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Tuesday, September 2, 2014

10% Less Pay, But $8 Less on My Paycheque

Posted by Tim Stobbs on July 28, 2014

I got my first pay cheque after I’ve reduced my working hours by 10%, so I’m also getting paid 10% less.  Yet after looking back at my previous pay stub I’m only making $8 less in take home pay.  How the hell is that possible?

Well the answer lies in a little bit of math that most people don’t really consider.  First off I make roughly $100,000/year at full time hours.  So at 90% time my salary drops to $90,000.  So $10,000 year less or $417 per pay cheque, yet that is on a gross basis.  You have to consider that $10,000 is getting taxed at my highest marginal tax rate or roughly 40% income tax.  So in fact if you reduce that $416 by 40% you would expect a $250 reduction on my take home pay instead of $417.  Yet my reduction was only $8, so we are closer but not there yet.

The answer was in the fact I had just max out my CPP/EI payments for the year on the previous pay cheque.  The 2014 contribution rates are 4.95% for CPP while EI is 1.88%, so all total you lose 6.83% of your pay cheque to these until you max them out for a given year.

So it may seem sort of obvious by now that out of my 10% less pay, I lose 4% approximately to income tax normally and the rest to CPP/EI, thus once I maxed out those my tax home pay is nearly identical for the last half of the year.  Of course the real drop in pay kicks in next year when I start paying CPP/EI again, but in the interim it does mean the rest of the year is fairly easy to live with the salary reduction.

Yet for now, life is easy and I don’t even really notice that I’m making less money.  It’s sort of a nice way to break myself in to the change in salary.  So have you ever got a weird pay stub?  Did you figure out what the issue was?

Good Bye Full Time Work

Posted by Tim Stobbs on June 11, 2014

Well I’ve finally out of my manager job and back to working in my old engineer job.  It feels good to be back, but even better yet I’ve negotiated to be reduced down to 90% time starting in July.  Ya! Less money but way more time off!  You might consider myself a bit nuts to want this, but in fact if I have my way I would never go back to full time work again.

Why?  Well have you ever noticed that your vacation after two weeks never seems long enough.  That somehow you feel you should be more rested by the end, but you are not.  Or the fact your typical weekend after errands and a few activities are gone before you know it.   You seem to blink and you are back in the office on Monday. Why?  Because our average work week is really too long.  So we end up in an odd situation where we end up valuing convenience over the money we just earned.  We are willing to pay dearly for an perceived time savings (at least that is my theory since I can’t understand why people spend so much money on eating out).

Since I’ve spent most of this year already with taking off every second Friday afternoon I’ve managed to notice a huge benefit to my life of being able to spend more time doing what I want (spending time with my family or friends, going for a walk or just simply reading a book).  How with just half an extra day?  Well because I can get so much done on those Friday afternoons that I can actually sit back and enjoy the rest of my weekend.  And taking those afternoons was equal to only 5% of my pay.  Now imagine what I could do by taking every single Friday afternoon or a full day every other week (which is actually what I’m planning on doing).

Life just get much easy with just a bit more time off, but even getting this approved was a little like pulling teeth (ironically not because of my boss, but rather my boss’s boss).  Why?  They oddly assume that you being gone is somehow critically  reduce the organization output when in fact, I typically only take off one minor item from my work plan in a year.  I even had to put in a six month trial period to put their minds at ease about the entire issue.

The policy I used to get this apparently is almost exclusively used by new mom’s who want extra time for their kids.  So when I wanted to use it they pointed out how unusual it was for me to get it.  My point back was ok, but how many of your employees are councilors on their Engineering Association?  The answer: one (out of approximately 3000).  Just me.  Heck even the last time I used this policy I was a school board trustee, which again was very unusual.  I don’t have the normal commitments so yes, I need the extra time off.  Yet the reality is the idea you need some highly unusual second job to get more time off is really sad.

I know a number of people who are getting near retirement who would love to reduce hours and stay around a little longer, but most companies seem unwilling to attempt this.  Despite depending on how much people cut back you could literally pay the full salary of a junior staff with the savings from the reduced hours of the senior staff member.  Also I’ve noticed people tend to grossly underestimate the impact of engagement on getting stuff done.  When I’m happy at work I get more done, I’m less tempted to surf the web or otherwise waste time.  God they have study that to death and it’s disturbing how little people get done in a day in the office anyway (hint just under three hours of actual work).

Besides I’ve worked out the impact of this change to my retirement plan and it comes out to a few months in total.  I don’t know about you, but I would much rather make the next five years a lot more enjoyable by working a few month extra at the end of my plan.

So would you ever work part time?  Or is your workplace likely to never approve it?

A Leash for the Beast

Posted by Tim Stobbs on June 5, 2014

So after nearly six years of dodging the issue, I finally decide to give a little ground at work and let them assign me a work cell phone.  The reality has been for the majority of my time at my current company it was silly to give me a work phone as I spent the majority of my time in the office.  So I just ignored any suggestions for a number of years on the topic.

Yet recently I decided to give in because it actually makes some sense as my more recent portfolio of work requires more field visits.  So the work cell might actually be a bit useful.  Also I’m ok with the idea after I checked with my boss that he would be ok with me not keeping two phones.  I would also use my work phone for personal usage.  The trick is I would have to pay if I took it on vacation out of the country, which is totally fair.  Not to mention I don’t pay the $55/month bill for a unlimited talk, text and data plan (heck I even get to save my normal $5/month I used to pay for my personal cell).

It’s been funny to me that everyone assumed when I got the phone I would suddenly develop bad habits like working all hours of the day and checking my phone.  Instead I decided right out of the gate to put a leash on this beast.  So while yes I’ll glace at the subject of an email that comes in, 90% of the time I don’t even read it.  Why?  Because most of the time it can damn well wait until the next morning.  Also I turn off the phone when I got to bed…they don’t pay me to be woken up with an email or call in the middle of the night.

In addition, I have purposely putting up some separation between work and personal things.  For example, I put my personal email on a separate app from my work email.  That way I’m not getting confused looking at both.  I also when through the iPhone 5S menus and disabled most of the notifications as I really don’t need to know that someone liked my status update from yesterday on Facebook.  I also refuse to put any banking or financial apps on my phone as I’m not comfortable with the work IT department having any access to that material.

So overall the experience has been fairly positive and I should have cancelled my personal cell by the end of this month.  What about your work phone?  Do you use it for both personal and work or do you carry two phones? Any other ideas for leasing the beast?