by Adam Dawson
As I mentioned previously, we are lucky that I received a job offer before my previous role came to an end. This transition is proving to be a very positive change for us, at least so far.
We are facing some changes in our finances due to the new job. I am curious how any of you have navigated any of these changes before.
First, I will be moving to a semi-monthly pay schedule instead of a biweekly pay schedule. This means that we will no longer get 2 months each year with an extra paycheck. In the past we have used these checks to pay down debt and to finance our holiday travel (we usually go home to Indiana/Michigan for the holidays). I think I should calculate what those extra checks would add up to, and then start saving that amount through the year out of each check.
Second, the phone. My previous employer provided my phone, but my new employer offers a reimbursement. I am not sure how this works yet, but I am hoping this will be a net gain for us because Emily and I will be able to share an account that will be maybe 70% reimbursed, instead of paying for 100% of Emily’s solo account.
Third, the wardrobe. I have to totally revamp my work wardrobe because of a different dress code (and many of my old clothes don’t fit – yikes!). Emily gets a lot of her clothes from thrift and resale shops, but I have a harder time with this. I wear a weird size and I think men tend to wear their clothes out more so than women, so there’s not as much to be found at the thrift store. There are a couple of men’s consignment shops here in Austin that we may check out. But right now I am leaning toward Costco’s dress shirts (17.99) that get good reviews for quality, and the price is right. In the past we’ve also done well at Nordstrom Rack, but I find their quality is actually pretty inconsistent (at the discount store, not the regular Nordstrom store). Any other tips?
Fourth, health insurance. On a very preliminary review, I believe our health insurance will be about2x as expensive as my last job, but my coverage will be much better. I think we’ll be out about $180/month for coverage for both of us.
Fifth, 401k. At my last job, the 401k matching and vesting was terrible, so bad that I just didn’t participate. At the new job, it will be somewhat better – a dollar for dollar match up to $5000/yr, immediately vested. Still not a great plan but it will allow us to sock away $10k/yr for retirement. At this point I think I should at least participate to that match level before we get accustomed to having that money in our paychecks.
Finally, I think free coffee and soft drinks will still be available at my new job, bu I am well aware that I have to solve the lunches out problem. In my view this is probably the single biggest lever we can pull to improve our budget.
Please let us know if you have any tips for saving money when changing jobs!
Some questions: how does the salary compare to the old job? Could Emily’s health plan be better for you both? Or would you fare better if you each went with your own plan?
A $5, 000 match sounds pretty good to me! Add the $5, 500 you can. put in a Roth and that’s significant money to save. Plus whatever Emily saves. Unless of course your salaries are very high, and its a low %. But if that’s the case, then you should have no trouble getting out of debt quickly.
I will have another post with the numbers related to the job change.
I’m excited about the 5k match, but at other places I’ve worked there weren’t caps if there was a % match. They just matched dollar for dollar. but I guess putting caps in place is a trend now.
i like the approach of figuring out what the “bonus” check amount would be and saving up that amount throughout the year. It could be as simple as have a set amount from each paycheck deposited into a savings account. That’s what I do – I can split my direct deposit into several accounts.
One nice thing about getting paid bi-monthly is that your paycheck usually arrives on a set date each month, e.g., the 15th and the last day. That can make auto-pays and auto-transfers easier to schedule. That’s one thing I miss about getting paid bi-monthly.
As for suits my only suggestions are Mens Wearhouse and Joseph A. Banks. I get the impression that they’re good quality but not crazy expensive, but I imagine the men out there can suggest better alternatives.
I’m glad you mentioned the auto-pay thing! Getting paid biweekly is exactly why I DIDN’T do autopay in the past. Maybe I can set some of these up now.
FWIW, my husband LOVES Costco’s dress shirts. Good price, good quality, good value!
When clothes no longer fit, blame the dryer for being too hot. It’s always worked for me. 🙂
One bit of advice – lunches out are not only expensive but generally unhealthy. Go out a few times to solidify your new relationships, but generally packing a lunch saves money, gas, and is healthier. After a while its not nearly as much trouble as you might think. Leftovers work well here assuming you have access to a microwave.
One to one match up to $5 with no vesting limitations is terrific. Go for it. Most companies have 3 or 5 year vesting requirements.
JA Banks works for me – get the wrinkle free and you wont have to iron them. They go on sale often. I haven’t tried the costco ones but those sound great at that price.
Finally, if you have an emergency fund, the timing of the pay periods shouldn’t matter much. Just budget a small fixed amount each period for yearly vacations etc.
You never know how a new job is going to go, so be extra frugal right now. Of course you hope it will be great, but be extra careful until you know for sure.
Good luck in the new job!
Does Jos. A Banks still have the annual suit trade-in sale? A long time ago I had a guy for a roommate and he would sometimes take advantage of that. Might be a good opportunity for Adam to both save and declutter!
Always take the 401(k) match; that’s free money. As for clothing, spend money on quality clothing and shoes. That’s how you earn your income and it’s important not to take any shortcuts. Always go to work looking polished and professional. Clothing and shoes should be immaculate.
A few thoughts:
On the pay schedule, I agree with others that this represents a good opportunity to have a more proactive tracking process of your income. Relying on “extra” paychecks has always seemed a little bit gimmicky to me as I feel like the budgeting/planning needs to be based on the total number, not the schedule of compensation. (True bonuses are different.)
Definitely take the full match. Eventually you will want to go beyond the minimum required to get the match, and contribute all the way up to your annual limit for deferred income (17,500ish). Another thing to look forward to as you get further along your debt repayment. 😉
The better coverage on the health insurance could potentially easily pay for itself if, as you mentioned a couple posts ago, you are thinking of starting a family… Is the increase coming from an actual increase in the premium on the plan, or because of the percentage covered by the employer? (I suspect the latter?)
Have no helpful comments re: wardrobe as my own is a mix of old and older stuff.
Lastly, might be a good time to try to tamper down any soda habit you may have. I cut down steadily from 1 a day to about 1 a week now, and I feel like it’s made such a big difference in overall health. I find myself reaching for the coffee a little more now, which has been tough on the teeth in a different way!
I never found the third paycheck in a biweekly cycle to be helpful. It just means I pay the mortgage with that third check vs the first check. I lay out all our checks and bills/savings for the whole year, then average the left over and use a credit card for spending to get miles. At least you are on a same day schedule now. Wrt clothes sears offers lands end which I think can be custom fit and is wrinkle free, no dry cleaning. You might pay slightly more up front but the ironing and dry cleaning on the back end should save. Most healthcare is going up this year which you probably would have seen had you stayed in your last position…just a fact of raising the age to 26.
And on the 401k I would contribute exactly the amount required to reach the match. It increases your retirement and reduces your tax obligation.
Interesting comments about the bi-weekly “bonus” checks. I started my professional life getting paid bi-monthly. I liked knowing I would get a set amount of income each month. Then, my company switched to bi-weekly, and each employer since then has paid bi-weekly. At first it drove me nuts since for 10 months I’d be getting less income. At the time of the switch I was making significantly less than I do now (mid-20s vs. mid-40s, retail vs. IT). As a result I was living more paycheck to paycheck 🙁 It took a bit to adjust to effectively getting less money each month, but eventually I got used to it. Now, I think of my monthly income as just two paychecks, and the months with the third paycheck are really bonuses – I don’t rely on them to pay anything specific. Instead, I end up with a surplus of cash I can allocate to different savings goals and my mortgage. It’s sort of like a forced savings plan in a way.
I don’t understand this ‘bonus check’ thing. What ‘bonus checks’? If the annual salary is $40k, what does it matter if it’s paid out in 52 checks, 26 checks, 24 checks, or 12 checks? In the end it’s still $40k isn’t it? If it has to be thought of that one or two regular checks are ‘bonus checks’ then something is wrong with the spending, not that a ‘bonus’ check was received because ‘bonus’ checks are an entirely different category.
It’s not quite like that. Most people who are paid biweekly do their budget based on 2 checks a month. So it’s as if that 40k was actually 37k as far as monthly budgeting is concerned.
Exactly. Planning on $3,333/month when for 10 months you’ll really be getting $3,077/month can mess you up. Can’t make rent if the cash isn’t there!
I suggest picking up a couple new things to wear, but then see what the actual dress is in your new group. My stated dress code is ‘business professional’, but my group doesn’t require wearing a suit jacket. I would have wasted tons of cash on full suits if I had purchased in advance.