Why a $45,000 pay cut was the best decision I ever made
This is my story of how I took a significant pay cut late in my highest income-earning years. Here’s why I did it, how I handled it, and how it was the best decision I ever made.
It shocks me how fast a twenty-year career can go by. I can still remember back then when I was the youngster at work who was ready to make an impact, and anxious to impress my managers. I had little patience; I was far too eager to earn my next promotion. That achievement meant more money and higher stature — a symbol of success that I was moving up in the world. Growing up, my dad instilled in me the notion of a successful career. He was proud of me, and that mattered alot to me at the time. Nowhere in this idealistic world was a pay cut ever an option.
All of a sudden, I became the older employee. In my 40’s, I was one of the oldest in my company and at the top of the pay scale. Then, I lost my job.
When I started looking for my next career move, I struggled to find my next role. I had grandiose dreams of having a perfect career transition, ideally in a start-up company where I could take my corporate skills into an exciting challenge. When I spoke to recruiters, I was stunned when some said I had too much experience, while others said I didn’t have enough experience for roles that could easily benefit from my transferrable skills. At this stage, I would have never considered a pay cut.
- WHAT? Not Enough Experience?
That was a big kick in the face. I felt twenty years of my life was wasted. Was I confronting ageism, wherein I was no longer relevant versus young 30-year-old job seekers competing for the same roles? Then, I had a recruiter tell me I had been in my jobs too long.
Too much time in my job? What happened to the value of experience?
I refused to believe this. I knew I was employable, I was marketable, and I had plenty to offer to any business.
I was now facing the reality of the new job market: I had just re-entered after seven years.
Businesses were and still are, in a quandary now more than ever.
Their priority is to make profits, to make decisions that will improve their bottom line.
The high paying jobs held by the more senior, more experienced employees are eliminated, or they are replaced by a person in a lower salary bracket. Now, there are significantly fewer jobs, while well-qualified, highly skilled workers are competing for fewer roles. And limited roles means it’s an employer’s market. They can choose to reset the salaries for this new economy. Does this sound familiar?
I never thought this would happen to me; no one is insulated from the profit pressures of the job industry.
After seven months of soul searching and connecting with hundreds of contacts over cups of coffee, I was discouraged by roles that came my way. Some were identical to what I was doing before, and accepting them would make me stagnant and uninspired.
Then, I found an exciting role where I could leverage my strengths and learn new skills.
I was offered a role at a small advertising agency. Although it was still a part of marketing, it was much different than my previous corporate marketing functions. I was excited about it as I used to be the client hiring advertising agencies, and now I would create solutions for customers, in a different kind of business, with a heavy focus on a new set of skills.
But accepting this role meant a major pay cut. Close to $45,000 a year less than my last salary.
If I took this was I settling? Was I short-changing myself? Would I be bitter over this decision? And could I afford such a pay decrease?
I belaboured the decision with my husband,Troy. We looked at our finances; we discussed options, and we weighed the pros and the cons. Then, I accepted the job.
- I learned more about myself, my finances, and my future than I ever imagined.
- It was the best decision I ever made.
1) We learned to manage our money differently
As surprising as it sounds, Troy and I didn’t feel we lost $45,000 in income. We were forced to get better with managing our finances. A pay cut meant to get smarter with how we spend our money. We started to prioritize things by spending first on things that were most important to us.
We lived in Toronto, an expensive city, but we found ways to reduce our expenses — by just taking the time to research and to organize it.
This decision also forced us to start a budget, which is how we were able to find areas where we could save. If before we only looked at our finances each month loosely, now we have honest discussions on where we spent our money.
– We were classic weekend shoppers, buying things for the sake of something to do, vs. buying products that we needed. We stopped the insanity and thought about our purchase decisions.
– The new job allowed me to bike to work, instead of driving, which saved us on gas money. Later, we sold our car, converting it into cash.
– We looked at ways to save in all aspects of our lives, from utilities (like cable and phone), renegotiating our mortgage, reducing bank fees, and cutting our food bill by wasting less food. Most importantly, we stopped going out for dinner or buying latte’s at Starbucks as often as we did.
– After all these little adjustments, we didn’t feel like we were missing out, nor were we were struggling to find money. We even went on a holiday, but we did it more economically and chose a different part of the world.
– These steps also led us to know we had the gumption to plan our finances to transition to our new lifestyle of full-time travel.
2) I parked my ego and started in changing my relationship with my income
Before, I equated success with how much money I was making. That is a typical trait operating in the business world. A higher salary meant I was moving up. But I just sucked it up and accepted that this role was the right thing for me, now, at this moment.
I convinced myself that a pay cut meant I wasn’t good at my job, or I wasn’t worth a higher pay although the salary for this job had nothing to do with me. This notion took some time for me to internalize this, but I got over it.
I stopped caring what people were thinking. I made this decision, I owned it, and it was the right one for me, for my career.
If before I was working for money, now, money was serving me — to become a means to do the things I want to do, instead of a symbol of status or recognition.
3) I became better at my skills set and expertise
I got a new perspective at this job. I was problem-solving every day, thinking more from a small business perspective, not from a big business approach. A pay cut didn’t mean I wasn’t learning anything new. I had to dig deep for solutions, and I learned more about digital marketing, e-commerce, and website development than I would have ever learned in my past roles. All these skills have helped me in our blogging career and our move to our life of travel. My only regret is I didn’t make this shift earlier in my career.
4) I gained the confidence to work for myself
Several months after I started, I was approached to do some consulting projects for past colleagues. I only worked for other people, and this was my chance to prove to myself I could work for myself. By making this shift to a different job, I got the confidence to serve my own clients. I started to think I could do anything and that anything was possible.
5) I had less responsibility, which allowed me to focus on other projects
I welcomed the change of having less responsibility and fewer direct reports. Although the role was still challenging and hectic at times, I had less staff to manage, which made me focus on learning certain skills I wanted to improve in myself. Five months into the job, Troy and I decided to leave our careers and create a new lifestyle, and I had more time to think through the steps for that new chapter.
I never expected that making a decision like this would have this kind of impact in my life. Of course, the combination of the right job role and pay cut played into this learning experience.
If you are struggling with the same decision, I found this great quote relevant to the economic situation out there:
“Given the economic climate and white-collar and blue-collar job loss, it’s going to become more acceptable for people to take pay cuts and it won’t have the negative stigma that it would if we were in a growth period of the economy,” says Brendan Courtney, senior vice president for recruiter The Mergis Group in Fort Lauderdale.
I can appreciate we all have different situations, and often the circumstances might be leaving a miserable job situation, or a pay cut of this magnitude is not possible. Here are some good tips to research this topic further.
What about you? Have you ever taken a pay cut, moved to a new job and gained a good learning experience from it? We’d love to hear from you.
Originally published at www.travellifex.com on June 23, 2016.