.

     
  4. fiveberries

    We did it about five years ago, but for real and on purpose. We were already a one income family of four, but my husband hated his job. With a capital H.

    So he followed his dream to become a police officer – and cut his salary by one third. And we bought a smaller house and moved closer to work, so his car would last longer and the commuting costs would be lower. We cut back on so much, and added another little person to our family.

    It was worth it, a hundred times over.

     
  5. Patrick

    NCN, this is a great way to save money. My wife just changed jobs, and the difference in her take home pay is HUGE (almost $20k per year after taxes). Thankfully, we started preparing for this a year ago.

    I started to write a longer comment, but I think it would serve better as a post. ;)

     
  6. Curtis

    We are working on doing this at home now! In starting to put our budget together, we are going to budget around a lower income. Since I get paid every other week (26 times anually) we are only going to plan on 2 paychecks per month (24 anually) which gives us 2 entire pay checks to save or pay down debt. We also won’t include tax refunds or either of our part-time jobs into account for an added benefit.

     
  7. JACK

    Anything that helps get you to seriously look at whether certain spending habits are necessary is a great idea. I think the corollary to this (which you have probably done before) is “Don’t Give Yourself a Pay Raise”. I find that a lot of people get into as much trouble through “lifestyle inflation”. I long ago decided that I had hit a comfortable spot and decided to not include any pay raises into my budget. Any I have gotten (and sadly hasn’t been many) go straight to savings and investments.

     
  8. JACK

    Anything that helps get you to seriously look at whether certain spending habits are necessary is a great idea. I think the corollary to this (which you have probably done before) is “Don’t Give Yourself a Pay Raise”. I find that a lot of people get into as much trouble through “lifestyle inflation”. I long ago decided that I had hit a comfortable spot and decided to not include any pay raises into my budget. Any I have gotten (and sadly hasn’t been many) go straight to savings and investments.

     
  9. Diolla

    I did this right after my ex and I separated. I downsized in home and poured over every bill to see where I could cut. By not having unrealistic expectations of where I would be with only one income I have managed to become debt free, except a small mortgage, pay for my sons orthodontia, fund retirement accounts, take a 5 day cruise and spend a week at Disney World. If I had continued with the ‘status quo’ I would have been in financial hell by now.

     
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  15. Anitra

    We do more of the “Don’t Give Yourself A Raise”, here. If we had a drastic cut in pay, it would be because one spouse lost their job (voluntarily or not), and that person not working would give us the resources we need to further cut our spending – getting rid of a car, cooking every meal from scratch rather than pre-made boxed/frozen meals, less computer/internet expenses, etc. We can’t do any of that now.

     
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