Skip to content
The Fearless Factor

The Fearless Factor

Building Sustainable Wealth

  • Home
  • Categories
    • Biohazard Tips
    • Car Rental & Maintenance
    • Cooling & Heating System
    • Home Care & Maintenance
    • Home Mortgage
    • Office Copier & Furniture
    • Photography
    • Senior Citizen Care
    • SEO & Marketing
    • Tax & Legal Tips
    • Temporary Warehouse
  • About
  • Contact
  • Privacy Policy
×

4 Tips for Handling Finances After a Pay Cut

  • Building Wealth
  • Money
  • January 12, 2021
Tagged 401(k), All, Auto, budget, Budgeting & Goals

woman sitting on the floor doing work on her computer

Millions of Americans faced pay cuts as the coronavirus pandemic affected industries. While many workers were laid off, some were furloughed, and others kept their jobs but at lower salaries as businesses struggled to stay afloat.

Some workers are reexamining their budgets to cut some of their expenses until they get another job or their employer restores pay cuts. Taking a pay cut means facing the reality of no longer living the same financial life.

Americans often aren’t so good at saving for emergencies such as a car repair or sudden illness, or for their retirement. A recent survey found that 59% of U.S. residents say they live paycheck to paycheck.

Less than 40% of working adults think their retirement savings are on track, and 25% have no retirement savings or pension at all, according to the latest Federal Reserve Report on the Economic Well-Being of U.S. Households.

Another alarming fact is that 4 in 10 adults have said that if they had an emergency and had to pay a bill of $400, they would have to borrow the money or sell an item they own. And that is in so-called normal times. Here are four strategies to handle finances after a pay cut.

1. Update Your Budget

There are several ways to deal with the changes to your budget after a change to your salary. Create a budget if you do not already have one. List all your expenses for weekly purchases, from groceries to gasoline and parking fees. Add monthly bills, including rent or mortgage, car loan, cable, cellphone, utility bills, credit cards, student loans, and any other debt such as personal loans.

Update your budget and examine all your expenses to see which ones you can lower or eliminate, even temporarily, for the next six months. Add your income and include part-time jobs, tax refunds, bonuses, and any child support, alimony, or help from parents. This will help you determine how much money you can spend for necessities, expenses, entertainment, and other items such as doctor visits.

There are several free apps that can help you manage your debt easily and update it as your financial circumstances change. To track your spending, decide if you want to track it daily, weekly, or biweekly. You might try different time periods before you decide on one. Some people prefer to keep up with their spending on old-fashioned pen and paper.

SoFi Relay.

After you track your spending for two or three months, you will see a pattern emerge of where most of your money goes. You can also look at older bank and credit card statements to see what you were spending money on last year compared to this year. This will help determine if you had one-time expenses such as medical bills, airplane tickets, hotel stays, wedding gifts, or a vacation. You might be surprised at what you’re spending your money on. For instance, you might be spending a lot of money on entertainment or buying gifts.

In addition to a budget, create a financial plan for both short- and long-term goals. A plan will help you determine when you can pay off any loans and how much you want to save, say, for a down payment on a house.

2. Cut Expenses

One place many consumers can cut costs is from entertainment, such as their cable bill or streaming services. These can really add up. Canceling all or some of these services can improve your cash flow, which is how much money you have left over at the end of the month. Another place where you can slash expenses is from your food budget. Consider using digital coupons, shopping at warehouse clubs, or going out to eat for lunch instead of dinner.

Your expenses include debt such as credit cards, student loans, and personal loans. Paying more than the minimum balance, refinancing to a lower interest rate. and making extra payments can help you pay down the principal amount, or the original amount that you borrowed, sooner.

Consider refinancing your student loans by checking out both fixed and variable rates. Interest rates are at historic lows. You might be able to pay down your credit card bills faster by taking out a personal loan; those interest rates are often lower. And if that’s the case, the debt could be paid sooner.

Automating the payment of bills can make your life easier. This will also help you avoid paying late fees. You can either have your bills paid automatically through your checking account or set yourself a reminder on your calendar if you have some bills such as utilities that are a different amount each month.

You can also automate your savings. You can have money taken out of your checking or savings account each month and have it automatically invested into your workplace 401(k) plan or an individual retirement account.

Snip, Snip, Snip

When your salary has been slashed, there are several ways you can save money immediately and long term.

Call your mortgage, auto loan, utilities, credit card, and student loan companies to see if you can defer payments for several months. Skipping a few payments can help you get back on your feet sooner. If the company cannot provide this option, see if the interest rate can be lowered on, say, credit cards.

Check with your local nonprofit organizations. Many provide food or partial payments for utility bills. Your local food bank is a good place to start; this can help you lower your monthly grocery bill.

Look online to see if stores are offering deals. Stock up on staples such as beans, rice, and pasta if they are on sale.

If you are still short of money, you might consider talking to family members and friends about obtaining a short-term loan or working on a small project to earn some extra money.

cash management account that keeps track of weekly spending—which then allows creation of a budget based on habits.

There are no account fees for SoFi Money® and you can earn cash-back rewards on spending. And SoFi members can gain financial advice—at no cost.

Learn more about SoFi Money® today.



SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
SoFi Relay is offered through SoFi Wealth LLC, an SEC-registered investment advisor. For more information, please see our Form ADV Part 2A, a copy of which is available upon request and at www.adviserinfo.sec.gov . For additional information on SoFi Wealth LLC, SoFi Relay, and products and services of affiliates, see SoFi.com/legal.
Advisory services are offered through SoFi Wealth, LLC an SEC-registered Investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at adviserinfo.sec.gov .
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer to sell, solicitation to buy or a pre-qualification of any loan product offered by SoFi Lending Corp and/or its affiliates.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOMN20098

The post 4 Tips for Handling Finances After a Pay Cut appeared first on SoFi.

Source: sofi.com

Post navigation

Previous post
Next post

Author

by Sophie Bates 
info@thefearlessfactor.com

Related Posts

Guaranteed Rate snaps up major lender from Blackstone

  • Money
  • Taxes
  • January 12, 2021
Tagged Financial Wize, FinancialWize, Mortgage

“This combination creates a powerful figure in the mortgage industry” Source: mpamag.com

Read More

Mortgage Impounds vs. Paying Taxes and Insurance Yourself

  • Money
  • Money Basics
  • Mortgage Tips
  • January 12, 2021
Tagged Financial Wize, FinancialWize, Home, Insurance, Mortgage

If you’ve been researching mortgages, or are in the process of taking out a home loan, you’ve probably come across the term “impounds” or “escrows.” When you hear these seemingly scary words, the loan officer or mortgage broker is referring to an impound account, also known as an escrow account. You may even be told [&hellip

The post Mortgage Impounds vs. Paying Taxes and Insurance Yourself first appeared on The Truth About Mortgage.

Read More

15-Year Fixed Mortgage Rates Just Hit Record Lows: Should You Consider One?

  • Money
  • Money Basics
  • Mortgage News
  • Mortgage Rates
  • January 12, 2021
Tagged All, Financial Wize, FinancialWize, Mortgage, Mortgage News

While 30-year fixed mortgage rates tend to steal all the headlines, 15-year fixed mortgage rates quietly reached record lows this week as well, per Freddie Mac’s weekly survey. This morning, Freddie announced that the 30-year fixed fell to a new record low 2.65%, down from 2.67% last week. That was the first record low of [&hellip

The post 15-Year Fixed Mortgage Rates Just Hit Record Lows: Should You Consider One? first appeared on The Truth About Mortgage.

Read More

How to Move Out of Your Parents House

  • Money
  • Money Basics
  • Mortgage Tips
  • January 12, 2021
Tagged Buying, Financial Wize, FinancialWize, house, How To

There’s nothing inherently wrong with living with your parents, other than EVERYTHING! So let’s talk about how to GET OUT! To be clear, I’m going to discuss moving out and buying a place of your own, not moving out and renting, seeing that the latter is fairly self-explanatory. The desire to move out might be [&hellip

The post How to Move Out of Your Parents House first appeared on The Truth About Mortgage.

Read More

5 Reasons Why Your Budget Is About More Than Money

  • Building Wealth
  • January 12, 2021
Tagged All, budget, Buy, Debt, Family

The post 5 Reasons Why Your Budget Is About More Than Money appeared first on Penny Pinchin' Mom.

It’s true.  Your budget is about more than money.  In fact, money is just one piece of the puzzle when it comes to learning how to create a budget. I’ve helped countless people learn to budget over the years.  The one thing that I hear them say repeatedly is how their budget helped them in … Read More about 5 Reasons Why Your Budget Is About More Than Money

The post 5 Reasons Why Your Budget Is About More Than Money appeared first on Penny Pinchin' Mom.

Read More

How to Make Tough Decisions as a Couple

  • Building Wealth
  • January 12, 2021
Tagged All, Family, Financial Wize, FinancialWize, health

Marnie and Tom live in a nice suburb in the Midwest with their two young children. Marnie’s mother, Elaine, lives about an hour away.

When the kids were babies, Marnie's mother used to drive to Marnie and Tom's every day to see her grandkids and help out. But lately, Marnie's mother's health has been declining, so she can’t drive over anymore.

One day Marnie gets an idea: What if she and Tom sell their house and move closer to her mother? Then the kids would be able to see their grandmother more often. Plus, Marnie would be able to keep a closer eye on her mother in case her health gets worse. Seems like a perfect solution.

There’s only one problem—Tom doesn’t want to move. Tom likes the neighborhood they’re in. He thinks he and Marnie paid too much for their house, but other than that he’s very comfortable.

Tom says no.

Tough decisions and zero-sum situations

Faced with big decisions like this, a couple will ordinarily try to compromise. But in this case, there’s really no half-way. Economists call this kind of thing a zero-sum situation. Someone’s going to win, and someone’s going to lose.

For over thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so.

Some classic zero-sum problems for couples involve whether or not to move—often for one partner’s career—and whether or not to have another child. But there are lots of others.    

For thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so. Today, we’re going to talk about what works, and what doesn’t, when you’re faced with one of these situations.

Three ways not to make tough decisions as a couple

 First, let’s talk first about what doesn’t work. There are three main approaches that don’t work. Unfortunately, most couples try all three:

Mistake #1 – Trying to convince your partner they'll be better off

The first mistake is to try to convince your partner that they’ll be much happier if they do things your way. In Marnie’s case, this might involve demonstrating to Tom all the wonderful things about the neighborhood she'd like to move to. Wouldn't Tom be better off there? 

No one likes to be told they’ll be happier if they just do things your way.

 Here’s the problem: No one likes to be told they’ll be happier if they just do things your way. It's better to assume each person has good reasons for feeling the way they do. And that those reasons aren’t likely to change. In couples therapy, we call this "staying in your own lane."

Mistake #2 – Suggesting there's something wrong with your parnter for disagreeing

The second thing that doesn’t work is to suggest there’s something wrong with your partner. Otherwise, they'd see it your way. If only they were less anxious, less obsessive-compulsive, less oppositional, less stuck in their ways, or less damaged by unresolved childhood trauma. Then they’d surely agree with you!

A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work.

A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work. It usually just leads to a lot of bad feeling.

Mistake #3 – Appealing to your partner's love

The third thing that doesn’t work is to appeal to your partner’s love and insist that if they really love you as much as they say they do, they’ll give you what you want. Almost every couple tries this.

Marnie is no exception.

“Tom,” she says, one night as they're getting ready for bed, “Don’t you see how I can’t sleep at night worrying about my mother? I can't stop thinking about how she’s missing out on so much of our kids’ lives. Can’t you see what this is doing to me? Don’t you love me?”

 “The answer’s still no,” says Tom. “And it has nothing to do with whether I love you or not.”

I'd be inclined to agree. Just because you love someone, that doesn't mean you're responsible for giving them everything they want. 

A better way to make tough decisions as a couple

The good news is there’s a much better method. There are three steps involved.

Step One:  Let’s make a deal

In business, this would be a no-brainer, right?  You’d never ask someone to give you something you want for free. Instead, you’d find out what their price is.  

In marriage, it’s the same thing. The main question is: What’s going to motivate the other person to do a deal?

Let’s see what happens when Marnie tries this approach.

One night in bed, just before they turn off the lights, Marnie turns over to face Tom.

“Tom, what can I give you to make you agree to move?” she asks.

Tom is silent.

“A promise to never complain ever again about you watching TV?”

Tom smiles. “It’s going to cost a lot more than that,” he says.

Marnie thinks some more. “How about if I agree to spend every Thanksgiving and Christmas with your family?”

Tom shakes his head. But now Marnie has the idea. She’s not asking for favors anymore. She just wants to do this deal.         

“I'll do all the cooking and cleanup three times a week,” she says. "And we spend Thanksgiving and Christmas with your family."  

Tom raises an eyebrow. Now he knows she's serious. "Let me think about it,” he says, and turns off the light.

Time for Step Two.

Step Two:  The $64,000 Question

The following night, Tom is sitting at his laptop paying bills. Suddenly it hits him. “Marnie,” he says, “I think I see a way to do this. If we’re going to move, let’s get a smaller house and start saving money again. What do you think?”    Marnie’s actually been hoping for a bigger house. It’s painful to hear that this is what Tom wants. But hey, now he’s named his price. That means he’s in the game.

To me, this looks promising. Marnie gets something she wants very much. And she pays for it, fair and square. Same thing on Tom’s side.

Marnie thinks for a minute.  

“Let’s see what we can find,” she says.

Step Three: The Price is Right

Now comes the fun part.

The following Sunday, Marnie and Tom drop the kids off with her mother and start house-hunting in earnest. After a few weekends, they find a house they both like well enough. It breaks Marnie’s heart to be downsizing, but it was the only way to make things work. And it helps that once they find a place Tom likes, Marnie gets him to agree to new cabinets and closets.

Decision making builds strong relationships

 A good deal will have both of your dreams in it. That’s important, because it means you’re both fully in. You never know how a move like this is going to work out. If it goes well, you both share the satisfaction. If not, you share the blame.

A good deal will have both of your dreams in it.

One sign of a good deal is that in the end, neither of you got everything you wanted. The final result didn’t look exactly like what either of you originally had in mind.

But hey, isn’t that the case with anything creative? Eventually you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.

Sometimes life brings you to a fork in the road, where no compromise is possible. When that happens, assume you’ll need to do some serious deal-making—as if your relationship depended on it. Which in fact, it will.

Eventually, you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.

As Yogi Berra famously said, “When you come to a fork in the road, take it!”

In the long run, how you settle the issue may matter more than which fork you take.

Read More

Categories

  • Account Management
  • Apartment Hunting
  • Auto
  • Auto Insurance
  • Auto Loans
  • Banking
  • Biohazard Tips
  • Breaking News
  • Budgeting
  • Building Credit
  • Building Wealth
  • Business
  • Car Insurance
  • Car Rental & Maintenance
  • Cash Back
  • Checking Account
  • Commercial Real Estate
  • Cooling & Heating System
  • Credit 101
  • Credit Card Guide
  • Credit Card News
  • Credit Cards
  • Credit Repair
  • Debt
  • DIY
  • Early Career
  • Estate Planning
  • Extra Income
  • Family Finance
  • Financial Advisor
  • Financial Clarity
  • Financial Freedom
  • Financial Planning
  • Financing A Home
  • Find An Apartment
  • Finishing Your Degree
  • First Time Home Buyers
  • Fix And Flip
  • Flood Insurance
  • Food Budgets
  • Frugal Living
  • Health Insurance
  • Home
  • Home Buying
  • Home Buying Tips
  • Home Care & Maintenance
  • Home Decor
  • Home Design
  • Home Improvement
  • Home Mortgage
  • Home Repair
  • House Architecture
  • Identity Theft
  • Insurance
  • Interior Car Wash Tips
  • Investing
  • Investment Properties
  • Life Insurance
  • Loans
  • Managing Debts
  • Money
  • Money Basics
  • Money Management
  • Mortgage
  • Mortgage News
  • Mortgage Rates
  • Mortgage Tips
  • Office Copier & Furniture
  • Office Furniture Items
  • Paying Off Debts
  • Personal Finance
  • Personal Loans
  • Photography
  • Quick Cash
  • Real Estate News
  • Refinance
  • Retirement
  • Saving And Spending
  • Saving Energy
  • Savings Account
  • Senior Citizen Care
  • SEO & Marketing
  • Side Gigs
  • Spending Money Wisely
  • Starting A Family
  • Student Finances
  • Student Loans
  • Tax & Legal Tips
  • Taxes
  • Temporary Warehouse
  • Texas Attorney DWI Guide
  • Unemployment
  • Work From Home

Recent Posts

  • 5 Things to Know About the Home Office Tax Deduction and Coronavirus
  • Top 10 Health Insurance Considerations
  • The Basics of Medicare Eligibility
  • COVID-19 Scams
  • How Long Does It Take to Refinance a House (+ 5 Ways to Speed Up the Process)

Tags

All Auto budget Budgeting building Buy Buying Career Coronavirus Credit credit card Credit Cards credit score Debt Emergency Fund Family Fees Finance Financial Goals Financial Wize FinancialWize Grow health Home house How To Insurance Interest Rates Investing Life Loans Main Money Mortgage News Personal Finance Retirement Save Money Saving savings Savings Account Spending Student Loans under will

How to Make Tough Decisions as a Couple

January 12, 2021

5 Reasons Why Your Budget Is About More Than Money

January 12, 2021

The Fearless Factor
Home | Contact | Site Map
2019 Copyright. The Fearless Factor

The Fearless Factor

Proudly powered by WordPress | Theme : Voice Blog free WordPress theme : by : Postmagthemes