Advice for career switch: How to decide about taking a job with a lower salary. – Slate
Pay Dirt is Slate’s money advice column. Have a question? Send it to Athena and Elizabeth here. (It’s anonymous!)
Dear Pay Dirt,
I was able to work remotely for a year and absolutely loved it. Now I’m back in my windowless office, driving eight hours a week and dreaming of how I can get back to a work-from-home job (remote work at my current job is a nonstarter; my workplace is run by a rising star in the Republican Party and he is fully entrenched in the culture wars). I have been looking for remote work in my field, but so far, no interviews.
I stumbled across an advertisement for a call center job that stated it’s remote-work-eligible and starts at $27,000 a year. I applied and was offered the position. It’s a $20,000 pay cut. I don’t see how any creative budgeting could pull that off, but I’m so tempted. I was a happier person working from home because I had more time to take care of myself. I think I was a better partner too because I was less stressed out. I did save more money when I was working from home compared to working in person, but that would only offset the difference and not make it up. Currently, my partner and I make roughly the same and contribute equally to expenses.
Maybe I’m delusional. Maybe answering phones all day sucks and I’ll be back to living paycheck to paycheck. What if I say yes, and take the job so I can be happy, but I’ve just traded one type of stress for another?
—Yes, I Know How This Sounds
Dear Sounds,
I don’t think you are delusional one bit. You’re fully aware that a $20,000 pay cut would take more than creative budgeting on your part, but you’re also recognizing how much you value your time. Millions of those who are taking part in the so-called Great Resignation are doing so because they have realized working from home may result in a better quality of life.
Ultimately, it’s up to you if you’d rather take a pay cut, but since you do split expenses with your partner, it’s fair to sit down and see how you can continue to fulfill your financial obligations to your living situation. If the switch seems like it’d make too deep of an impact on your household, you can consider whether a side hustle that fits your skill set can help provide financial stability. You don’t mention having caregiving responsibilities, so you may have some flexibility in how you use your time and could supplement your call center income (and fill some of the hours you got back from quitting your commute) by doing substitute teaching or child care, taking a part-time food delivery job, or looking into another of the many online side-hustle options out there.
You also don’t have to stay at the call center if you don’t like it, or find that the change results in too much of a financial cut. It’s always easier to find a job when you have one, so make sure you stay on top of your job prospects via LinkedIn. But hey—you might enjoy customer service and find room for growth. You never know unless you try, so go forth, butterfly.
Dear Pay Dirt,
My fiancé got a great offer on his house, so he sold it and moved in with me. The plan is to save money leading up to the wedding and buy our together place after the wedding in May. We have some in savings without feeling a pinch, and almost all of his debt is paid off now. I am focusing on improving my credit ahead of any real estate purchases. We hope to have a bit more in savings by the wedding, which will cover our down payment, with a small cushion left over. Neither of us is really willing to tighten our belts as much as we can, largely because our goals are fairly modest and we like having disposable income.
My house is big enough for us, but it doesn’t have the space we want for our forever home. It has some costly cosmetic issues, and some also costly foundation issues, that make it a much better option to sell sooner while the market is hot, rather than later after the current bubble bursts. (We live in the Midwest, so prices aren’t insane here, but they’re still very inflated.)
My question is, how do we manage to buy low and sell high, almost at the same time?
—Stuck in a Hot Market
Dear Stuck,
It’s definitely a seller’s market right now, so selling high isn’t as much of a problem as buying low. That’s not saying it can’t be done, but you’ll need to be creative and patient.
“Houses that sell for the highest price are the houses in top condition and updated to current trends. With your home needing some updates and some structural repairs, you’re probably not going to get top dollar for it—however, you can do a lot to squeeze as much out of your property as you can,” says Mindy Jensen, host of BiggerPockets Money Podcast and author of First-Time Home Buyer.
First, ensure you clean and paint. A clean house with fresh paint everywhere will catch someone’s eye before a disorganized mess will. If your home has “weird” spaces, stage the home to make it look more modern. When people can imagine themselves actually living somewhere, they become more invested, and their bid reflects it.
Jensen also says it’s important to “disclose, disclose, disclose. You have structural issues. Either fix them or disclose them—don’t try to hide them. You’re obligated to disclose known material defects with your home, and it could be extremely costly to try to hide it, only to have the buyer discover it—and discover that you knew about it—later.” Even if it seems like it would be easy to sell your house without doing due diligence right now, because people are so eager to buy, you don’t want to be disingenuous—both for ethical reasons and because being revealed can, and will, be costly.
As for buying low? It’s tricky in a red-hot market. Buying a home in desperation will reflect what you’re willing to settle for, with a buying price that doesn’t feel good. Take your time as a buyer. If you have to, you should rent a place to live in the interim, or find another in-between solution, rather than springing for something that isn’t right. The market may still be for the sellers, but that doesn’t mean you can’t find something if you’re patient.
Money advice from Athena and Elizabeth, delivered weekly.
Dear Pay Dirt,
When my girlfriend and I purchased a home several years ago, we agreed to each get life insurance policies in the amount of our mortgage. That way, if one of us dies, the other can pay off the house and any excess is just that. My girlfriend is divorced, and part of their divorce agreement is that they will keep a sizable lifetime life insurance policy, with their ex as the beneficiary. I took out a term policy for the amount and length of our mortgage. She fulfilled her end of our deal through a workplace life insurance policy. She also has an accidental death and dismemberment policy.
The combined payout of the policies is such that if my girlfriend dies and both policies apply, myself and the ex will get our designated sums. If my girlfriend dies naturally, only the life insurance policy will apply, and while I will get my sum, their ex will fall short of what was in their divorce agreement. She says that this is the only way she can afford the monthly cost of covering both obligations.
If only the life insurance policy pays out, can their ex sue for my share? Would marital status impact that? Should I encourage her to look at term policies the way I did? I am not looking for a way to short her ex, just to ensure that I wouldn’t be left in a lurch, as the mortgage payment is more than I can handle on my own.
—Just Thinking of the Worst-Case Scenario
Dear Worst-Case,
There seem to be a lot of moving parts and what-ifs in your current housing situation. First and foremost, any of the legal documents and policies should be looked over by an attorney who specializes in life insurance claims and personal injury litigation.
In the meantime, there are a few things to consider, as suggested by Valerie Sanchez, a partner and co-founder of Divine Asset Management. Sanchez’s first question is in regard to the accidental death and dismemberment policy your girlfriend has. Since AD&D is not life insurance, it’s important to ask if the policy satisfies the lifetime life insurance obligation. And since we’re on the subject of the AD&D, was it in existence at the time of the divorce decree?
Another part of this scenario you should think more about is the life insurance policy issued through her workplace. Policies issued through an employer are governed by a complex federal law called the Employee Retirement Income Security Act of 1974. ERISA-governed life insurance policies have specific rules that are entirely different from the state-specific laws and rules for policies that don’t fall under ERISA. So if she were to leave her employer, she wouldn’t be taking her life insurance policy with her. You may need to make a plan for that contingency as well.
Last but not least, Sanchez notes that “any individual with a valid legal claim can contest a life insurance policy’s beneficiary after an insured has died. This process can be complex and time-intensive, but it is possible. This doesn’t mean they would win in court, but it could affect the disbursement of funds while the case is pending. “
Since the last thing you’d want to do if something should happen to your girlfriend is fight her ex in court, have a lawyer look over all policies stat. It probably wouldn’t hurt to also consult an estate attorney, to get a will or trust going for both of you. Good luck!
Dear Pay Dirt,
My spouse and I are wondering how best to use our retirement accounts. My job (20-plus years) ended due to COVID, so I retired at 60. I have approximately $900K in a 401. My husband is due to retire in about a year. He has approximately $600K in his 401 and will receive a pension of around $250K annually. Our house on the West Coast will be paid off in about 10 years, but other than that we have no debt (we have a 529 for our child’s college).
We have no plans to take regular 401 withdrawals until required to at age 72, but will use these funds for travel, house renovations, emergencies, charities, etc. I’m curious if this approach is the best use of these funds. Would we be better off taking monthly withdrawals to build up savings outside the retirement accounts? Something not impacted by the volatility of the market.
—Good Position, but Could Be Better
Dear Good Position,
You’re not in a good position—you’re in a GREAT position for you to embrace retirement and have fun with it. Your partner has a sizable pension that will allow you to spend your retirement accounts exactly as you have outlined above. While it’s good to have cash that’s easy to access in case of an emergency, you don’t want to miss out on the opportunity to have your money making you money.
In this case, I’d advise you to see how it feels if you start taking a monthly disbursement out of one of your 401(k) plans now, before the IRS requires you to. You may find that you enjoy having the buffer of cash to put into additional savings to help you make progress toward your goals of travel, house renovations, etc., now. It’s time to enjoy the fruits of your labor. Have fun!
—Athena
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I have two very young children with severe developmental disabilities who will need lifelong care. My brother has seen them twice for a few hours each time and never calls or emails. Recently we redid our wills and had to decide who we wished to be guardians of our kids if something were to happen to both my husband and me. Because of the physical strength needed to care for the kids, we decided it wouldn’t be right to ask the grandparents to take that on when my husband and I each have a brother. My brother-in-law is a great guy and agreed to be first in line, but our attorney suggested we name a second guardian just in case. I thought that since my brother and his wife are financially well-off, plan to have kids, and are at heart the sort of people you’d expect to rise to the occasion in such a dreadful scenario, he would say yes. He said no. At this point, I really want nothing further to do with him. Is it worth keeping up the appearance of a relationship?
