How to survive a $70,000 pay cut

Jason, over at Work Save Live, has a great post up on how they survived a $70,000 pay cut. I especially love this part:

Living on less than you make is extremely difficult. It’s one of those easier-said-than-done things. What typically happens in this country, regardless of income, is that we spend EVERYTHING we make (and most of us go into debt beyond that). I’ve coached people that make minimum wage, some that make $20/hr, and others that take home $10,000/month. And that statement applies to all of them. Everything is relative. Income and lifestyle adjust in the same direction.

The fact is, regardless of your income, you MUST learn to live on substantially less than you make. Doing that will allow you to take a lesser-paying job in the event that (1) you want to pursue your dream job or (2) you get fired/laid off and can only find work that comes with a reduction in pay.

Read the full post.

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Comments

  1. says

    So true! My husband just graduated and the temptation to move out of our cramped apartment into something *slightly* bigger was so incredibly strong!

    Thanks in large part to your encouragement and inspiration, we stayed where we are to allow us to put as much as possible to paying off our small student loan FAST and then moving on to our long-term financial goals.

    • Shelly says

      Although I’m not married, I got a job at my alma mater and lived at home for over two years, even though I badly wanted to go on my own, for reasons similar to yours. I paid off my small(er) student loans, and was happy I waited!

  2. Amy Pickett says

    Thanks Crystal, we went through this too, on a larger scale! Encouraging words to ponder & not forget. Also, to teach our 3 children, God blessed us even when we didn’t know it. Time for sleep ;-)

  3. robyn says

    absolutely love the quoted section and isn’t it so true. my in-laws are extremely wealthy-they worked hard (and still do) and live modestly to get there. over the years as i’ve been apart of their family i’ve witnessed first hand folks they do business with or are acquainted with file bankruptcy (some more than once) because of poor money management and not a lack of income. these were people making hundreds and hundreds of thousands of dollars each year and had nothing left to show for it. and i’ve seen the opposite as well- folks earning a very meager blue collar wage that make their money work for them- save invest and pay cash! it truly is what you do with your money that makes a person wealthy NOT the amount of money you make.

    • Brittany says

      “it truly is what you do with your money that makes a person wealthy NOT the amount of money you make.” <—yes!!

  4. says

    Thanks so much for sharing that article! I loved it, and I’m going to show it to my husband later. He is at a job he hates, but we can’t afford for him to switch jobs because of the lower pay. Maybe if we put some of that (and of course read your new book!) into practice, we can afford for him to have a lower paying job, where he is happier.

  5. says

    We survived a similar pay cut when the bottom fell out of the construction industry back in Oct 2008 and I lost my job as a kitchen designer. My income was 40% of our take home pay. We cut our budget back pretty hard. We had/have no debt, except for a very manageable mortgage and had savings. I still have not gone back to work and have enjoyed being at home.

  6. says

    We took more than that–and it made our mortgage payment pretty much our entire income, wheras before it was 25% of our income. It’s been 5 years and we’re still in our home, thanks be to God. I only hope we can continue. Today has been a hard day.

    • Kelly says

      I know that I don’t know you but I have followed your website. As a reader, we are allowed to be drawn into your life through the internet and it feels like I know you. You always seem so positive and seem to have such great advice on how to manage with little. You writing show how you find much in little. Your information and family’s story have been very encouraging to me. Your last line above brought a tear to my eye for your family. Prayers for your situation.

    • Lea Stormhammer says

      So sorry yesterday was a hard day, Brandy. We’ll say some extra prayers for you and your family!

      We’ve had some hard days here too – my husband needs to leave his job next year – for an internship that we pay for with no income from it at all! We’re going to be in exactly the same situation you’re in – our monthly income will be less than or equal to our mortgage payment – depending on the month. We are so very, very grateful that we’re able to “do something about that” before we get there! We’re pretty overwhelmed most days here and try to take it one day at a time.

      I’m going to second Kelly that your site has been such an inspiration to me. We definitely have different styles, but I have been making and making over more clothing and household items, decorating with what I have and eating very, very, very well for a lot less than we ever thought possible since I found your site! Just knowing that other people have been there, done that and are continuing to do it is such a comfort! Your site has been a huge blessings and being able to share it with others has been a blessing too!

      Hugs and Prayers,
      Lea

  7. says

    I relate to this article. It’s wasn’t quite 70,000 for us.. but close, probably 50,000. When the recession hit my husband and I were photographers- he was a real estate photographer and I was a wedding photographer. Our business was booming- he was shooting 20+ houses a week and I was shooting 25 weddings a year and our income was just increasing every year- it was time to cash out that big home equity and do the 800 sf home addition we had been wanting.

    Then the recession hit.. the real estate agents stopped calling and so did the brides.. our income was cut in half that year..plus we were still trying to plow forward with they addition.. since our house was “open to nature”, literally..

    We kept moving forward and thought, “It will be Ok”.. this will pass. It did not.. the next year we took another 50% paycut. My husband was looking for a job and no one was hiring. He spend a whole year out of work.

    I closed my photography business and just focused on my blog.. and basically we lived on that income for a year.. which was no were near huge, especially considering our Southern CA sized mortgage.

    The month before he got a job (not his current one which is awesome) we were planning to not pay our mortgage any more.. there was no more money. We tried a mortgage adjustment but the told us we were making so little even if they did it we couldn’t afford it.. so this was it.

    But God provides, as He does. My husband finally got a job, not a great one, but a job, and we could stay in our home. A few months later he was offered a wonderful job at a fabulous company owned by a man at our church.. and I picture him staying there for many, many years. It’s one of the best companies you could ask for.

    Now we are just working on the huge amount of debt we accumulated during that difficult period. And we are working hard at it.. we should have it paid off next year, God willing!

    jenetta

    • Shelly says

      And here I’ve been doubting that God does work in people’s lives, and what a story you have to tell otherwise! Thanks for sharing, and I hope your husband does remain there – sounds like a good spot!

  8. says

    I can relate to this post right now, My husband lost his $110,00 job right before the holidays of this year. Imagine a 54 year old SQL DBA finding another job or taking one for minimum wage, if he could find one.
    Without these types of blogs and posts it would be terrifying, but to hear that you can do it it great. Even if you are not (which we are not ) those people you hear about who have three months salary in the bank, you can do it. There are so many things that you can save money on that only this humbling experience can teach you. Thank you to all of you who give us great tips like these. Linda r. www. survivethecostofliving.com

    • Lana says

      My husband is the same age as yours and in the same line of work. It is tough out there! We were unemployed for 9 months and then he got a 12 month contract which expires in about 5 weeks. Whether or not it will be renewed we do not know but during the time he has worked we have worked to build our savings back up and we can do it again if we have to. The crazy thing is that my husband’s job went over seas to people who do not know how to do his job and then he was hired back as a contractor to cover their mistakes. But, our God has supplied all our needs and given us peace through it all.

      • says

        Hi sorry to hear about your husband, although the contract job was good. That is what my husband is looking for now. Some weeks it is really hard, but I try to write as many hours as I can to make a few hundred a month when I can find the work. I keep my blogs up and get some advertising articles.
        Do you do anything like that?

        And you are right God has kept us all going, I honestly don’t know how I would do it wothout His help.

  9. shauna says

    70,000 pay cut, would leave us with zero dollars. But for anyone that is a steep cut especially when you have grown accustomed to such a lifestyle.

  10. says

    Hello everybody! Thanks for visiting the site. I want to thank Crystal greatly…you sure do have some loyal followers.

    Shauna, the only thing I’ll say in reply is that things are relative (as Crystal quoted from the blog post). Instead of looking it as a $70,000 pay cut, it may be best to view it as ‘what would you do if you lost 50% of your current income?’ We were lucky and we didn’t really get accustomed to that lifestyle, or else we would have been in some serious trouble.

    The principles of the post still apply whether you make $250,000 or $30,000.

  11. Tammy says

    Shauna that has been us.My husband is the only one who works and many times has lost his job over the past 6 years.So we went from 70,000 a year to unemployment in a a matter of a minute when they announce we are letting you go!

  12. Debra says

    How encouraging are your words! How gifted you are to touch the lives of so many! Praise God! A lot of the feedback here is so important and humbling. So many lights that leave no room for darkness is what you all are!

  13. Wendy says

    Looking forward to reading the whole article when his server recovers! :) After about 6 weeks of unemployment in October and November my husband found a new job. At about $30,000 a year it’s a little less than half of what he had been making. We were in the process of trying to dig out of a hole before the unemployment. Now, we’re trying to dig out of a little bit deeper hole on half the income. It’s very daunting. I’m in my late thirties and have been out of the “regular” work-force since we got married 9 years ago (our anniversary was Jan 3rd). I work part-time cleaning houses because it pays well for a part-time job – and the schedule has been very flexible. I’m now trying to find more houses to clean or a part-time job I can work around the houses I’m already cleaning. With the current job market, I’m soooo not in high demand! :)

    The good news is that my husband really likes his new job. He is an assistant manager so he will get monthly bonuses based on store sales, according to his manager we can expect his bonuses to continue to increase because his percentage will go up as he’s there longer. And there is real hope he will be ready to move into a position as store manager by the end of the year! That would greatly increase his pay!

    I’m getting ready to order Crystal’s book from Amazon (thanks Swagbucks!) as I am greatly in need of some motivation and encouragement as I try to increase my income and decrease our expenses, deal with the emotions related to my son graduating from high school this coming May, AND remain an encouraging, supportive help-mate for my husband! I really wish I had been able to order it yesterday to get the Dave Ramsey bundle; however, I think it’s a great buy even without any bonus offers!

    Crystal, thanks so much for all you do to encourage and bless us! :)

  14. Natalie says

    Very timely post for us as well. We took a $60,000 pay cut last year when my husband left his glass ceiling job for a once-in-a-lifetime opportunity 666 (seriously! I should’ve know it wasn’t going to go according to plan!) miles from friends and family. It was terrifying for me to halt the corporate career I’d built for 10 yrs, even though I hated it. It was 50% of our income. But, I was energized at the prospect of turning my part-time job as a licensed massage therapist into a full time gig. We did everything right, saved as much as we could in the short amount of time we had, paid off what we could, I got licensed for the state we’d be moving to. The prospect of dual mortgages was put on the back burner as his new employer would reimburse us for the vacant dwelling payments for one year. What we never dreamed was that we would be required to replace the entire water softener/filtration system before we could list our house, that it would then be burglarized and that system, most of the HVAC and all the copper would be stolen, that our home owner’s insurance dropped us b/c it was vacant more than 3 months, that it would take 3 months to get our 1st reimbursement check or that we would lose 2 buyers due to the offers on THEIR homes falling through. We have used up nearly our entire life savings in a little less than a year on a house that could very realistically end up foreclosed. Add to that the kitchen ceiling collapsed in our new house, the dryer stopped working, and my van was broken into, not to mention that building a client base when you know no one is very tough! It makes me sick to think about the $10s of $1000s we’ve spent trying to juggle for the last year. …I keep repeating, I am thankful that we did have it saved. I am thankful to have a temporary position arise just when we thought all was lost, and I am thankful that my old company brought me on as a consultant for a few weeks. I am thankful that we were able to pay off some major debts. I also recently secured a wonderful job with a chiropractic office and am seeing an increasingly steady stream of independent clients. Things are starting to come around; not quite making ends meet, but we’re very close. Our financial scars are so deep, I still wonder if it was worth it. But we certainly have learned alot about ourselves, money management and what it means to “have enough”. ; )

  15. says

    Food for thought.

    Say you make $100,000 a year. Your expenses are $80,000. You have $20,000 left.

    So, basically takes $8 to make every $2

    Think of it this way – every time you spend $2 for something, it really costs you $10.

    Made me cut back and look for deals.

  16. Patti says

    I highly recommend that everyone read “Your Money or Your Life” by Joe Dominguez and Vicki Robin. I had the good fortune to have seen them on public tv and to have read the book before the recession hit. When my boss came to me in 2005 to ask me to work in five counties (one was four hours away from my home!!!), I was able to look at him and say, “NO.” I called my husband and said, “I just quit my job”. Having 18 years invested, it was hard and it also took a big chunk of our salary away. But we were determined to make ends meet and we did. I have never looked back. Reading this blog and all of the comments is how we did it. We simply decided there was more to life than money. Who would have thought the economy could get so much worse? (I had planned to return to work by now but my job no longer exists). I have such sympathy for all of those who are struggling out there, but I know you can live on a whole lot less than you ever thought possible. Keep looking up!!

  17. L says

    I agree with many of you that said that money isn’t everything, because it’s not. Family, children, love and life experiences all should be priorities. And I believe most people can make it in very tight circumstances. My only fear in life is when I become too old to work, that I will have not saved enough to live comfortably, at least enough to pay for necessities. My hope for everyone is to be able to find work if they have lost a job. My opinion is to save as much as you can, plan for your retirement, as I have seen many in our older generation struggle with “not having enough” where medical bills, insurance, prescriptions, and grocery bills are hard to afford.