When Frugal Means Forever

The news is full of stories of people who are having to take pay cuts in order to remain or become employed.  With unemployment rising, it appears that this may just be the tip of the iceberg.  While many personal finance blogs have great tips on how to trim the budget and adjust to lower paychecks (or to save a bit more), my own experience with a paycut was different, especially in magnitude.  When I shifted from the corporate sector to the non-profit sector, one of the tradeoffs that I had to contend with was a decrease in salary.  I’m not talking about a 10-20% cut; I was offered a position at an 80% paycut.  I understand that I am still more fortunate than most, but I found that the shift to a (drastically) lower income had some lagged effects.

The full magnitude of my financial choices didn’t hit right away. I think this is like going camping, when being without electricity is great fun for a few days.  It’s wonderful to have not phone interruptions, sleep under the stars, and cook on an open fire. The novelty is refreshing.  But after a few days of camping, some of the inconveniences start to become clearer.  Similarly, it wasn’t for several months, when I came to the gradual realization that I really never wanted to return to the corporate sector, that the reality set in that I would have to make frugality an every day experience, not just a temporary visit. Friends of mine who had been through a similar shift, especially new moms that decided to be a stay at home mom for a lengthy period, seem to have experienced similar transitions.

Here are some of the things that I did (eventually), that you might consider if you anticipate a move to lower income for an extended period:

Consider a major change in scenery — I found it much easier to move to a different state and live in a new neighborhood rather than to scale back my expenses where I was

Create a budget at the outset and track your expenses meticulously for the first few months to see if the budget is realistic and long-term sustainable

Begin to cultivate a social network that overlaps with your new circumstances.  For example, I began to enjoy the outdoors more.  There are a number of hiking groups of all intensity levels.

Try new hobbies that are frugal in nature.  For me, this is cooking at home which has helped lower the costs of eating out as well as contributes to an overall healthier lifestyle.  The key is to displace things that require shopping or large-spending to  take part.

Have an exit plan.  The new lifestyle you have chosen may not be the best thing.  Have a plan B in mind, in case you decide not to stick to it. If the decrease in income was not voluntary, it is even more important to cultivate a plan B.

see more in my post Surviving a Large Paycut, and at the festival of frugality at The Dough Roller.