This year my paycheck seems like it's part of a magician's act as it becomes the incredibly shrinking paycheck. In addition to the increase in payroll taxes, I have a smaller paycheck due to unpaid days off or furloughs. That's on top of a pay cut that helped my company "balance its budget." According to an article by LearnVest, the average worker is taking home $64 less per month or $770 for the year.
Although I am doing some things to compensate for my shrunken paycheck, there are a few financial tips that make me cringe more than my paycheck.
Selling my home
One way experts say I can cushion the blow of a smaller paycheck is by downsizing. They also suggest renting out a room or getting a roommate. Since I like my personal space and don't want to become a "landlord" even on a smaller scale, I wouldn't rent out a room in my home. I also won't sell my house. I spent years getting back to even on the value of my home after being underwater on my mortgage. I also refinanced recently. Selling my home at this point would be a terrible financial move. What I am willing to do is to stop sending as many extra payments to my mortgage company.
Picking up a second job
Even though I should feel justified getting a second job since my regular employer has reduced my pay, it's not a smart move for me. Some of my friends say they regret taking menial second jobs because it tarnished their professional image. In my case, I believe I wouldn't have the same energy and creative ideas for my job if I was distracted by other work. I'm afraid my quest to make extra money would backfire, jeopardizing my main source of income. What I am wiling to do is sign-up for any overtime at my company.
Cutting out all the non-essentials
I've heard personal finance experts on television such as Suze Orman advise people who spend more than they make to cut out all the non-essentials. People are often told to get rid of cable, stop eating out and do away with any gym memberships or lesson for their children. I am not willing to take all the fun stuff out of my budget to compensate for a smaller paycheck. However, we did call our cable company to see if we could change packages and eliminate the landline. We saved $60 a month. Also, I am willing to switch to generic.
Changing my withholdings
Another tip that I won't even consider is changing my withholdings. I will not get into a situation where I owe the IRS money every year simply because I didn't want it withheld. To me, it's a foolish idea to have less withheld from my paycheck. If money is tight now, it will be just as tight when it's time to pay the tax bill on April 15. I rather get a refund of any size than owe the IRS money. What I am willing to do is change how much money gets automatically taken out of my paycheck and put into my retirement account.
While it hasn't been fun to deal with a smaller paycheck, I'm optimistic about the future. I am setting career goals so that I can increase the size of my paycheck rather than hit a midlife income plateau.
*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
More from this contributor:Taking the "Spent Challenge"
- Employment & Career