5 ways to survive a pay cut imageand emerge unscathed



Part of the difficulty of dealing with a pay cut comes from the fact that we are creatures of habit. Because we grow accustomed to a certain lifestyle that comes with a certain level of income, suddenly having to adjust to a lower budget can be disorienting.
But, just as we’ve gotten used to our present standard of living, so can we adjust to a new normal. Why? Because we’re creatures of habit.
Re-do your budget to fit your lowered income by grouping your expenses into three colours – green, yellow and red (yes, just like a traffic light).
Green – expenses that need to continue (utilities, mobile service, meals, groceries insurance premiums, other essentials)
Yellow – expenses that you reduce or put on hold (credit card debts, loan repayments)
Red – expenses that you stop completely (holidays, entertainment, coffee, recreational classes, memberships or subscriptions)
(Read also “4 Ways To Cut Down On Your Daily Expenses“)
Your new budget should consist mainly of expenses in the green category, which are essentials that you need to continue paying for. Besides the obvious ones such as food, groceries and utilities, you should also include things like insurance premiums, lest you lose your insurance coverage and suffer heavy financial penalties along with it.
For expenses in the yellow category, you should try your best to hold or reduce them. This means that for credit card debt, switch to paying only the minimum each month (3% of card’s outstanding, or $50, whichever is lower), and make plans to pay off your debt once you’re able to in future.
As for loan repayments, reach out to your bank to restructure your loan. Either extend the repayment period for lower monthly instalments, or ask the bank for a ‘haircut’, which means forgiving the rest of your debt in exchange for a lump-sum payment of part of it.
Lastly, for expenses in the red category, simply cut them out until you can afford them again. Be creative and come up with alternatives to help you adjust to the onset of deprivation.



Source link