What can you do when your employer expects you to take unpaid "furlough" days?
How to Handle Temporary Income Reductions
by Dollar Stretcher Contributors
Side Gigs that Can Earn You a Little Extra Money Each Month
14 Ways to Save Money
How to Tighten Your Belt in Tough Times
Temporary Income Reductions
As part of our contract negotiations, the union agreed to a furlough day with the other options having been worse. There won't be raises of any type, but with the furlough day, there also won't be additional pay cuts. I haven't finished planning for this as the date of the furlough day is still to be determined (and therefore the month in which the pay reduction will occur), but I will be putting extra money in savings to be ready when it comes. How have people dealt with such short-term reductions in pay?
Tighten the Belt
Some general belt-tightening should help. Eliminate things you really don't need to survive, like cable TV. Switch to a lower phone plan and talk less. Limit your groceries to the basics like meat, grains, fruit, vegetables, and dairy. Cut out the extra snacks that just lead to weight gain anyway. Try taking public transportation at least part of the week. Google your regional transportation authority for schedules, maps, fares, etc. Work out a budget that takes the reduction into account. Hold a family meeting to discuss the situation. Let everyone know what's going on and have everyone make extra efforts to cut down on the use of water, gas, electricity, and general wastefulness. Consider picking up some extra work like babysitting, pet sitting, tutoring, etc. There are plenty of ideas for making extra money you can find online.
Prepare Ahead of Time
As a part-time RN, I work in preference over the PRN staff, but am cancelled in preference to the full-time staff. For the last two years, November and December have been slow in the NICU. Last year, I made sure I had shopped ahead and completed buying holiday gifts and birthday gifts. I also stocked the freezer and pantry, etc. When the call-offs came, I chose to look at them as extra time off instead of as a cut in pay. I know that is somewhat a mind game, but it worked for me.
Look for Opportunities to Bring in Extra Cash
We've dealt with both short-term (furloughs) and permanent (pay cuts) reductions in the last couple of years. We've definitely adjusted our spending. We've also taken opportunities to bring in a bit of extra money when possible. Can't say it makes up for the shortfall, but every bit helps.
Start with Your Budget
Personally, I prefer a furlough to a pay cut. When they quit doling out furloughs, you are still on full pay so the money comes right back. It can take years to get back to original pay if you take a pay cut.
When I've had pay cuts and furloughs, I started with the budget. If the net effect (I always work from take-home pay rather than gross pay) is 10%, I cut every variable line in the budget by 10% including groceries, entertainment, etc. The car insurance and cell phone bills were sort of "fixed," so I dealt with those items next. I called the insurance company to see if I could get that lowered. I did the same with cell phone and landline. I got about $15 per month off the landline last time I tried. I'm on the lowest cell phone plan that has reliable service around here so there's not much I could do about that. I stopped using more minutes than I paid for and paid $5 a month more to allow more texting. This ended up cutting $10 to 12 off per month by stopping over-minute charges (which were still cheaper than the next plan up).
Then, I added it all up to see if I came in at the new pay cut. Things like rent don't go down (and thank goodness have not gone up!) and utilities and gas costs go up so usually the first cut only got me part way there. Then I started looking at things like clothing. For one entire year, I cut the whole clothing budget and just wore what I had and borrowed clothes for special events. That helped with the furlough costs that year. I asked for underwear and socks for gifts.
Would you like to
pay off your credit cards
in less time
for less money?
When I got down to the amount of the new lower income, I gave it one or two more shots at cutting costs so I could continue saving. I turned the thermostat down or bought bulk dry beans rather than canned, etc. This is where I stopped cutting to the bone and started shaving the bone.
This year, which is my fifth without a raise and with a higher chance of being laid off or let go, I'm working on starting a small side business that could be expanded if I'm laid off, let go, or quit in frustration at the ever-increasing workload and never-increasing pay.
Good luck with the furloughs! It can be difficult. I hope you and yours make it through. I keep hearing how the economy is recovering, but where I live, it has been going down quickly over the last six months.
Take the Next Step:
- Discover ways to bring in some extra cash.
- See if there are any expenses you can cut further.
- Stop struggling to get ahead financially. Subscribe to our free weekly Surviving Tough Times newsletter aimed at helping you 'live better...for less'. Each issue features great ways to help you stretch your dollars and make the most of your resources. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist And What You Can Do About It for FREE!
Share your thoughts about this article with the editor.
More Debt Tips & Tools
- 6 smart strategies for paying off your credit cards
- 5 great second jobs to bring in extra cash
- Pay down debt now or save: Here's how to choose
- Can I get a debt consolidation loan with bad credit?
- Staying motivated to continue digging yourself out of debt
- Options when you can't make your car payments
- 8 ways to beat retail therapy
- This week's Readers' Tips
- Reduce your debt step by step
- Am I a good candidate for credit counseling?
- Do I have a debt problem?
- Compare personal loan rates
- Get free answers to financial questions
- Get free answers to legal questions
- Calculate the real cost of your debt
- Debt pay-down calculator
- Calculate the true cost of paying just the minimum