A decrease in pay, should I be worried?

**maat55** · 04-25-2010, 04:15 PM

I would trim the fat(cell,gym,net,lifeline,aflac). Your condo will be way too much of your income. You can work extra and cut expenses, but if this is longterm I would consider finding a cheaper place to live.

I would not use the credit cards to ride this out.

**disneysteve** · 04-25-2010, 04:21 PM

I would agree with cutting the fat - there is a fair amount of it on your list.

I think the bigger issue is what you are doing to pursue a better job that will pay you as much or more than you were making before the cut.

**Homebody** · 04-25-2010, 05:07 PM

Cell phone seems like a lot!

**Adria.John** · 04-25-2010, 11:59 PM

What does that mean Homebody?

**Homebody** · 04-26-2010, 05:27 AM

The monthly fee for your cell phone, it seems kind of high for 1 phone. We pay $69.99 plus tax for 700 shared minutes between my husband and I. That just jumped out at me, along with the cost of the gym. Do you live in New York City or some HCOL area?

**jpg7n16** · 04-26-2010, 09:20 AM

Why not take some of the $15k you have in savings, and pay off the CC entirely?

Keeping that balance on there gains nothing and costs you 15-25% a year ($450-875/yr)

Paying 135 doesn't make you sweat harder at the gym

So gym you can get lower (I pay $35/mo), but keep working out. Healthy living saves on several other costs (insurance costs, medical bills, clothing doesn't get too small, etc). Either way, the gym isn't a major issue.

The main thing I don't like so much is the condo payment. Condo + HOA is almost half your income! I guess it is backed by an asset yeah, but still. Wow.

If you're struggling, could you get a roommate? I share an apt with my bro and a roommate. Total for all rent and utilities this month was $1250. My share was $420. (Dallas area). I don't know where you live, but man $2k a month... that seems high!

**docstudent** · 04-27-2010, 03:44 PM

working on a plan

I live in the LA area, and the real estate market is totally different with relationship to most parts of the US. I purchased a tiny, one bedroom condo, 431 square, so I can't rent out a room. Luckily, the area is amazing, and I'm willing to make sacrifices to maintain...I pay a lifeline bill for an elderly family member, plus provide for her a cellular phone, so I can't get rid of those bills. However, I will be able to get rid of my lease, in Nov, so I should be able to get a cheaper car. I plan to pay off the credit card debt by Aug of 2010. The mortgage payment is $1665, but my taxes are compounded, plus I have to pay $349 for HOA fees. I'm applying for jobs, but the 71G will be a worst case scenario; however, there is a great possibility that I will be able to secure a higher paying job.

Thanks for the input.

**DavidKimball** · 04-27-2010, 08:53 PM

Hey DocStudent --

Do you have a financial plan (budget) and goals written out? That would eliminate the worry.

David

**bjl584** · 04-28-2010, 06:24 AM

Originally posted by docstudent View Post

Current salary: 86G
Future salary: 71G, Fall of 2010 to 2011 (pending, take home about $3560

Current take home: $4680 per mont after taxes, and contributions to retirement and 403b plan. Currently, I'm contributing $400 per month to 403b.
Age:33 and single
Saving: $12,000 should have $15,000 saved up by Aug of 2010
403b (account #1): $16,000
403b (accountg #2): $12,000
Pension/ Retirement: $100,000
Student Loan: $135,000, payments deferred til Jan 2011, $500 per month
---------------------------------------------------------------------------------------

Current take home: 4680, future 3560

Condo payment: 1665 (230,000 at 5.5) 30 year fixed
HOA: 349, electricity is the only utility that i pay
Car insurance: 144
Cell phone: 124
Car: 466, lease ends in Nov 2010
Gym: 135
Electricity: 45
Internet: 45
Life Insurance: 37, (Coverage of 250,000, is it necessary for a single guy?
AFLAC,disability insurance, 168
Food: 185
Gas: 80
Lifeline: 48
Credit monitoring service: 11
Credit card: 3,500 payment $200 per month

5 major credit cards: Available credit over $100,000/ balance $3,500 on asingle card
Potential options to make additional money: Teach night classes at a local university or start a tutorial service.

Why do you have two 403b accounts?
Your car insurance seems high, but I don't know what you drive or where you live, but it may be worth your time to shop around.
The car lease needs to go. When it ends, I would buy a car for cash, or at least finance to own something with a reasonable payment.
The gym membership seems very high. Is that $135 per month? Most gyms I have inquired at charge around $40 a month.
The cell phone bill is high. Get rid of the internet browsing and text messaging.
You probably don't need the life insurance until you have a family.
You eat alot. Is that $185 just for groceries, or does that include eating out? Eat out less and cook more if so.
Why do you pay your own disability insurance? Do you have this from your employer? Can this be dropped?
What is the $48 Lifeline expense?
You probably don't need the credit monitoring so long as you are diligent about your finances on your own.
What is the interest rate on your credit card? Can this be refinanced/transferred to a 0% card?

I would also suggest bulking up your emergency fund to around 20,000.

**jIM_Ohio** · 04-28-2010, 10:13 AM

How long is the pay cut in effect?
Can you change jobs and increase income?
Can you get a second job to bridge the 10k per year gap?

This is a great example of why you want to spend less than you earn by a factor of 20%. Your $4800/yr contributions to 403b is not even 6% of your gross. You've been living paycheck to paycheck (or close to it) and when that paycheck gets decreased, problems occur.

A decrease in pay, should I be worried?