Case Study: paycut for peace of mind?

[debittogether]

I guess this is kind of a general question, less of a "case study"  (if mods think this should therefore not belong in this section I understand)

but the scenario is:

We've got some savings but IMO not enough.  Zero debt.  Our budget is pretty tight intentionally so we can save as much as possible.  We do have an emergency fund properly sized for our living expenses, a retirement fund that I'm maxing out (both 403b and IRA are getting maxed) and then saving more on top of that.  Right now we're saving about 2/3rds our monthly cash not counting the 403b which as mentioned is maxed out.  Planning to have first and only child late this year or early next, childcare costs will likely mean we can't save any cash beyond the retirement accounts going forward until daycare's done.

My job is absolutely awful.  It's very possible that either the organization closes in the next few years, or that it is restructured and my position would be eliminated and I could take a lower level position instead.  I do not know if that would result in a pay cut or how much of a cut, if so. 

Got an offer from another place that seems like a dream to work for but comes with approx 10k net cut.  There's not much more I can cut from my budget, so likely this means I'm saving less than usual each year.  They offer complimentary childcare and summer camp for kids 3+.  But who knows if I'll even be still working there by the time the future kid is of age to take advantage of it, or if we'll even be able to have a kid.  Paying for fertility treatments outside of what insurance covers or for adoption fees is off the table, it's too expensive.

Do I go for it despite my finances not being as good as I'd like them to be?  Scrap having kids because the daycare is too expensive and would stall our savings?  How much is a pay cut worth if it means you're no longer working in misery?  Stick it out here and wait for another opportunity to come my way that closes that 10k gap a bit?

[formerlydivorcedmom]

What percentage of a pay cut is it?  How do the other benefits line up?  Is health care more/less expensive?  Do they have the same/better/worse retirement matching?

Is there room for advancement (and pay raises)?  Would you be learning a new skill (technical or business) that would be valuable in the future?

How are the soft perks?  More flexibility in working from home, for example?

How long do you usually stay at a job?

I changed jobs six years ago - I took a 10% pay cut, plus the benefits weren't as good.  Shortly after, my husband quit working to go back to college.  We really slowed down retirement savings for a few years - and I was okay with that because we could cashflow college and still save some.  I figured we were doing better than most people.   I'm at a different company now, using a combination of skills learned from those two jobs, the benefits are amazing, and I work from home full time. 

If you really want this new job, take it.  However, before you accept the offer, at least try to negotiate a higher starting salary or more vacation.

[ender]

The % difference matters a lot here imo.

The answer to this is very different if you make $50k vs $150k.

[debittogether]

What percentage of a pay cut is it?  13% of gross salary

How do the other benefits line up?  Is health care more/less expensive? Slightly more, about $30 a pay check more.

 Do they have the same/better/worse retirement matching? Better.  2% more than what I am getting now.

Is there room for advancement (and pay raises)?  No.

Would you be learning a new skill (technical or business) that would be valuable in the future?  Yes.

How are the soft perks?  More flexibility in working from home, for example?  Relatively the same.

How long do you usually stay at a job? anywhere from 3-5 years.  In the industry where I've worked, there is basically no room for growth.  You want more money and responsibility, you have to leave.  I've been the department head my last two positions.

[leavesofgrass]

How long have you been looking for a new job? Is this you first offer? What is it about your current job that makes it awful?

Taking a $10k paycut is a lot. I would try to avoid it. Are you overpaid at your current job or is the new job less work/responsibility? Does you industry use recruiters? I would think there are other jobs out there where you can have a better work-life balance and make the same amount of money or even more.

I was once in a position where I was willing to take a paycut to work less hours. When I told recruiters this, they laughed. Every job I've taken has been for more money, and luckily, a much better work-life balance. Anytime I pursued jobs without using recruiters, the salaries were generally much lower than those at companies that used recruiters.

[Retireatee1]

I made a similar move three years ago and haven't regretted it.  A cut isn't really a cut if you are headed for burnout or a pink slip at your current job.  I ran some simulations to adjust my FI date, so I went into the decision well-informed.

[debittogether]

How long have you been looking for a new job? Is this you first offer? What is it about your current job that makes it awful?

Taking a $10k paycut is a lot. I would try to avoid it. Are you overpaid at your current job or is the new job less work/responsibility? Does you industry use recruiters? I would think there are other jobs out there where you can have a better work-life balance and make the same amount of money or even more.

I was once in a position where I was willing to take a paycut to work less hours. When I told recruiters this, they laughed. Every job I've taken has been for more money, and luckily, a much better work-life balance. Anytime I pursued jobs without using recruiters, the salaries were generally much lower than those at companies that used recruiters.

Sorry, I am new to posting here, I hope I am replying to your specific post correctly.  I lurk here a lot to get ideas and learn.

The new job is probably way less work.  It would give me exposure to some elements of my area that I will not get in my current job, that would make me a stronger candidate down the road someday.

I have another "soft" offer.  Basically a service provider who wants to hire me on when she gets enough clients to expand her business by one FTE.  But she hasn't given me any compensation info.  So I have absolutely no clue if this job will ever materialize and if so what the compensation looks like.

I do have another interview lined up Friday, and I have applied to a few more positions, but I doubt they will consider me, as they have been open a few weeks now and they're probably further along in the process.  I generally can find maybe 1 or 2 jobs a month I am qualified for.  It is kind of a niche field.

My industry does use recruiters, but I am not currently using one.  Perhaps I should.

I don't really want to get too involved in the forum about why my job is awful if that's ok. 

[leavesofgrass]

Sorry, I am new to posting here, I hope I am replying to your specific post correctly.  I lurk here a lot to get ideas and learn.

The new job is probably way less work.  It would give me exposure to some elements of my area that I will not get in my current job, that would make me a stronger candidate down the road someday.

I have another "soft" offer.  Basically a service provider who wants to hire me on when she gets enough clients to expand her business by one FTE.  But she hasn't given me any compensation info.  So I have absolutely no clue if this job will ever materialize and if so what the compensation looks like.

I do have another interview lined up Friday, and I have applied to a few more positions, but I doubt they will consider me, as they have been open a few weeks now and they're probably further along in the process.  I generally can find maybe 1 or 2 jobs a month I am qualified for.  It is kind of a niche field.

My industry does use recruiters, but I am not currently using one.  Perhaps I should.

I don't really want to get too involved in the forum about why my job is awful if that's ok.

I think you should counter-offer the new job. At lease try to get them to match your current salary.

Definitely reach out to recruiters!!!

[debittogether]

I think you should counter-offer the new job. At lease try to get them to match your current salary.

Definitely reach out to recruiters!!!

I can try to counter.  I don't recall verbatim what she said when she gave me the offer, but it was basically like "we know you are higher now but this is the best we can do and hope the other perks make it worth the salary cut".  I suspect they won't bite though.

[ysette9]

I vote for leaving your current job, no question. A bad job is so bad for everything else in life. Whether you take the job in ha d (which sounds like a nice place to land for a couple of years) or keep looking is up to you.

You have savings for a reason. Stop being miserable.

[Freedomin5]

I’ve taken a few pay cuts over the years to improve quality of life. Burn out (and all the associated physical and mental health conditions) is not worth the extra couple thousand.

[iluvzbeach]

I’ve taken a few pay cuts over the years to improve quality of life. Burn out (and all the associated physical and mental health conditions) is not worth the extra couple thousand.

This exactly! Worst-case, you do the job for a few years and move on to a company that will pay more. Happiness at work is worth a lot IMO.

[The Fake Cheap]

To me it almost always makes sense to jump to a new spot when you hate your current role, if salaries & benefits are in the same ballpark.

You could also look at it from a retirement/FIRE savings goals perspective.  If you are 2 years from FIRE at your current pay level, and this move would cause you to work 2 years plus 4 months to make up the extra 10K net, then I think it is still a no brainer to jump ship.  Even if you have 10 years to go currently, I would rather work 11.5 years in a decent spot then 10 years in a hellhole. 

[debittogether]

To me it almost always makes sense to jump to a new spot when you hate your current role, if salaries & benefits are in the same ballpark.

You could also look at it from a retirement/FIRE savings goals perspective.  If you are 2 years from FIRE at your current pay level, and this move would cause you to work 2 years plus 4 months to make up the extra 10K net, then I think it is still a no brainer to jump ship.  Even if you have 10 years to go currently, I would rather work 11.5 years in a decent spot then 10 years in a hellhole.

Nowhere near retirement.  Not even close to calculating a date since we don't have a kid yet and unsure of how that will impact the savings.  I would guess we could retire on regular not early schedule and move to SE asia (LCOL) given our current savings.  Too many bad decisions earlier in life and too old to catch up now.   So just saving the best I can for now.

Honestly i'm learning towards not taking the job and waiting for something else without a cut,  or a smaller one.  I've already been miserable for a year so what's another year, and maybe we should focus on starting a family instead and understanding what the impact of that will be.

[Tuskalusa]

One thing to consider...how possible is an upcoming layoff?  If you think you’re likely to be without a job eventually, then maybe a pay cut and a better working environment might be better.

What about countering them to meet you in the middle. A $5k pay cut would be way more manageable.

[debittogether]

One thing to consider...how possible is an upcoming layoff?  If you think you’re likely to be without a job eventually, then maybe a pay cut and a better working environment might be better.

What about countering them to meet you in the middle. A $5k pay cut would be way more manageable.

I think it's a low likelihood over the next 6 months,  but there.  15%? Over next 2-3 years I think it's much more likely they close.

Much more likely the position is reconfigured to something that resembles a demotion w/in the next 6 months.  Right now I supervise 2 people and manage $10M. I see it going to no supervision and $4ishM.  Honestly I hate supervising, but managing under $10M is unappealing to me and unrealistic at my current salary level. This could happen maybe over the summer.  I'm actually going to a meeting this morning that will shed more light on that.

That said, even if none of that happens and my job is unchanged,  i'm still hoping to leave in a year max.  I've outgrown the position and most of the people are insufferable.

[Metalcat]

As someone who took a pay cut more than 10X that amount, you couldn't pay me enough to be miserable for even one more week much less one more year.

You have no idea how miserable you actually are until you stop being miserable, and then you look back in horror at how much torture you were willing to put yourself through...and for what?? To save more to be able to get away from a job that you hate, which you have the option to get away from NOW?

The fact that you are considering staying sounds like absolute lunacy to me.

I simply and utterly refuse to believe that for a person with no debt, some savings, and a capacity to do valuable work that bring utterly miserable by CHOICE is ever the best option.

Crazy talk.
Plain ass crazy talk.

[debittogether]

As someone who took a paucity more than 10X that amount, you couldn't pay me enough to be miserable for even one more week much less one more year.

You have no idea how miserable you actually are until you stop being miserable, and then you look back in horror at how much torture you were willing to put yourself through...and for what?? To save more to be able to get away from a job that you hate, which you have the option to get away from NOW?

The fact that you are considering staying sounds like absolute lunacy to me.

I simply and utterly refuse to believe that for a person with no debt, some savings, and a capacity to do valuable work that bring utterly miserable by CHOICE is ever the best option.

Crazy talk.
Plain ass crazy talk.

Bear in mind that with the potential of a child soon,  the daycare costs will wipe most of our non savings capacity.  Our savings is far far lower than most people on these boards.  We don't own any property either,  so while we're fortunate to have *some* cash and no debt our situation is still precarious imo.

[leavesofgrass]

Bear in mind that with the potential of a child soon,  the daycare costs will wipe most of our non savings capacity.  Our savings is far far lower than most people on these boards.  We don't own any property either,  so while we're fortunate to have *some* cash and no debt our situation is still precarious imo.

While I agree with others that you need to leave your current job, I really think you should consider if this new job is the right answer.

You currently make ~$77K and this new job is offering about $67K with no room for advancement/pay raises. That's a big financial impact, especially with plans to have a child. Does your wife work or are you the sole breadwinner?

I think you should keep looking, assuming you can stick it out for a little longer. (If you really feel like you can't, then you should take the offer and leave. Your mental health is key.) In the meantime, try to care less about your current job and know that you'll be leaving soon for a better opportunity.

[debittogether]

Bear in mind that with the potential of a child soon,  the daycare costs will wipe most of our non savings capacity.  Our savings is far far lower than most people on these boards.  We don't own any property either,  so while we're fortunate to have *some* cash and no debt our situation is still precarious imo.

While I agree with others that you need to leave your current job, I really think you should consider if this new job is the right answer.

You currently make ~$77K and this new job is offering about $67K with no room for advancement/pay raises. That's a big financial impact, especially with plans to have a child. Does your wife work or are you the sole breadwinner?

I think you should keep looking, assuming you can stick it out for a little longer. (If you really feel like you can't, then you should take the offer and leave. Your mental health is key.) In the meantime, try to care less about your current job and know that you'll be leaving soon for a better opportunity.

I'm the woman. My partner works low wage jobs.  He's in school now.

ETA, this thread has really helped me formulate my thinking around the scenario.  Yes, there is a whole lot I dislike about my job.  However it does give me the ability to help me increase our savings and try to catch up to where we should be based on what I'm seeing people here have in savings/assets.  It really makes me feel more confident to know that even though I am behind, I am in way better shape than I was a year ago, or two years ago!

 If I leave this job for this particular offer, I would gain a better daily working environment, sure.  But I would also lose that ability to catch up my savings and that would be a negative that offsets the positive of the new working environment.  So I don't think for me personally, this particular job is the one.  I don't think holistically I would be much happier.

[debittogether]

Update:

I had an interview today that went really great.  Their salary and benefits are more in line where i'm at now,  if not better.  If this doesn't work out I now feel more confident with a plan going forward.

I formally declined the other offer.  I feel confident that I can hold on longer for a better fit.  I've had a few local people tell me this week that the job market for my work area and city is only going to get hotter this summer.

Thanks again for helping me look at this from different angles.

[ysette9]

Great! Good job on your interview and confidence.
I hope something good works out for you.

[ItsALongStory]

Excellent update, please keep us posted on how things progress.

[debittogether]

Above in the thread, I mentioned a soft offer I had from a consultant.  That consultant actually contacted me today and we are meeting over lunch tomorrow to discuss the details.

I also have a final interview for a position I am almost certain will offer me at least what I am making now and does offer a better benefits package.  I suspect I will end up getting the position, my first interview went great both on a professional basis and cultural fit basis.  I also got a call this morning for an interview for a position I applied for on Thursday (I am not certain I have the proper licensure for it though).

I am glad I held off now, it seems like the job market for what I do is pretty hot.   

[ysette9]

What a wonderful position for you to be in. Good luck!

[ItsALongStory]

Options! great to be the spot that you are.

[debittogether]

I did get and accept the job.  It's about the same compensation package I have now.

Honestly I'm not excited though.  I'm so burnt out from my current job that the idea of working anywhere is unappealing.  I realized I have not had any time off from work, other than vacations where you check in daily, since 2003.  But I am nowhere remotely close to FI. 

My current employer is devastated I am leaving (I am a key employee and one of the people who hold this whole place together). They're going to struggle without me here.  Especially since while I was looking to leave one of my direct reports quit, so now they're down a person and they're soon to be down the department head.

Hopefully when I actually start at the new place I'll be a little happier about it. 

[leavesofgrass]

Congrats on the new job!

Can you take some time off between jobs for a mental health break? Even if you've already agreed on a start date with your new employer, this is a great time to take some time off. I would imagine they'd be flexible with this request. Who cares if you're not FI -- as long as you're not going into debt to take a few weeks off, I think you should prioritize yourself and your time right now. It's probably going to be a bit stressful when you start the new gig.

[debittogether]

Congrats on the new job!

Can you take some time off between jobs for a mental health break? Even if you've already agreed on a start date with your new employer, this is a great time to take some time off. I would imagine they'd be flexible with this request. Who cares if you're not FI -- as long as you're not going into debt to take a few weeks off, I think you should prioritize yourself and your time right now. It's probably going to be a bit stressful when you start the new gig.

They're very firm on the start date.  I have to work both jobs concurrently for a while even.  The new during business hours,  the old nights and weekends part time.

[ysette9]

Ugh, that sounds rough.

Get a vacation lined up and then make it a REAL vacation.
No checking work email allowed! This is critical for your mental health.

[debittogether]

Ugh, that sounds rough.

Get a vacation lined up and then make it a REAL vacation.
No checking work email allowed! This is critical for your mental health.

I can do that around Christmas I think. 

If we end up having a baby that winter though it won't be much of a vacation ! Lol.

[ysette9]

A baby definitely is not a vacation!


Good luck carving out time for you. It is so important.

[myrrh]

Of course you cannot let your job rule your family planning. However, I'd personally put off trying to get pregnant until about 3-4 months into the new job so you'll be covered by FMLA when the baby comes. And please plan a vacation before baby too! It's possible to vacation with a baby but words cannot express how much things change and how difficult logistics are, especially when sleep deprived. Best of luck!

[debittogether]

Of course you cannot let your job rule your family planning. However, I'd personally put off trying to get pregnant until about 3-4 months into the new job so you'll be covered by FMLA when the baby comes. And please plan a vacation before baby too! It's possible to vacation with a baby but words cannot express how much things change and how difficult logistics are, especially when sleep deprived. Best of luck!

Yes, I've been really mulling over the timing already.  I'm old enough though that 3-4 months could make or break it.  So I need to really think it through and decide how important it is to me.  Vacation isn't going to be an option until December though regardless,  unfortunately. At least I had a great vacation back in November this year (despite the daily check-ins, I still had a lot of fun).  Also, if I wait for the year mark that would mean I am out most likely during late spring/summer, which is the peak busy time for what I do.  If I do have a kid this winter, that is a much slower time of year business-wise even though I'm not at the 1 year FMLA mark.