Taking a paycut

[Klubbie]

I am curious to hear the thoughts of those on this forum at the prospect of taking a paycut when changing jobs. Or advice from anyone who have done it themselves.

An overview of my situation - been with company about four years in the same role. There is some toxicity in the work environment but it's manageable. My role itself is not challenging and very soul sucking. The work that the job requires does not require me to really use my brain. The way day to day "essential" tasks are structured makes it difficult to pursue creativity and alternate solutions myself. I have found some ways to inject more creativity and skill development in the job, but it is not always possible or easy to do so. I have stuck with it for as long as I have as it made it easy to go through some major life transitions (getting married, buying a home, having a child).

I am very well compensated, probably too well compensated for the market I am in and stage I am at career wise. My base is about 120k and I get a target bonus of 20% of base as well as about 10k annually in RSU. I have about 38k of RSU and they start vesting this year, with more than half vesting in 2019 and 2020.

We have about 80k in student loan debt left that at my current compensation level (assuming bonuses payout annually and company stock doesn't tank) my wife and I think we can get paid off in late 2020.

I have been job searching for a year and it's simply been difficult to find comparable pay. I am considering pursuing lower paying jobs as a way to take a step back to then take a step forward. I am simply bored at my job, not challenged, and not developing or using skills. For various reasons I have determined staying with my current employer in a different role is not a viable option long term.

However, I am finding it difficult to walk away from the pay and restricted stock that will begin vesting with the student loan burden. It's like I am close enough to paying them off, but far enough away that it's a long time to just "tough it out".

I am also concerned that staying in a role that isn't challenging and is not helping develop skills for my career is a bad career move to make, just to stick around and pay off my loans.

I mentioned the student loan payment, we also have high daycare costs. Between the loan and daycare we are spending about 2500 a month on those two items alone. Daycare costs will trend down some, but remain high for the time being.

From the research I've done (I have turned down similar offers this past year because I was trying to match comp), I could likely land a role that is about a 15 to 20% paycut in base salary and a total cut of about a third of total comp when you consider bonus and RSU in my current role. I'd also be waking away from the RSU that starts vesting. I could also potentially find an job matching my base or within 5 to 10k meaning that my paycut becomes smaller off base and more around walking away from the annual bonus or un vested RSUs. Taking the paycut would also mean we pay off the student debt in five years instead of 2.5 because right now we are taking the bonus and RSU money to pay down the loan further.

My wife also works as a nurse and could up her hours which would add roughly 5-7k of annual income if needed, primarily to offset a paycut I would take. But we like her being home more to keep our daughter out of daycare some days and to help with some of the stuff at home that's harder to keep up with when we both work a full 40 hours.

We are 36 and 34. No plans for anymore children. I worry that sticking this job out until I am approaching age 39 will make it harder to switch career paths. Plus bonuses could suddenly disappear for various reasons if management wanted it to.

I would be taking a paycut to pursue work in the data and analytics world. I have some experience in that space on my resume (enough that I have gotten interviews and some offers at lower comp levels). I enjoy the work and think there is a ton of potential there going forward. Most of my current experience is in banking in audit and compliance type roles.

We are very blessed in that this type of decision comes down to "do we walk away from money that will help us pay our loan down quicker to pursue a more satisfying career, or tough out a boring soulless job to pay debt?"

Taking the paycut I've described would have some impact on our monthly cash flow, but we would still be generally fine - especially if my wife picked up more hours.

So I am curious, what have others done in similar situations? Have you taken a paycut in your career to pursue more interesting work? Did it pay off long term? I am genuinely curious how others have responded when faced with this type of situation under whatever circumstances led them to consider it.

[Senator]

Tough it out. The next job may be worse.

[Texas Proud]

Just curious on why you think that taking a pay cut will get you ahead?

I would think that if your new company was not willing to pay for your services at a market rate then they never will...

Now, you might be above market right now, but if that is so then why would you think that moving to a place that pays market will get you above market anytime soon?

IOW, if you drop pay by say 20%, how long do you think it will be before you even catch back up... and remember that your current pay will more than likely go up... I remember when I was working in NYC there was someone who was WAY overpaid (in the $700K range) who wanted to move to the middle of the country.... he was surprised that small company CEOs did not make as much as he did... he never could find anything close to what he was making...


If the job you are doing is going to change a good bit, then you might have to drop down since you do not have enough experience but can make it up... or if you have something you know will be better.... be aware that lots of places do things similar and you might be getting into the same situation but with less pay....

[ivinsfan]

That's a lot of student loan debt for someone in their mid-30's. You really need to get that millstone from around your neck.

If you really you are getting paid too much just hang around until the loans are paid off. You know S$%t happens someone else might decide you are overpaid and offer you a nice package. Or they might decide to double your workload so you "earn your keep". Then you can revisit your options for a different job. In this climate there are worse things then having a "boring soulless job" with good health insurance.

If your job allows you to have fun with your wife and kid and sleep well at night, there's not a lot of upside in changing that right now.

[Red Badger]

Agree that you should hang in there 'til at least 2020. Also, consider a babysitter instead of daycare. My DW sat young (3-6 YO) kids PT during my working years. The last few years, she was paid $6/hour, 6 hours a day, 5 days a week. So, her "customer" paid about $750 a month, and the crumb cruncher got personalized, attentive care (DW in her sixties. When she was younger, she sat for 2-3 kids).

[pb4uski]

I faced a somewhat similar situation in my early 40s. I was plateaued at work.... while I was well thought of in the organization they passed me over for the CFO job twice within 6 months.... they were looking for someone with different experience from what I had since they had dreams of doing an IPO.

I could have just treaded water in that job for another 12-15 years or move on to something different. I decided to make a move. I was lucky to land a better job that was 30% more pay but that required 80+% travel.... but the job was much more interesting and intellectually stimulating. Ironically, in the new job I was part of a team helping clients outside the US list their shares in the US!

OTOH, a colleague who was similarly situated like I was at my former employer stayed and served his time and is now retired... I would have been bored silly.

I would be very reluctant to tread water career-wise at your age. While we focus a lot on money here.... there is more to life and work than money. I would make the move... life is too short to be stuck in a job that is unsatisfying.... it will wear you down in the long run... and sometimes one needs to take a step back to take steps forward.

[Luck_Club]

Earning more is always better than earning less especially in a lateral role change.

From the sound of it you would go from:
120K Base
24K Bonus
10K deferral comp
154K total

willingly accept:
$96K Base & No bonuses

I guess on the bright side you wouldn't have to pay more in taxes.

[ivinsfan]

Quote:

Originally Posted by Luck_Club Earning more is always better than earning less especially in a lateral role change. From the sound of it you would go from: 120K Base 24K Bonus 10K deferral comp 154K total willingly accept: $96K Base & No bonuses I guess on the bright side you wouldn't have to pay more in taxes.

What happens if the new job bombs all of a sudden his salary history got tanks try going from a 100k a year to a 150k job. This will have a negative effect on future jobs

[exnavynuke]

Personally, I'd try to stick it out at least long enough to eliminate your debt before considering taking a paycut for a more enjoyable job, especially since it's such a short timeframe you're looking at for getting there.

[gamboolman]

Hang tuff where your at Hombre.

[njhowie]

Quote:

Originally Posted by exnavynuke Personally, I'd try to stick it out at least long enough to eliminate your debt before considering taking a paycut for a more enjoyable job, especially since it's such a short timeframe you're looking at for getting there.

Ditto.

[Texas Proud]

Quote:

Originally Posted by Luck_Club Earning more is always better than earning less especially in a lateral role change. From the sound of it you would go from: 120K Base 24K Bonus 10K deferral comp 154K total willingly accept: $96K Base & No bonuses I guess on the bright side you wouldn't have to pay more in taxes.

Quote:

Originally Posted by ivinsfan What happens if the new job bombs all of a sudden his salary history got tanks try going from a 100k a year to a 150k job. This will have a negative effect on future jobs

This just reminded me of someone I worked with many years ago... back in the dotcom days.... he left a good salary with benefits for a dotcom startup making much less, but with stock options... it tanked... took him awhile to get back up to where he was for some reason... he was not a super star, but was not bad...

He took a gamble and lost... but he might have been lucky with a Facebook or Amazon and had many millions of $$$$s....

[ocean view]

Yep, I’ve been there. The RSU income (ie golden handcuffs) is hard to walk away from...however, if your job is toxic and soul sucking, eventually it will impact your health and your life at home. It’s a hard decision to make. Personally I would take the pay cut and move toward a happier life. The money is not worth the price of health.

My toxic environment came during 2008 recession when there were no jobs to move to. I’d been at this company 11 years and promoted twice during that time. New VP didn’t think I was performing up to my pay grade, and the manager who promoted me didn’t defend me. I offered to take a demotion & pay cut to get them off my back about performance and just waited out the job market. 18+ month’s later, jobs were starting to open up and I took the first opportunity to get out. By the time I left and for several more months I was a wreck physically. Couldn’t sleep, couldn’t eat much. I dropped 15 pounds. My mood was difficult. I was seeing a therapist. The first year at the new job was challenging (normal new job challenges, getting up to speed) but not in a bad way, just a pile of work. New job VP appreciated all of my hard work and it didn’t take long for my comp to rise. Definitely worth it. 4 year’s later I ER’d at 50.

Good luck!

[Dd852]

In general I believe challenge and joy trump dollars. However, the joker in your deck is the loans - you really can’t have freedom until you’re free of debt and its incessant demands. Be grateful you have mental capacity to spare in your current job and put that to use - learn a new skill on the side, get a new qualification, do a side hustle to pay off the loans faster.

[cathy63]

Quote:

Originally Posted by ivinsfan What happens if the new job bombs all of a sudden his salary history got tanks try going from a 100k a year to a 150k job. This will have a negative effect on future jobs

In more and more places it's illegal to ask about current or prior salary history of applicants. The goal is to reduce income inequality, primarily between men and women doing the same work; but also to allow people who chose to take a pay cut or who started their careers during a recession to catch up. So, I don't think it should be a huge negative issue as long as his skill set for the higher paying jobs will still be current enough to get back into that line of work.

[ivinsfan]

Quote:

Originally Posted by cathy63 In more and more places it's illegal to ask about current or prior salary history of applicants. The goal is to reduce income inequality, primarily between men and women doing the same work; but also to allow people who chose to take a pay cut or who started their careers during a recession to catch up. So, I don't think it should be a huge negative issue as long as his skill set for the higher paying jobs will still be current enough to get back into that line of work.

This is true but a good HR or hiring manager will at least have a ballpark idea of your job description and pay scale in the same industry.

[cathy63]

I took pay cuts twice during my career in order to get things like better growth opportunities, more interesting work, and better work/life balance. One other time I moved to a place that paid the same salary but had basically no benefits, which is pretty much the same as a pay cut. In every case, I exceeded the income I had left within two or three years.

The thing that enabled me to make these moves was that DH had a lower paid, but stable job with good benefits. Before I made any moves, we always talked it over in detail, looked at our spending, and figured out exactly what we'd be sacrificing and what we'd gain. I was also willing to wait a few months, but not a few years, for stock options to vest. I'm lucky that DH always thought it was worth it to have a happier spouse who was home more for him and our daughter.

I think you can make this work as long as it's a team effort and your wife is fully on-board. If she has to work more shifts and resents the lost time with your daughter, or if you can't take the vacation you had planned because you won't have enough PTO or money, then it might be better to stick it out where you are for a while longer. You'll have to have some really honest conversations and make sure you know when you'll be able to pay off that debt and what impact this will have on your retirement plans if your salary never does go back to what you have now.

[pb4uski]

Quote:

Originally Posted by Dd852 .... However, the joker in your deck is the loans - you really can’t have freedom until you’re free of debt and its incessant demands. ....

I think too many respondents are over-fixated on th OPs $80k of student loan debt... if the OP's mortgage was $80k higher would anyone give a care? If not, then what is the d.ifference? Debt is debt... so IMO the student loan debt is a factor in the decision but not an overwhelming one.

[GravitySucks]

Thirty years ago I left an okay paying job that was not increasing my skills for a lower paying one that did. But I figured it would be a one step back, two steps forward move. Turned out to be a two steps back, five steps forward in reality.
Worked for me.

[ivinsfan]

Quote:

Originally Posted by pb4uski I think too many respondents are over-fixated on th OPs $80k of student loan debt... if the OP's mortgage was $80k higher would anyone give a care? If not, then what is the d.ifference? Debt is debt... so IMO the student loan debt is a factor in the decision but not an overwhelming one.

Fixated,it's an unsecured loan..A house covers the basic need of shelter..if the OP bought too much house that's another topic