26, work in analysis. Moving from a corporate job paying $90k to a start up job paying $60k. How should I be thinking about my retirement / savings / debt, specifically in terms of priorities, given this loss of income?
It’s difficult to thoroughly answer this question without knowing your specific expenses. In general, you want to minimize your monthly debt expenses so that less of your money is being spent. Money is only relevant to your expenses. In other words, it’s not a financial hardship to have less money if you have less expenses.
Assuming that your monies were properly allocated, your savings and retirement should be reduced by the percentage of the decrease in your income. For example, if your income decreased by 30%, you could reduce your savings and retirement contributions by up to 30%.
Take a closer look at your budget. I am sure that you can easily cut cost by reducing expenses such as eating out, shopping, and other non-essential items. Also, don’t forget to review your household bills. Can you adjust your cable services, or cell phone plan? Once you’ve identified which bills to cut, use that money to aggressively pay off your debt. Eliminate the lowest monthly payments first. Your goal is to pay off all unnecessary debt. As I said before, it won’t be a financial hardship to have less money if you also have less expenses. Good Luck!
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