DH's salary cut overnight! Wow.

[pooh4evr]

Basically DH had a meeting the other day, and was informed his salary is / was cut by a fairly significant amount. We had just refinanced a few months go based on his previous salary, moving from a 30yr to a 15 yr. the rate is lower but the payments are higher. Now I am second guessing that and some other decisions we made recently, IRA contribution, health savings acct. and so on. How do or would you absorb an unexpected hit? Literally no warning at all, if we had thought, or someone had said 6 months or even 3 months ago, that this could be a possibility we could have been prepared.

 

[2disneyboys]

Thats scary, but unfortunately, it's getting more & more common to hear of people getting unexpected pay cuts like this example. I'm sorry that your DH's employer was not considerate enough to at least warn staff that this might be a possiblitiy. It would have at least let you prepare.

The most obvious is to take a very hard look at your budget. Identify the things you can't change and list them ... then look closely @ everything else and cut where you can. You need to do this until you get your expenses (including still putting $ in savings if needed) less than your new income. If this is going to be too hard, or impossible, you need to look @ supplementing your income (either permenantely or temp) and worst case, Have DH start looking and applying to see if he can get a new job at least closer to his prior salary. You can also supplement this by looking through your house and selling what you can. Depending on your current mortgage holder, you may be able to contact them to see if you can modify your new mortage from 15 yr back to 30yr if keeping it @ 15 makes things to tight for you, but I would honestly try to cut everywhere else, but that's just me.

adjusting your budget is not an easy task and, IMHO, it can be gut wrenching. Good Luck to your family. You will get this this.

 

[TheRustyScupper]

1) Unfortunately, you just deal with it.
. . . you look at the household budget
. . . you make cuts where possible
. . . sometimes even painful cuts

2) In reference to the mortgage refi
. . . if done under HARP or HARM, those are one-time deals (by law)
. . . if you now refi, it is a "real refi", like in the old days
. . . for new refi rule, qualification is needed FICO/downpayment/appraisal
. . . it got a lot tougher
3) For other deductions
. . . you reduce the 401(k)/IRA contributions drastically
. . . if possible (though usually not possible now) reduce the FSA/HSA amount
. . . you cut cable/satellite to basic, with no movie channels
. . . you eliminate restaurant meals
. . . you get down to a bare-bones budget,and stick with it
4) It might be tough, but a real sit-down with your budget is needed.
5) Nothing should be off of the table.

 

[midwestdee]

I know this is scary. This is why you never box yourself into a 15 year mortgage (I don't care what the financial guru's say). You can get the same effect by doubling your mortgage payment. If something like this happens, then you drop down to your actual payment until the "crisis" has passed. For now, just take a hard look at wants versus needs and see if cutting back to needs can give you some breathing room. Good luck.

 

[Diegosmom]

Not a long term fix but when hubby wasnt working I ended up lower what I put into 401K. Plus hubby was out of the country so I dropped health insurance for him (easier to pay OP if anything was needed which it wasnt)...

 

[Diegosmom]

I know this is scary. This is why you never box yourself into a 15 year mortgage (I don't care what the financial guru's say). You can get the same effect by doubling your mortgage payment. If something like this happens, then you drop down to your actual payment until the "crisis" has passed. For now, just take a hard look at wants versus needs and see if cutting back to needs can give you some breathing room. Good luck.

t

Car saleman taught us this too...same interest for 3 year and 5 year. He said just take 5 but make the payment as it was 3 (he told me the number) then if something happens you can go to lower payment...At first I thought he was crazy I was not paying for 5 years on this car...but I understood what he was saying and did it...18 months later DH was in Mexico for 8 months with family stuff and we didnt have his income so I was able to drop back...then when he was back we went back to up'd payments I think it ended up taking us 4 years but otherwise it would have been rough to do in 3.

 

[BeachLove]

I'm sorry this happened to you. My parents just had it happen to them and so now I'm having to support them financially with grocery's and other basics. It sucks and really these companies aren't giving any warnings before cutting salaries. Its either take it or get out. Just try to do your best and start looking for extra sources of income.

 

[flateacher]

I am soooo sorry this happened to you!

I wanted to write because this happened to my family three years ago. But instead of cutting my husband's salary they called him in and laid him off. No warning - nothing. He was the head of the department and they said eliminating his salary would "save other peoples jobs". No offer of even cutting his salary in half.

To top it off I was at home on maternity leave. However, my previous teaching job had let me go because I wanted a longer maternity leave (no I didn't sue - longer different story). Sooo....

What we did:

1. Husband applied for unemployment (won't help you - but we needed it.)

2. I had to go back to work. Because our states unemployment is terrible! You may have to look into part time work to supplement (if you aren't working).

3. Called mortgage company to try to get help... never got it because we were current on the mortgage and REFUSED to get behind. Beware - our mortgage company actually said to not make payments then we would qualify. That was never an option for us -plus I heard they then charge you late fees...

4. Take stock and look at what you spend and where you can cut - places we found
a. groceries - we always shopped at Publix= expensive. We turned to coupons. It wasn't enough. We decided to drive a little and started shopping at Save a Lot. We had to give up name brand food - and found it wasn't that bad.

b. eating out - it stopped or we only ate out when we had a coupon or a "deal".

c. cable/ satelite tv - we cut our service down to basic with the thought of canceling if needed

d. cell phone - neither one of us has a smart phone or uses the web on the phone. I called them too to see if they could lower the bill. They did

e. Child care - Hubby became stay at home because we couldn't afford the day care

f. insurance - I shopped insurance to see if I could get it cheaper - and we did

5. Hubby looked for a new job far and wide - including other cities and states. He didn't get any offers. So instead he went after contract work and ended up starting his own business. Doing this lowered our taxes because we now can itemize alot of his expenses.

I hope this helps and gives you some ideas. I agree with a pp - nothing should be off limits when you are looking at the budget. We even thought about selling the house (even at a loss) and moving into an apartment if we needed to....

Good luck!

 

[crisi]

I'm sorry to hear that. I went through that in 2008.

We cut out cable completely. We stopped eating out. Turned down the heat, gave the water heater a jacket. Stopped a bunch of incidental expenses - most of which were underused anyway. Reviewed all the bills and cut some.

At the end of the year, we had more in savings than ever before and barely felt it.

And I switched jobs after a few years.

 

[pooh4evr]

Thank you all so much, I am looking at everything I can cut. It just really sucks! We had done well last year, paid off everything, and we're thinking about doing some needed home improvements, then this. Oh well! Yes I do stay home right now, I have thought about finding something, but worry that with my kids crazy school schedule there won't be much out there for me, but I guess some thing is better than nothing!

 

[a1tinkfans]

just wanted to wish your family good luck.

 

[RitaE]

We cut our budget drastically one year. What I did was spend a couple of days in complete denial and panic (natural). Then I looked around me and realized that there were plenty of families out there living on our new budget or less and if they could do it --- then we would also.

Make a list of what you spend money on. Organize it top to bottom of most important to least. Squint hard at everything and truly ask yourself for each item .... do you really need that? Does it really make you happy or your life better? Is it worth what you spend on it? Can you get it for less money? Can you get something else just as good for less money?

Then start from the bottom and cut the things that don't matter as much until you are once again budgeted.

Then the HARD part is actually living the life that the numbers say. It is one thing to write down on a piece of paper "We will only spend $55 a month on restaurant food." The difficulty is getting everybody in the family to follow it.

 

[a742246]

First thing you do is appreciate everything you have.... your health, family, love for each other, and whatever wealth you have.
Second thing, is this a temporary cut cause by cash flow problems or the company is doing bad. If it is a temporary cut have your husband present ideas to the powers at be, on how to make the company more profitable. If the company is doing badly with little hope of inprovement he should look for another job (very actively).
I don't know what kind of company your husband works for (large or small)
but I do know if it is a small business the owners feel just as bad.
Good luck to you!

 

[aclov]

I'm so sorry this happened and sounds like you've gotten some great advice! I just wanted to add since you mentioned your kids busy schedules and this worked for my best friend is perhaps looking into getting a job at a school. She works in the lunchroom and the hours work great!

 

[3boymthr]

Someone mentioned unemployment and it not helping you well, maybe it will. If your DH had his salary cut by 25% or more and he's willing to look for a new job then he can apply for what's called "underemployment". Underemployment will determine what his benefit would be if he were unemployed than when he applies weekly for benefits they will deduct his salary off the full benefit. But it is not something to do lightly as if your DH does take the benefit and he gets laid off then he'll have used part of his benefit. The good thing is it can help you through a difficult period until you can do something else to make up the difference in budget such as selling off some items or getting a part time job or until he can replace his job.

 

[seashoreCM]

Here is my list (in no particular order).

1. Cancel the cable TV. (All TV sets made in the last 5 years can receive programs using an antenna.)
2. If you have a low interest mortgage loan, try your best to not replace it with a higher interest mortgage even if the payments are lower.
3. Cut features from your phone plan. Make fewer calls. Have others call you instead of your calling them.
4. Cut out movies and restaurant meals completely.
5. Skimp on gifts, including for Christmas and office parties.
6. Stop adding to your IRA, 401k, pension plan, health savings plan, etc.
7. Cancel your Disney vacation.

2a. If you have a high interest mortgage loan, investigate the consequences of getting behind for the purpose of qualifying for a lower interest rate. I don't have complete advice but you need to get complete advice before doing it.

 

[Cheshire Figment]

Now is the time to start looking for new employment!

 

[Jenny3]

I feel your pain; my DH's salary was cut unexpectedly at the beginning of this year for no reason and with no warning - just cuts across the board. So far we are managing fine after reevaluating our budget, but it really does throw you for a loop when they shock you like that. Good luck!

 

[hellow]

I know this is scary. This is why you never box yourself into a 15 year mortgage (I don't care what the financial guru's say). You can get the same effect by doubling your mortgage payment. If something like this happens, then you drop down to your actual payment until the "crisis" has passed.

Yes! Always have recommended this. You just never know...

 

[shortbun]

In addition to looking for ways you can cut expenses, look for ways you can come up with cash without a cut...yardsales, take some of your antiques in for commision sales, send a teenager out for a 10hour a week job, get in touch with coupons and gift cards you may have in a wallet or purse. Be sure you are taking advantage of gas discounts, grocery discounts, make sure you EAT your leftovers instead of throwing them away. Go through old jackets, purses, drawers for change and paper money. I found $12 the other day. I have allowed Netflix so we can stay home for entertainment. We've learned to make our own pizzas-they are fabulous!!! Cook from your pantry for a week if you can. We made it 5 days without having to buy anything. I won movie passes last weekend by redialing a radio station-free film!!! We took our cans in for money and finally cut up the old air conditioner for copper and some other metal DH was hoarding in the garage-can't remember what...$70! You would be suprised at what you've got that's worth money and you don't need or want. We had tons of flour...I've made several loaves of bread by only having to buy yeast. One of our grocery stores-Giant Eagle-has a half off in their bread department after 7pm. They will slice it without charge-fresh baked bread with no preservatives, crusty, tasty, $1.50!!!