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View Full Version : How much of a pay cut can you handle?



genglandoh
01-31-2012, 09:17 AM
I have posted before that my wifes company is moving to China.
So she will lose her job and our family income will drop by 40%.
Her company gave the employees a 12 month notice and we have had time to get ready.

The 40% cut will be hard but we can handle it mostly because we are in our 50s and do not have any debts.
If we were younger with kids at home it would be much harder.

So to answer my own question we can handle a 40% pay cut without having to sell our house but that will put us on the edge, if the amount was 50% we would have to sell the house.

The good news is even if she gets a job at 50% of her current pay our family income will go up 20% and we will be off the edge.

wardd
01-31-2012, 10:24 AM
I cut my own income close to 95%. Went from 120k down to a 10 or less. Best move I ever made was to leave materialism behind and live according to need and not want. Want pollutes the mind. Just look around the forum. I have more true friends and people around me that I can actually count on and truly only one from the forum meets the criteria and he doesn't post here anymore. Smarter than I. :)
It is one hell of an adjustment to start to live deliberately but I highly recommend it.

and here i thought we were buds

Joe Dupere
01-31-2012, 10:28 AM
It is one hell of an adjustment to start to live deliberately but I highly recommend it.

We're living on about 25% of what we were making 4 years ago. If we didn't both still have student loan payments, we could bring that down to about 16%. The life we're living is not for everyone, but we're pretty comfortable and satisfied with where we are right now.

Joe, FFPoP

Blowtorch
01-31-2012, 10:31 AM
I could get by on 2% of what I make but it wouldnt be any fun at all. I couldmake half of what I do and be able to keep everything Ive worked to own but would have a hard time feeding myself.

Captain Intrepid
01-31-2012, 10:43 AM
You could cut my take home pay to zero and I'd be fine. It helps when your job provides food and shelter!

Old Dryfoot
01-31-2012, 12:23 PM
Zero. My income is pretty much inline with the current living wage for my location. In fact, I just had a slow few weeks at work and just missing out on some 30 hours of work means that to cover my obligations for the month I will need to dip into my meager savings.

Blowtorch
01-31-2012, 12:25 PM
You only own what you can carry. The rest is an illusion.
Well I own a Kenworth and a 51' Dry Van so I can carry quite a bit!!

wardd
01-31-2012, 12:26 PM
Zero. My income is pretty much inline with the current living wage for my location. In fact, I just had a slow few weeks at work and just missing out on some 30 hours of work means that to cover my obligations for the month I will need to dip into my meager savings.

don't mention savings, or some republican will accuse you of class warfare and withholding from the wealthy

Old Dryfoot
01-31-2012, 12:34 PM
don't mention savings, or some republican will accuse you of class warfare and withholding from the wealthy

Not to worry... what I call savings the wealthy would call tip money, I'm under the radar. ;)

Waddie
01-31-2012, 01:52 PM
Best advice I ever got was to enter retirement with all new appliances and no debt. I am expecting cuts of some kind, so let the chips fall.... first thing will be means testing. Then will come the painful cuts....

Of course the baby boomers will oppose any cuts to their benefits, but will younger workers be willing to pay for them and pay the debt? Once they become the largest voting block we shall see. But we are sure putting them under the hammer.

It seems everyone is learning to hunker down and do with less. Maybe if we had done that gradually we could have avoided some of what we're going through now. The age of "conspicuous consumption" appears to be over. Even people with fairly secure jobs feel the angst.

regards,
Waddie

Blowtorch
01-31-2012, 03:47 PM
Another illusion. You don't own it and in fact you have a user title. The MCO is with the state who actually owns it.No, I paid cash for it. its mine.

purri
01-31-2012, 07:12 PM
We've gone to 60% from 2009 income. House is paid for and nil outstandings. Life is good.

leikec
01-31-2012, 07:15 PM
I can't handle much--I'm already making "do you want fries with that?" money as it is....

Jeff C

John Bell
01-31-2012, 07:39 PM
Eleven years ago we cut our income by 45% when my wife left the full-time workforce right before the birth of our second child. We managed. The best part now is we can tell our children they've cost us in the neigborhood of $800,000 in order that they may have one parent focused full time on their development. The expensive little ungrateful wretches never seem to be impressed at that.... :)

Seriously, it was a pretty scary step for us to take but we managed and even thrived despite the loss of incoming cash flow. We have no regrets, either. It's just about re-ordering priorities.

Peter Malcolm Jardine
01-31-2012, 07:50 PM
I don't worry about money too much. I work hard, and I have done a lot of different things, so even if I don't like the job I have, I always work, pay my taxes and participate in society. I learned that from my father, and other people I try to emulate.

genglandoh
01-04-2013, 12:19 PM
I have posted before that my wifes company is moving to China.
So she will lose her job and our family income will drop by 40%.
Her company gave the employees a 12 month notice and we have had time to get ready.

The 40% cut will be hard but we can handle it mostly because we are in our 50s and do not have any debts.
If we were younger with kids at home it would be much harder.

So to answer my own question we can handle a 40% pay cut without having to sell our house but that will put us on the edge, if the amount was 50% we would have to sell the house.

The good news is even if she gets a job at 50% of her current pay our family income will go up 20% and we will be off the edge.

Well it has happened.
My wife's last day was last Friday.
We are lucky in that we had a 2 year notice of the plant closing and was able to get things in order.

I thank the former owner of the business for giving the employees the best deal possible.
The History
The company sells 80% of their products to Japan and China.
The former owner refused to move the business to China and held out for a long time.
He does not have any kids and is about 60 years old.

He sold the business to a larger company but stayed on to help his employees with the transition.
The new company decide to move the manufacturing to China closer to their customers.
The former owner ( now a very wealthy man) continued to go to work everyday and did the following
1. Made sure the employees were told about the move early.
2. Made sure they got resume writing and interview training.
3. Set up 3 full day job fairs where they invited in other companies to meet with the employees.
4. In the case where both a husband and wife both worked for the company he was able to keep one of them.
This way the family income would only drop by 50%.
I should explain that the company will still design new products in Ohio and will manufacture the prototypes.
So they will need a small manufacturing staff and this group is where former owner was able to save a few jobs.

You can see I have a lot of respect for the former owner.

As for my family because we were given a 2 year warning and we got our situation in order so we do not need to sell our house.

It will be hard but we will manage.

RichKrough
01-04-2013, 12:40 PM
Good to hear everything worked out for you and your wife. We only hear about the bad employers seldom the good ones.

When I began closing out my business I gave everyone (6 employees) several months of notice and helped them have new jobs lined up before I locked the doors. It was both the right thing morally and the smart thing financially. By transitioning them into new jobs I didn't get dinged by the state of NY for unemployment insurance claims.

genglandoh
01-04-2013, 12:56 PM
I agree... he did the honorable thing. Unlikely to see that kind of responsibility from a public corporation.

Back in 1992, when I left my company, they were in the midst of a rather severe cutback, with layoffs (I wasn't laid off.. I left voluntarily, unrelated to the cutbacks). The company provided a severance package of 13 weeks, plus two weeks for every year of service... which included all benefits. Since there were many employees who had been with the company for a lot of years, many of them got a VERY long time to find a new job. One fellow I worked with had 35 years with the company, so he got 83 weeks of salary and benefit continuation... remarkably generous.

As it turned out, despite the fact that I wasn't part of the cutbacks or layoffs, I was given the same deal, which in my case, amounted to 49 weeks... it made the transition far easier.

I agree a big stock driven company would not have done these things.
As most know I do not like big anything including big business.

One little odd issue is the company is still manufacturing in Ohio using Temporary employees.
The manufacturing will stop in 1-2 months.
The way the labor laws are if the company keeps the old employees past the new year then they will have to give them their vacation time.
Some of the older employees have 8 weeks vacation time so they would have to pay the employees for the 8 weeks of manufacturing and the 8 weeks of vacation.
Just to high a cost for the company so they are using temps.
Some of the employees have asked to be hired as temps but the labor laws are preventing them from being hired.

Don't get me wrong I do not disagree with paying employees for their vacation time but if the law was a little different and the vacation time was prorated then the employees would have kept their jobs a little longer.

PS My knowledge of the labor law is based on what the company has told the employees and it is possible the are using this as an excuse.

Gerarddm
01-04-2013, 01:26 PM
This thread title reminds me of that Thoreau observation that most men lead lives of quiet desperation. He'd be pretty boggled if he were around today...

hokiefan
01-04-2013, 01:26 PM
I agree a big stock driven company would not have done these things.
As most know I do not like big anything including big business.

One little odd issue is the company is still manufacturing in Ohio using Temporary employees.
The manufacturing will stop in 1-2 months.
The way the labor laws are if the company keeps the old employees past the new year then they will have to give them their vacation time.
Some of the older employees have 8 weeks vacation time so they would have to pay the employees for the 8 weeks of manufacturing and the 8 weeks of vacation.
Just to high a cost for the company so they are using temps.
Some of the employees have asked to be hired as temps but the labor laws are preventing them from being hired.

Don't get me wrong I do not disagree with paying employees for their vacation time but if the law was a little different and the vacation time was prorated then the employees would have kept their jobs a little longer.

PS My knowledge of the labor law is based on what the company has told the employees and it is possible the are using this as an excuse.

As far as I know, vacation accrual is based on company policy. My previous employers gave you your vacation on Jan 1st of each year based on last years service. So you had little to none the first year. So if you left anytime in the year the company owed you your unused vacation. My current employer grants vacation as the year progresses, so if you leave early they owe you very little. But you start having vacaction available almost from the beginning. If you want to take a January vacation, you have to borrow it from later and if you leave before you are even you may owe the company for the "borrowed" vacation.

Cheers,

Bobby

genglandoh
01-05-2013, 11:07 AM
Good to hear everything worked out for you and your wife. We only hear about the bad employers seldom the good ones.

When I began closing out my business I gave everyone (6 employees) several months of notice and helped them have new jobs lined up before I locked the doors. It was both the right thing morally and the smart thing financially. By transitioning them into new jobs I didn't get dinged by the state of NY for unemployment insurance claims.

It is a shame you had to close your business but good for you in trying to make the closing as easy as possible on your employees.

BrianW
01-05-2013, 03:59 PM
I agree... he did the honorable thing. Unlikely to see that kind of responsibility from a public corporation.

That's a major reason I switched employers last year. The publicly traded company was was too 'stockholder driven'. I understand the responsibility, but that kind of info should not be transmitted all the way down to my level. It sends the wrong message.

Meli
01-05-2013, 04:30 PM
i could handle a 50% cut because I own my home and have no debt. But the kids would have to go :( :D

Todd D
01-05-2013, 05:00 PM
I could go down to zero without changing anything. Of course my employment income is only about $2,500 a year now.

Reynard38
01-05-2013, 05:37 PM
I took a 46% pay cut as a result of my companies chapter 11 filing after 9/11. Lost my pension and post retirement medical as well.
Shortly afterwards my wife's main client evaporated as well. In total it was about a 70% cut.
i went out and got my real estate license and did that on the side until I could make captain. My wife's business finally rebounded 2 years later.
It was tough. We cut way back, but we made it out the other side. Fortunately we never bought the big house, and owned our cars.
Started and sold 2 businesses as a result of all this.
Made captain 5 years ago and we are back to our former standard of living again, but we still won't buy a new car, and the next house will be smaller (but closer to the coast and with room for a big shop!)

RichKrough
01-05-2013, 07:23 PM
I'm not working now and will be living off SWMBO for the next year or two while we get this house sold and I get another built in NC. So we just lost half our income. Fortunately our kid is grown,his college is paid off and we have very little debt. On the other side when my wife retires and we have moved, I'll have to make a little money to cover my health insurance costs until Medicare kicks in and to keep the 2 boats up.
Problem for me is I promised my wife no more construction related work or work requiring travel. Frankly I am scared sheot-less at attempting a new career at age 56

John Smith
01-06-2013, 08:40 AM
Best advice I ever got was to enter retirement with all new appliances and no debt. I am expecting cuts of some kind, so let the chips fall.... first thing will be means testing. Then will come the painful cuts....

Of course the baby boomers will oppose any cuts to their benefits, but will younger workers be willing to pay for them and pay the debt? Once they become the largest voting block we shall see. But we are sure putting them under the hammer.

It seems everyone is learning to hunker down and do with less. Maybe if we had done that gradually we could have avoided some of what we're going through now. The age of "conspicuous consumption" appears to be over. Even people with fairly secure jobs feel the angst.

regards,
Waddie

We cut at our peril. If we cut 100% of the defense budget, we'd still have half, or more, of our deficit.

Mrleft8
01-06-2013, 09:02 AM
I could take a 100% cut in pay. As the old saying goes... "Nothing from nothing is nothing"

McMike
01-06-2013, 10:19 AM
Well it has happened.
My wife's last day was last Friday.
We are lucky in that we had a 2 year notice of the plant closing and was able to get things in order.

I thank the former owner of the business for giving the employees the best deal possible.
The History
The company sells 80% of their products to Japan and China.
The former owner refused to move the business to China and held out for a long time.
He does not have any kids and is about 60 years old.

He sold the business to a larger company but stayed on to help his employees with the transition.
The new company decide to move the manufacturing to China closer to their customers.
The former owner ( now a very wealthy man) continued to go to work everyday and did the following
1. Made sure the employees were told about the move early.
2. Made sure they got resume writing and interview training.
3. Set up 3 full day job fairs where they invited in other companies to meet with the employees.
4. In the case where both a husband and wife both worked for the company he was able to keep one of them.
This way the family income would only drop by 50%.
I should explain that the company will still design new products in Ohio and will manufacture the prototypes.
So they will need a small manufacturing staff and this group is where former owner was able to save a few jobs.

You can see I have a lot of respect for the former owner.

As for my family because we were given a 2 year warning and we got our situation in order so we do not need to sell our house.

It will be hard but we will manage.

That's a very responsible man right there. I wish even half of the business owners were this honorable, sadly, most are douche bags.