This guest post from Tim Stobbs is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes. Tim Stobbs is the writer behind the blog, Canadian Dream: Free at 45. He lives in Regina, Saskatchewan, Canada and despite his recent pay cut, he hopes to reitre by his 45th birthday.
I left my boss's office with a huge smile on my face. I had asked for a 20% pay cut, and was thrilled that he had agreed to it. Had I lost my mind? No, not yet. Did I have the worst performance review on the planet? No, that wasn't it. So what happened? That's a long story, but it goes something like this.
Like many middle-class people, I had a decent job, a wife, two young kids and, of course, a mortgage. There was just one small problem: I didn't find my work all that meaningful. It paid well, it had good benefits, and I wasn't bored by it — most of the time. Yet, I was never fully engaged at work. It all seemed like rather pointless paper shuffling.
I was looking for something more meaningful to with my life. I was open to all possibilities, so on a whim one day I looked at who was running in our civil election for city council and the school boards. I noticed that no one was running for the Public School Board for my subdivision. Out of curiosity, I looked up the requirements to enter the election, and then called the previous trustee who told me that he wasn't running again.
So, just days before the nominations closed, I went around to get my signatures and paid my deposit. When talking with the election office staff a couple of days later, I had it confirmed: No one else ran against me. I was acclaimed and just got elected to my Public School Board for a three-year term. The kicker was this: I didn't realize they also paid you for the job. Beyond a new title and a lot of responsibility, I also found out that I earned just over $23,000 per year in salary.
I really didn't need the extra salary since I was already living below my means, so my wife and I decided to pay down the mortgage faster. With the school board pay and most of our regular savings, we managed to pay off just over $25,000 of the principal in six months. If we keep up this pace, we could be mortgage-free by the end of my term on the school board!
So, yes, I was rolling in extra cash, and I was enjoying my school board work, as it was directly meaningful to my own children's lives. To a lot of people I had it all, except I had a major problem: I had no time. Working a full-time day job, a part-time job as a trustee, helping to raise two young boys, and keeping up with the household chores left me falling asleep from exhaustion most nights. I felt like Bilbo Baggins I was “stretched out and thin”. After six months of this, I realized something had to give — I couldn't work this hard for the next three years.
My initial response was to look at my calendar and drop things that I didn't need to be doing. Then I looked at where I was spending my time in a week. I got merciless with my time as I turned down meetings and avoided extra projects like the plague. In the end, it still wasn't enough; I rarely got to do anything for myself, and still fell into bed exhausted more often than not.
So I looked at my more extreme options:
- I could quit the school board (but I didn't want to give up that meaningful work).
- I could work part-time instead of full time at my day job.
I assumed that dropping to part time at the day job was a long shot, but it was worth a try. I made a meeting with my boss and explained my situation and how I wanted to drop down to 80% time (or a four-day work week). “I want the time more than the money,” I said. It took a few more meetings and some discussion on how to move the workload around in the department, but in the end my boss agreed.
I started my first four-day workweek in July. I had every Friday off all summer long — and as far as my calendar goes into the future. My first morning off, I woke with a pounding heart as I looked at the clock. I assumed I was late for work until I remembered I didn't have to work on Friday anymore. I rolled over and slept in for another half an hour.
The cost of this choice isn't cheap: I'm losing 20% of my day job's salary. Yet, my-take home pay is actually higher than I would have expected. Why? Taxes. By dropping my income, I'm also no longer paying as high a tax rate on that income. My overall take-home pay only dropped around half of the total salary reduction. Yes, this means I have to keep my mortgage for a little longer, but I'm okay with that choice because I have the time now to do more of what I love, like writing and spending time with my family.
In the end, this was the right choice for me and my family. It does come at a cost, but it's not nearly as high as some people would assume. Besides, money is just paper and metal coins or numbers in an account. Having a balanced life again is worth every dime of income that I gave up.
Follow-up: Taking a 20% pay cut
Last September, I shared a reader story about my 20% pay cut at work and how I loved it. That was written back when the entire experience of dropping down to 80% working week was new and exciting. Now, after nine months of arrangement, how am I doing?
I still have every Friday off from my day job, and at the start of 2011 this became permanent — at least until I decide otherwise. The initial agreement with my employer included a six-month trial period in order to assure both of us that this was going to work. As of the end of last year, we decided to make it permanent.
I have to admit that not working on Fridays is addictive. Why? Life becomes so much easier when you always have a three-day weekend. No, really. Think about adding an extra weekday to your life, so that you can run all of your errands and attend all of your appointments. This is what I've done. It leaves weekends free to spend time with my family or work on other projects.
What about the costs of only working part time? Isn't that going to have a negative impact on my career? Well, to be honest, it could potentially, but so far the response has been the opposite. I'm actually finding my work as a Trustee at the School Board directly transferable to my day job. After all, there are very few people inside the company who can think about information from the other side of the Board table.
So far, I've been able to provide feedback to follow employees and my own work to keep Executive or Board information summaries to the point. Board members have full plates and limited time to review material, so I've learned to keep it brief. I don't care if the decision is from $1000 to $1 billion — you can always summarize it in three pages or less.
I also took it upon myself to use some of the “Friday time” to work on what I love to do: writing. During 2010, I managed to finish a book project that I'd been working on for two years! Free at 45: How to Retire Early & Happy was published last month. I've also managed to do some freelance writing for the Toronto Star, which provided some unexpected income. So, rather than having less money from working less, I actually ended making more than I expected in 2010.
I have no regrets about giving up that 20% of my paycheck. It brought balance back to my life. Granted, I'm still busy a lot of the time, but when you're working on what you love, it doesn't seem to matter.