The United States economy shed about 2 million jobs in 2008. Some people have been fortunate enough to keep their jobs but have had to accept salary cuts. The point is that millions of people have had serious reductions in salary. Are you one of these people?
While browsing through financial reporting sites such as CNN and Yahoo I’ve come across several articles which share readers experience with adjusting to much lower salaries. Naturally all of the readers were forced to cut back on expenses. While some were able to cut unnecessary expenses (such as cable) others were forced to downsize to such extremes as losing their home to foreclosure and moving into a rental property.
I’m extremely grateful that my wife and I have not had to do any downsizing, but I’m naturally concerned about the future. I’ve realized while reading all of these stories that topics that I preach on this personal finance blog such as establishing an emergency fund and avoiding debt, are more relevant now than they’ve ever been.
While those who have already had to make major lifestyle changes probably won’t have much of an opportunity to build an emergency fund or cut back on expenses there are still us lucky few who have our jobs and continue to earn our normal salaries. With that being said I want to emphasize the three lessons I learned while reading these articles and thinking about this blog post. They’re not earth shattering, and I’ve gone over this again and again… but they’re so important.
Don’t Take On Too Much Debt
Establish an Emergency Fund (6 – 12 months of living expenses)
Please share your stories with us here at Debit versus Credit. If you’ve had to adjust due to a layoff or otherwise tell us what you’ve done to adjust. If you’re just starting an emergency fund so you can be prepared for the future share your story with us! We’d love to cheer you on!
One response to “Have You Had To Adjust To A Reduction In Salary?”
I have been very fortunate and not had to worry about losing my job or taking a salary cut; as a matter of fact, I was blessed with a raise. However, I’m still one to be prepared for the worst, just in case.
Currently I have 6 months of expenses saved up, plus about $2-3k more for car repairs, etc. As a precaution I’m going to beef up my living expenses part of the emergency fund because I’m in the banking industry and it may be difficult to find another job if I were every laid off. My boss and coworkers say I’m paranoid and I worry too much, but I say better safe than sorry.
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