If Your Salary is Cut
In order to deal with the coming recession and massive cut in income caused by the national lockdown and global Covid-19 pandemic, many firms are starting to look at ways to reduce their monthly costs. Most firms largest monthly costs are their salaries and so many companies are now asking staff to all take salary cuts rather than having to fire some of the team. This enables the company to still put out as much work as possible because all staff members are still at work. This helps keep productivity and profitability high.
What should you do if your boss tells you they are going to have to cut salaries?
Cut Back on Spending
Lockdown has made everyone look very hard at all their insurance policies, monthly entertainment spending and even their shopping habits. If you are going to be getting less income each month then you need to adjust how you spend your money.
By now you will have cut out any non-essential spending but you may have to look deeper at how and where you shop for certain products and services. Comparative shopping for better prices can help. Reducing a service or product from the best version to a generic or cheaper alternative will also help.
Stop spending to impress. If you are in lockdown nobody can see how you are dressed (below the waist anyway) so hold back on spending on items that are non-essential.
You should also speak to your landlord about ongoing rental rates or even look at cheaper rental alternatives (prices are about to drop as the market becomes flooded). Consider if you can move in and share with family or friends. Can you rent out part of your own home or take in a reliable tenant to get in some extra income each month.
It may finally be time to launch that small side project you and your partner have been thinking about for some time. Even if it is just something small it will help. The goal here is to come up with a second revenue stream that can help offset the income reduction not to become overnight millionaires.
Consider Debt Review
Because debt review automatically aligns with how much you can realistically afford to repay on your debt each month after having covered your essential monthly running costs this may be the right time for you to look into starting debt review.
If You Are Already In Debt Review
If you are already in debt review then you should talk to your Debt Counsellor immediately. They will help you review your budget and then start to contact your credit providers about adjusting the repayment plan going forward. This may involve the matter going back to court if the repayment amount is going to have to drop by a large amount.
If your income is going to be reduced then look at ways to earn more, spend less and consider some big changes, like debt review, that will help you deal with the rough months to come. Remain positive, be happy that you do have work in a time when many will lose their employment and focus on being a valuable and indispensable employee.
This article first appeared in the May issue of Debtfree Magazine.