You have no other way around but signing the agreement stating you have no problem working for the company while being on a pay cut for a certain length of time. Due to the financial downturn, you and your employer have to find a middle ground. Now is not the time to express disapproval and fight over such issues.
Businesses are going down, which is why it is not possible for employers to keep up with salary payments. While a lot of businesses have made their employees redundant, you are still lucky to be a part of the company. At least, you are having some money coming in to make ends meet.
Even though it is fleeting, you cannot sit back as no one has an idea of how long this situation is likely to continue. Depending on income and monthly expenses, salaried people are likely to fall into the following categories:
- People who can manage to pay for expenses including loans
- Those who can manage to keep up with repayments but may fall short of cash
- Those who may be struggling to make ends meet
If you come under the first category, you do not need to worry about it. If you belong to the second or third category, the following tips can help stay afloat.
Revamp your budget For Financial Stability
Since you are on a pay cut now, your current budget will no longer be useful. You will have to whittle down your cost of living to make ends meet. Make a list of all expenses including repayments to be made to private lenders. Now set the limit for each expense. Of course, there is no wiggle room when it comes to paying off loans, but you can cut down the size of other expenses to as minimal as possible.
Whether you accept it or not, you will have to whittle down to keep the wolf from the door. While revamping your budget, make sure that you are considering the necessity. Try to focus on meeting essential expenses instead of luxurious and discretionary expenses. Cutting down the discretionary expenses seems to be a bit tough job for many people, but you can do it easily if you are determined to do so.
Keeping aside your temptation and your habits of living your life before the pay cut, remove clothing, entertainment, and dine outs from your expenditure list. Overcome such temptations will not be so difficult if you understand the root cause of the economic recession. A home-cooked meal and home entertainment will be way affordable than dining at restaurants and going to pubs and clubs.
Avail yourself of a payment holiday
You can apply for a payment holiday till 31 October and this will be valid for the next three months from the date you apply for this scheme. It means you do not need to make repayments for three months.
However, note that the interest will keep accruing. After the end of the payment holiday, the repayment amount will be recalculated and it will be slightly higher than the one you have been paying before. For instance, you have an outstanding instalment loan for bad credit, you can ask your lender to out your loan on a payment holiday.
If you have already applied for it and it has expired, you can be asked your lender to extend this period. It is up to your lender whether they extend it or not. It is likely to get an extension of the lender believes that you can bounce back.
Do not shift focus away from your long-term goals
When you are on a pay cut, it is tempted to cut down on retirement and other saving goals. If you do so, you are harming your financial life in the long run. The financial crisis can show up at any time.
It may be tempting not to set aside money for your retirement. How about if you come up with the same situation in the future too? It is not possible to turn to direct lenders every time when you have a financial problem. Instead of compromising with your long-term goals, you should try to cut down on essential expenses.
Try to work on cutting your monthly bills. For instance, do not keep lights and fans on when not in use. Look for cheaper cable subscription plans. You can think of downsizing your home if you have faced a worst hit in your income. You may think that such tiny moves will not have a major impact on your financial life, but something is better than nothing.
Pay cut can affect your financial stability, but you can manage to stay afloat if you follow the tips mentioned above. You have to be cautious with your spending. One careless move can take a huge toll on your finances.