Money & Policy

How I Survived a 75 Percent Pay Cut

Walking the walk after becoming a personal finance counselor

I took a major professional and financial detour in 2005 when I left my cushy, six-figure attorney job at a national law firm to take a 75 percent pay cut for a position in local government. For the next three years, I had to find creative ways to cut my expenses while maintaining some semblance of my prior lifestyle.

I did, and I have some advice in case you find yourself having to make severe cutbacks, too — voluntarily or otherwise. And I’m including some tips from other people who’ve been even more budget-conscious than I was.

Walking the Walk After a Big Pay Cut

At my government gig, I worked for a local county’s housing authority where I created and directed a pilot personal finance program. As a financial literacy counselor, I taught low-income residents about basic budgeting and credit. Every day, I talked the talk about living on less than you earned. I had no choice but to walk the walk.

Every day, I talked the talk about living on less than you earned. I had no choice but to walk the walk.

At first, it seemed like a hardship to curtail my spending, even though I had always been frugal. But I soon got used to it. I also dipped into my emergency savings temporarily, which is not something I generally recommend, but it was a calculated risk.

Even if you don’t have to make extreme reductions in your spending, some of the following suggestions will help you save money, which is always a good thing.


Slashing my grocery costs and cutting back on restaurant meals made the biggest impact on my budget during my frugal period.

Before I lived on a limited budget, I had bought whatever I wanted at the supermarket. Sure, I gravitated toward sale items and store brands, but I didn’t limit my quantities. In my new mode of severe cost cutting, I scrutinized each item and bought only what I needed for the immediate future unless a sale justified stocking up.

I carefully evaluated items I previously considered staples. Orange juice was $3.50? Really? Suddenly that seemed exorbitant. I didn’t like frozen concentrate, so I skipped the OJ.

When I bought fresh items that were individually packaged and sold by weight, such as chicken or cheese, I always bought the smallest package. If it cost a dollar less than the largest size, I figured that was like getting it on sale. I’d eat the same amount, so it didn’t matter if it weighed a fraction less. I wouldn’t notice the difference in quantity, but $1 off my grocery bill was significant.

A Crock Pot was a worthwhile investment. I slow-cooked large quantities (usually chili), ate leftovers for lunch and sometimes again for dinner. I froze meal-sized portions and quickly learned to label the containers, since freezer burn made the various meals indistinguishable.

For one extreme meal planner I contacted, the answer to saving money on groceries came in a 10-pound bag of pinto beans. “For $6 we could eat all week,” Devin Carroll, financial adviser and writer at socialsecurityintelligence.com wrote me. “My wife got creative with the recipes too. Experimenting with different seasonings you could give the same dish (beans) a different flavor.” Once the couple reached their savings goal, they were happy to resume their earlier eating habits. “We rarely eat beans now,” Carroll added.

Before my fiscal transformation, I ate out frequently— often several times per week. So I cut way back on dining out. On the plus side, a restaurant meal once or twice a month became a real treat, since it wasn’t a regular occurrence.

But the peer pressure was tough. Washington, D.C. has regular “Restaurant Weeks” when popular eateries offer prix fixe dinners for $30. My friends who were lawyers, lobbyists and others from my previous pay grade didn’t understand why I couldn’t afford to join them. I explained that the $30 didn’t include tax, tip or drinks. Later, my friends admitted that their tab was at least $50 each. Far outside my budget.

Clothes Shopping

I’ve never been a big shopper, but eventually you have to replace clothing. I found that thrift shops have hidden gems, if you spend time hunting there.

The best deals were at stores in higher-income areas where the wealthy donated their clothes. For example, I got a nice wool blazer for about $15; at a retail store, it would have sold for well over $100.

Cleaning Products

I also saved money by diluting liquid cleaning products like dishwashing liquid. When a container was about one-eighth full, I added a bit of water. The liquid was thinner, but I didn’t notice any effect on its cleaning abilities.

It might seem trivial to save money this way, but I managed to stretch those purchases out for weeks.

Housing and Transportation

I wasn’t able to cut my expenses for housing or transportation, for reasons I’ll explain. But I spoke with a few people who found ways to cut their housing expenses and I’ll offer their tips shortly.

I didn’t want to sell my house in Washington, D.C., particularly since I expected it to continue appreciating in value. Nor was it practical to rent my house out and become a tenant in someone else’s place. I had no guarantee of finding suitable tenants, so I would have been exposed to the possibility of paying both a mortgage and rent — clearly the worst of all situations. Also, as a landlord you run the risk of tenants not paying their rent or damaging your home.

It would have been expensive to incur moving expenses to relocate twice, too.

In the end, being a landlord and a renter wasn’t financially sensible, so I didn’t reduce my housing expenses. However, here are ways to save money if your circumstances permit.

Athena Lent, founder of Money Smart Latina, saved a significant amount by renting only a room for 14 months in Phoenix, instead of an entire apartment. “After I found myself on my own after a break-up, in a relatively new town, I had to figure out where I was going to live,” she told me. “Renting just a room instead of getting an actual place with someone was so much cheaper. My living costs, including utilities and access to the bathroom and kitchen, were $325 per month, which allowed me a ton of financial freedom.”

By renting a room, she saved $415 per month, for a total of $5,810 over 14 months.

Lent discovered other benefits making this housing switch. “It made me really prioritize my belongings so I didn’t have clutter and made me prioritize myself since I knew it wasn’t a long-term solution,” she explained.

Another way to cut your housing expenses is to take in a tenant. “Having roommates and sharing your private space is hard, but the few hundreds you will get for rent will make up for it,” said Pauline Paquin, personal finance expert and founder of Reachfinancialindependence.com.

“When I was trying to live on as little as possible, I took two roommates in my three-bedroom apartment. We had our issues, but the three of us were paying off my mortgage, and my share was 80 percent less than what I paid on rent before I bought,” she explained.

As for my transportation costs, I couldn’t reduce them because I owned a car and had to drive to my job 25 miles away. Public transportation wasn’t viable. Neither was walking or biking, particularly since I often worked late. None of my co-workers lived nearby, so carpooling wasn’t an option either.

But If I had had a fancy car with a loan payment, I would have sold it and bought an inexpensive, reliable vehicle.

Life After the Pay Cut Ended

After nearly three years on a drastically reduced income, I then returned to a six-figure salary as an attorney for a large corporation. But some of my frugal habits have stuck. To this day, I always buy the least expensive package of cheese and dilute my cleaning liquids.

By Valerie Rind
Valerie Rind is the author of the award-winning book, Gold Diggers and Deadbeat Dads: True Stories of Friends, Family, and Financial Ruin. During a hiatus from her career as a corporate attorney, Rind worked for a housing authority to create its pilot financial literacy program for 500 low-income individuals. She writes about personal finance and lifestyle topics at Valerie Rind and contributes to online media outlets including GoBankingRates, Huffington Post, Time/Money, U.S. News & World Report, Forbes, Business Insider, and CentSai.

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