Should I take a pay cut now to potentially earn more later?

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Should I take a pay cut now to potentially earn more later?

John Heasley
Youngstown, OH · Member since 2017 · 13 posts · 2 votes

Hello BP! Full disclaimer--I'm borrowing a friend's account as I'm discussing a job switch, and I don't want this information floating around the internet with my real name on it in the event that someone from my current company sees it. 

I have a dilemma on my hands. I have several years of accounting experience for a company that owns and manages commercial RE. In January, I took on a new role in my company doing leasing. I'm not satisfied with my current company anymore and would like to eventually become a real estate agent focusing solely on investors until I have enough assets to become a full-time landlord. I have 3 properties now, so that day is pretty far away. 

My mentor encouraged me to get a sales job so I could learn some entrepreneurial skills before taking that plunge. I have an opportunity to take a role as a recruiter for accounting and finance positions. It's a great blend of what I've done so far, and I'd have a base salary for the first year until I got up and running. However, the base salary is about $20k less than I make now. Naturally as a salesman, the hiring manager threw out a lot of big numbers when discussing what his top earners make, what he made in his first few years, and what I could be making in 2-3 years. I have the right skill set to work in sales, and I would be good at this job, but I can't help but hesitate at that low base that I'd have to live off of until I got going.

The timing sucks. My boyfriend is in nursing school on the GI bill and only working part-time. We have a house payment. I've got student loans and some CC debt, and I just about wiped out my savings to put a large down payment on a car earlier this month. My dad is in the middle of a quasi-divorce, and we're trying to buy a 4th property for him to move into this spring. But there's always going to be a reason why the timing isn't right.

Do I take the plunge and do sales? Do I look for another accounting job that pays more even though I hated the work so we can wipe out some debt before I make a job change? I'd appreciate any insight or guidance! 


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Mary M.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
6y

@John Heasley If I were in your shoes I would follow your bliss.....  life is short and we have one life to be the human we want to be.....  Therefore, spend a day really thinking about the what-ifs.....  and what you *really* want in life - where you want to be in a year, 5 years, 10 years, etc....  think about how you can get there....  In my opinion, working for the "man" is drudgery and is good at times but isn't how you will be financially free.......

Sales is the place where you can have a hedge for the downside (guaranteed salary) and no limit on the upside. You also will learn valuable life skills that will serve you well in your future....  Find a sales mentor and model what they do.... 

As for the vehicle, it sounds like you did ok and I would not waste time on that right now as you would lose too much if you sold it now.....  (and even with AAA it can take several hours to tow a car and that loss of time may mean a sale or not, a job or not, etc..... also, if this is a female then breaking down in the wrong place can be scary.....  so there is more to this than meets the eye)

Run a budget...  be honest, cut as much expenses as you can, save 10% and go learn to be the human you dream of being !  

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  • Jaysen Medhurst
    Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
    6y

    Take the new role, @John Heasley. It's aligned with your long-term goals and you're unhappy where you are. Work your tail off and hopefully you start to see the fruits of your labor sooner rather than later.

    Since this is the Personal Finance forum, a little unsolicited advice.

    • Downsize your car. Wiping out your savings for the "big down payment" was a bad decision. You will be well served to undo that as soon as possible. You're losing money on the car every day you own it, don't delay.
    • Why are you buying a property for your father? He's a grown man and sure as heck shouldn't be putting his financial troubles on his daughter. What is a "quasi-divorce."
    • Considering you have 3 properties, I bet with a little belt tightening you can still aggressively pay down any consumer debt. Do you and your boyfriend have a written-down and agreed-upon household budget? Are you tracking your spending? My wife and I were shocked several years ago to find we were spending almost $1k/month eating out/drinks with friends.
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  • John Heasley
    OP
    Youngstown, OH · Member since 2017 · 13 posts · 2 votes
    6y

    @Jaysen Medhurst Thank you very much for the thoughtful, insightful response! A few follow-up comments/quetions:

    I did downsize on the car. By putting down a larger down payment, I've cut my monthly payment by $70 a month; however, I would like to continue paying as if the loan were $70/month higher to cut down the loan faster.

    I am financing the property. He will make the monthly payments. Since we're acquiring the property at a discount, he'll save a lot of money by "renting" from me. He will cover any repairs necessary. We can then refinance the property and use it to buy the next deal. I get another rental out of the deal. Wash, rinse, repeat. Yes, he's a grown man, but he made many sacrifices to raise me as a single parent. I call it a quasi-divorce because they've been together 17 years but never legally married. They co-mingled their finances, so it's a divorce in everything but name.

    Do you recommend using the profit from the properties to rebuild savings or pay down debt?
     

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      • Lee RipmaPro Member
        Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
        6y

        @John Heasley

        My advice to anyone is never to take a job for what you earn but for what you’ll learn. If the new job will give you skills you want then it’s worth the switch. If you’re excited about the new job then you’ll do well at it and probably earn a lot. If your heart isn’t in either of the jobs then might as well keep the one where you make more until you can find something you’re excited about doing everyday. Then do that. When you’re excited about something you’ll find a way to make money at it. I made a six figure salary as a botanist for years before going into RE full time. Why? I love it and I used that to make money at it. Now I love RE and I do well at it. I don’t think you need to turn your passion into a career but doing something you’re excited about will make you successful at it. Just some random life advice from a stranger on the internet.

        Podcast Guest on Show #373
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      • Jim K.
        Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
        6y

        @John Heasley

        I think you should probably stay where you are until your boyfriend finishes nursing school. It's going to get harder before it gets easier. He needs something as dead stable as possible now. If you can get him to quit his part-time job, do it. I've been through this with my wife -- it gets brutal.

        You've made, I believe, an unwise decision on the car. In the age of Lyft, universal cell phone coverage, and the tow-anywhere $87/year AAA membership, you have a car payment. 90% of the American public makes the same unwise decision. You also depleted your savings account to get to it, so if an opportunity comes along right now, you're stuck on the sidelines. Now if you were already a hardworking, hard-driving real estate agent and getting your 55-cent deduction for every mile you drove, hmm, that's sometimes a different story. But right now you have a rapidly depreciating wonder to sit in 5% of your time that's eating up a serious bite of your income. you might as well be throwing a hundred dollar bill out the window every three trips in it.

        I speak from extremely painful experience. Before we wised up, my wife and I went through three brand-new Toyota RAV4s in six years and were discussing the merits of a Volkswagon Tiguan versus a Lexus NX for our next car. At the time, our taxable income was inching close to $100K. We deserved it. We deserved so, so, so much more. God, I used to be a simp about cars.

        I would use the time that your boyfriend's in nursing school to learn more about personal finance and financial independence. I realize you hate accounting. But I think you're really at one of the times in your life when you have to choose what's more important to you, relieving the misery of your job or helping your boyfriend, to sing lead or play the tamborine. I played some bada$$ tamborine when my time came, and we don't regret it now.

        0Reply
      • John Heasley
        OP
        Youngstown, OH · Member since 2017 · 13 posts · 2 votes
        6y

        @Lee Ripma Thank you, Internet Stranger!

        0Reply
      • John Heasley
        OP
        Youngstown, OH · Member since 2017 · 13 posts · 2 votes
        6y

        @Jim K. I work 25 miles away from home; I don't think the cost of Ubering each day would be less than a car payment. I also would not encourage him to return to full-time work as his grades suffered terribly when he worked full-time and went to school full-time. He also has the army reserves. His plate is full enough.

        I wouldn't need to go back to accounting as I make the same doing leasing as I was doing accounting. I could just keep doing what I do now, and I will consider that based on your advice. Thank you!

        0Reply
      • Jim K.
        Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
        6y
        Originally posted by @John Heasley:

        @Jim K. I work 25 miles away from home; I don't think the cost of Ubering each day would be less than a car payment. I also would not encourage him to return to full-time work as his grades suffered terribly when he worked full-time and went to school full-time. He also has the army reserves. His plate is full enough.

        I wouldn't need to go back to accounting as I make the same doing leasing as I was doing accounting. I could just keep doing what I do now, and I will consider that based on your advice. Thank you!

         John, I'm sorry my advice on the car was received the way it was, but you missed the point of what I wrote about that. Because I believe it's an important concept, both for you and anyone else reading this, I'm going to try again.

        To summarize: In the age of Lyft, universal cell phone coverage, and the $87 tow-anywhere AAA membership, 90 of car-owning Americans have a car payment.

        I didn't advise you to "Uber to work every day," as you summarized my point. What I meant was that in the event of a breakdown, getting a ride to work or to any critical meeting or other engagement is reliable and straightforward. The functional necessity of having a car that will start every single time you turn that key, guaranteed, which is the reason most people have always stated is why they drive almost new cars and pay their car payment, has been largely removed from our society. You could break down multiple times a month and still reliably get where you're going and still come out ahead on the money spent on rides and your car.

        Ergo, there are only four reasons to continue driving a car worth more than, say, $5K, andshouldering the additional insurance costs involved. Some people, specifically salespeople, need to project an image of material success to make sales, and a car is part of that. The second reason is tha someone else is paying for the car and insurance. The third reason is unreasoning fear -- people are unreasonably terrified of the potential unreliability of used cars. But the last reason is probably the most common, simple misplaced wealth-devourng vanity.

        As I mentioned, we also went through a period of throwing away money on cars. In our case it was mostly fear -- we hadn't developed a good relationship with a local mechanic and service shop. We didn't understand the AAA membership implications and we had never used the ride-share services. But I thankfully realized early that vanity had no place in our specific wealth-creation strategy and business plan, building a portfolio of low-income rentals in our city. We were lucky that way.

        Anyway, good luck with whatever you do about your car. It makes no difference to me if you continue to shoot yourself in the foot over it. I obviously need to be clearer about presenting this point in the future.

        0Reply
      • John Heasley
        OP
        Youngstown, OH · Member since 2017 · 13 posts · 2 votes
        6y
        Originally posted by @Jim K.:
        Originally posted by @John Heasley:

        @Jim K. I work 25 miles away from home; I don't think the cost of Ubering each day would be less than a car payment. I also would not encourage him to return to full-time work as his grades suffered terribly when he worked full-time and went to school full-time. He also has the army reserves. His plate is full enough.

        I wouldn't need to go back to accounting as I make the same doing leasing as I was doing accounting. I could just keep doing what I do now, and I will consider that based on your advice. Thank you!

         John, I'm sorry my advice on the car was received the way it was, but you missed the point of what I wrote about that. Because I believe it's an important concept, both for you and anyone else reading this, I'm going to try again.

        To summarize: In the age of Lyft, universal cell phone coverage, and the $87 tow-anywhere AAA membership, 90 of car-owning Americans have a car payment.

        I didn't advise you to "Uber to work every day," as you summarized my point. What I meant was that in the event of a breakdown, getting a ride to work or to any critical meeting or other engagement is reliable and straightforward. The functional necessity of having a car that will start every single time you turn that key, guaranteed, which is the reason most people have always stated is why they drive almost new cars and pay their car payment, has been largely removed from our society. You could break down multiple times a month and still reliably get where you're going and still come out ahead on the money spent on rides and your car.

        Ergo, there are only four reasons to continue driving a car worth more than, say, $5K, andshouldering the additional insurance costs involved. Some people, specifically salespeople, need to project an image of material success to make sales, and a car is part of that. The second reason is tha someone else is paying for the car and insurance. The third reason is unreasoning fear -- people are unreasonably terrified of the potential unreliability of used cars. But the last reason is probably the most common, simple misplaced wealth-devourng vanity.

        As I mentioned, we also went through a period of throwing away money on cars. In our case it was mostly fear -- we hadn't developed a good relationship with a local mechanic and service shop. We didn't understand the AAA membership implications and we had never used the ride-share services. But I thankfully realized early that vanity had no place in our specific wealth-creation strategy and business plan, building a portfolio of low-income rentals in our city. We were lucky that way.

        Anyway, good luck with whatever you do about your car. It makes no difference to me if you continue to shoot yourself in the foot over it. I obviously need to be clearer about presenting this point in the future.

        I  see what you're saying now--you aren't against car ownership, just newer car ownership/auto loans. Thanks for clarifying. My last car was a 2013 Jeep Compass that I bought in 2015. I thought that thing was going to last me 10+ years. It was over $17k. Four years in, the transmission goes. I set my limit at $12k this time around. I did better, but I'm still not where I need to be.

        1Reply
      • Jim K.
        Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
        6y
        Originally posted by @John Heasley:
        Originally posted by @Jim K.:
        Originally posted by @John Heasley:

        @Jim K. I work 25 miles away from home; I don't think the cost of Ubering each day would be less than a car payment. I also would not encourage him to return to full-time work as his grades suffered terribly when he worked full-time and went to school full-time. He also has the army reserves. His plate is full enough.

        I wouldn't need to go back to accounting as I make the same doing leasing as I was doing accounting. I could just keep doing what I do now, and I will consider that based on your advice. Thank you!

         John, I'm sorry my advice on the car was received the way it was, but you missed the point of what I wrote about that. Because I believe it's an important concept, both for you and anyone else reading this, I'm going to try again.

        To summarize: In the age of Lyft, universal cell phone coverage, and the $87 tow-anywhere AAA membership, 90 of car-owning Americans have a car payment.

        I didn't advise you to "Uber to work every day," as you summarized my point. What I meant was that in the event of a breakdown, getting a ride to work or to any critical meeting or other engagement is reliable and straightforward. The functional necessity of having a car that will start every single time you turn that key, guaranteed, which is the reason most people have always stated is why they drive almost new cars and pay their car payment, has been largely removed from our society. You could break down multiple times a month and still reliably get where you're going and still come out ahead on the money spent on rides and your car.

        Ergo, there are only four reasons to continue driving a car worth more than, say, $5K, andshouldering the additional insurance costs involved. Some people, specifically salespeople, need to project an image of material success to make sales, and a car is part of that. The second reason is tha someone else is paying for the car and insurance. The third reason is unreasoning fear -- people are unreasonably terrified of the potential unreliability of used cars. But the last reason is probably the most common, simple misplaced wealth-devourng vanity.

        As I mentioned, we also went through a period of throwing away money on cars. In our case it was mostly fear -- we hadn't developed a good relationship with a local mechanic and service shop. We didn't understand the AAA membership implications and we had never used the ride-share services. But I thankfully realized early that vanity had no place in our specific wealth-creation strategy and business plan, building a portfolio of low-income rentals in our city. We were lucky that way.

        Anyway, good luck with whatever you do about your car. It makes no difference to me if you continue to shoot yourself in the foot over it. I obviously need to be clearer about presenting this point in the future.

        I  see what you're saying now--you aren't against car ownership, just newer car ownership/auto loans. Thanks for clarifying. My last car was a 2013 Jeep Compass that I bought in 2015. I thought that thing was going to last me 10+ years. It was over $17k. Four years in, the transmission goes. I set my limit at $12k this time around. I did better, but I'm still not where I need to be.

        Exactly right. Glad I made sense this time.

        0Reply
      • Dennis M.
        Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
        6y

        You had me on board till the last part of the post  . You got a new car which I can assure you was unnecessary you have credit card debt house payments etc .. and you want to get into a job that makes less money ??. This sounds unwise . I’m no personal finance guru or even what I’d consider to be a very wealthy individual but I can assure you racking up liabilities is putting you further from your goal and will be counterproductive. I would find a way to increase your income not reduce it . Is your mentor friend going to pay your car payments or the mortgage ?? Don’t jump around job to job and for Pete’s sake , stop buying crap you don’t need and why are you buying dad a house when your own affairs at home are out of wack ? 

        Look You don’t need a w2 job to learn sales and negotiation skills you can get that by reading books and listening to podcasts . I read a book a week on persuading and negotiating to keep my skills up . How many books do you read a week ? How bad do you want this in life ? What are you willing to do and at what price to reach your goal ? Real estate is a difficult expensive business . You are correct to say no time will be the “ perfect” time but there is a time that can be really “ off” and can hurt you like buying when your debt is high and income is low such as your suggesting here . 

        0Reply
      • Mary M.
        Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
        6y

        @John Heasley If I were in your shoes I would follow your bliss.....  life is short and we have one life to be the human we want to be.....  Therefore, spend a day really thinking about the what-ifs.....  and what you *really* want in life - where you want to be in a year, 5 years, 10 years, etc....  think about how you can get there....  In my opinion, working for the "man" is drudgery and is good at times but isn't how you will be financially free.......

        Sales is the place where you can have a hedge for the downside (guaranteed salary) and no limit on the upside. You also will learn valuable life skills that will serve you well in your future....  Find a sales mentor and model what they do.... 

        As for the vehicle, it sounds like you did ok and I would not waste time on that right now as you would lose too much if you sold it now.....  (and even with AAA it can take several hours to tow a car and that loss of time may mean a sale or not, a job or not, etc..... also, if this is a female then breaking down in the wrong place can be scary.....  so there is more to this than meets the eye)

        Run a budget...  be honest, cut as much expenses as you can, save 10% and go learn to be the human you dream of being !  

        1Reply
      • Sam Shueh
        Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
        6y

        If you are changing a profession. Often they will offer your last pay.

        0Reply
      • Ryan Webster
        Member since 2019 · 89 posts · 65 votes
        6y

        @John Heasley

        First off sales is a very important skill for future success in any venture. But you have to ask your self are you a good enough sales person right now to make up the salary gap or is it going to take you time to learn and develope the sales skills nessasary. Yes the opportunity to develope sales skill for a better paying future is good, but how much are you paying for the opportunity? Is there a cheaper source for developing these skills?

        Let's say that you owned a business that made widgets. Right now you produce and sell 100 widgets a day. And you have back orders for 50 widgets piling up daily. As the business owner you have a choice. you can shut down for a week forfeit a weeks revenue and send your widget machine in for an upgrade so it can produce 150 widgets a day, or you can get a loan for the bank in an amount equivalent to one weeks revenue and purchase a second widget machine to increase production.

        Which do you choose?

        There are many places to learn and practice sales skills. There are a number of multilevel marketing programs. Some are good some are bad all will teach you sales. I'd do your research and pick one that is focused on developing and supporting its members.

        Also grant cardone has a very good sales education program it's not free but it's worth the investment.

        0Reply
      • John Heasley
        OP
        Youngstown, OH · Member since 2017 · 13 posts · 2 votes
        6y

        @Dennis M. These are the doubts that are holding me back. While my debt is not unmanageable (and low interest as my CC still has a 0% APR), it's still there. It does make me nervous about a position that temporarily earns less upfront. But, as a commissioned gives me more control over my income in the long term, wouldn't my debt be a reason to make this change? After all, I have way more opportunity to increase my income as you suggested in a sales position than a salaried position, and my product would be accounting and finance jobs--that's a pretty good product to sell! While I don't think it will be easy, I can't help but hear @Scott Trench's advice from Set For Life--"The benefit to performance-based pay is that earnings can theoretically be unlimited...if you want to have a shot at earning way more money or at achieving financial freedom early in life, you will likely have to give up a regular salary in a traditional career to attain it." 

        Of course, there's a chance I'll fail and put myself in a deeper hole. I always have accounting to fall back on if I need to turn around, but I hate to think about the hit my pockets would take if I got to that point. 


        0Reply
      • Jeff Ronningen
        Investor · Cincinnati, OH · Member since 2015 · 242 posts · 182 votes
        6y

        @John Heasley. Read Rich Dad Poor Dad. The new job is the right move. Your upside is higher. You’ll learn new skills and you’ll learn you can thrive without the salary safety net. Once you’ve done it and survived it will build confidence, remove fear, and open your eyes to more possibilities.

        Sales is a numbers game. More activity, more calls, more contacts leads to more opportunities in the pipeline. More in the pipeline means more comes out the other end as closed business. It requires discipline, planning, determination, and perseverance. Based on the fact that you have rental properties, that you recognize the value in a mentor, and you’re seeking input on BP......my gut tells me you have the right stuff.

        0Reply
      • John Heasley
        OP
        Youngstown, OH · Member since 2017 · 13 posts · 2 votes
        6y

        @Mary M. Amen! I see this position as one step further away from "the man." I know BP is very anti-car payment, which is completely understandable, but I did the best I could for my situation with the resources and knowledge that I had. And yes, I am a female, so safety is a larger concern for me and one that steered me away from buying anything too cheap. But I don't expect men to think about that; they live in a different world than we do. 

        0Reply
      • John Heasley
        OP
        Youngstown, OH · Member since 2017 · 13 posts · 2 votes
        6y

        @Sam Shueh They will not. The salary is set. Everyone starts out the same. It's just enough to cover the basic costs of living in NE Ohio, which makes sense. They have to incentivize you to sell. I'm glad there's any salary/benefits at all, as those are not guaranteed in sales jobs. 

        0Reply
      • John Heasley
        OP
        Youngstown, OH · Member since 2017 · 13 posts · 2 votes
        6y

        @Jeff Ronningen I have read Rich Dad and also read @Scott Trench's Set For Life. Everything I've read in both books tells me this is the right move. My mentor is also encouraging me to take the opportunity. It's scary, but there's a lot of signs pointing me in this new direction. 

        1Reply
      • Jeff Ronningen
        Investor · Cincinnati, OH · Member since 2015 · 242 posts · 182 votes
        6y

        Sounds like you know what to do.  Keep in mind this may hinder your ability to fund new properties for a while.  Lenders like your current salaried position because your income is predictable.  They won't like your new commissioned position with a temporary, smaller salary.  You'll need to establish a couple years of earnings.

        0Reply
      • John Heasley
        OP
        Youngstown, OH · Member since 2017 · 13 posts · 2 votes
        6y

        @Jeff Ronningen I have considered this, and it is a concern. Would this affect my ability to refinance properties I already own as well? Will my prior income be considered at all?

        0Reply
      • John Heasley
        OP
        Youngstown, OH · Member since 2017 · 13 posts · 2 votes
        6y

        @Ryan Webster I will consider that. Thank you!

        0Reply
      • Jeff Ronningen
        Investor · Cincinnati, OH · Member since 2015 · 242 posts · 182 votes
        6y

        I believe it will impact any new financing including refinancing.  Talk to a lender.  Maybe you could do the refi first?  

        0Reply
      • John Heasley
        OP
        Youngstown, OH · Member since 2017 · 13 posts · 2 votes
        6y

        @Jeff Ronningen I will do that as we do have one property we'd like to refinance. Thank you for the advice! 

        0Reply
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