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Personal Finance from the Broke Perspective

Dell Pauses Employee Benefits to Cut Costs

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As the COVID-19 crises continues around the world, the United States continues to see economic fallout.  While restaurants, bars, gyms, and other service sector employees had to layoff employees during the early days of the pandemic, now, many white-collar employees are also feeling the pinch.  Many universities have had to furlough employees, and recently, even the computer industry is taking significant cost cutting measures.  Specifically, Dell pauses employee benefits to cut costs.

Dell Pauses Employee Benefits to Cut Costs

The Cuts Dell Is Making

Beginning June 1st, Dell is making cuts to several of their many employee benefits.

Retirement Contributions

Dell will not be contributing to their employees’ retirement funds for at least the remainder of the fiscal year.  (Dell’s current fiscal year ends on January 29, 2021.)

Dell typically matches the employees’ 4% retirement contribution the first year of employment, then bumps that amount to 5% the second year, and 6% the third year of employment or up to a $7,500 a year match.

However, in an effort to preserve cash, Dell will temporarily halt this benefit.

Internal Promotions and Raises

Dell Pauses Employment Benefits to Cut Costs
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Also beginning June 1st, Dell will temporarily stop internal promotions and raises.  Once again, these actions are expected to last at least through the end of the fiscal year.

Employee Incentives

Dell has an internal employee incentive program where employees can earn “inspire points” that they also paused.  With this program, employees receive commendations from bosses and colleagues and can use the points to buy gift cards and other items.

The Cuts Dell Has Not Had to Make

While Dell is signaling that they are proactively protecting their cash with these cuts, there are some significant measures they have chosen NOT to take.

No Furloughs

Unlike many companies, Dell is currently NOT furloughing employees.  All employees have kept their jobs.

No Pay Cuts

Many companies and industries, such as higher education, have had to cut their employees’ pay.  Thus far, Dell is avoiding that.  While employees won’t be eligible for promotions or raises for at least the next seven months, they are not, so far, getting their pay reduced.

Employees Aren’t Alone

Dell pauses employee benefits to cut costs isn’t the first cost-cutting measure implemented by the company.  Effective the second quarter, which began May 2, 2020, Dell Technologies CEO, Michael Dell, forfeited his base pay, estimated to be approximately $950,000 per year.

Dell and his wife also have donated $100 million to coronavirus relief.

Take Aways from Dell Pauses Employee Benefits to Cut Costs

Dell is just the latest of many white-collar companies that have faced decreased revenue thanks to the COVID-19 pandemic.  As a result, Dell employees must make some sacrifices to keep the company in good financial standing.

If your company has not been affected yet, be prepared financially.  Likely before this pandemic is over, your company (and your pay) will be affected.  Take the time now to make your budget leaner.  Also, now is a good time to forego unnecessary spending and funnel more money to your emergency fund.

As a nation, as a world, we will pass through this time of difficulty, but it likely won’t be as soon as we would like.

 

Why We’ve Decided Not to Throw Extra Money at Our Debt Now

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Going into debt is a bit like gaining weight.  It’s much easier to go into debt than to get out.  But, when you’ve finally decided you want to break the debt cycle and live debt free, it takes a lot of time and effort, much more effort than it took to go into debt.  Likewise, when you decide you want to be fit and healthy, you have to work much harder than you did to gain weight.  With either situation, when you decide you want to make a healthier change, you want it to happen.right.now!  That’s why so many people who want to be debt free decide to save only a $1,000 emergency fund and put the rest of their money on debt.  We’ve tried that before, but there are several reasons why we’ve decided not to throw extra money at our debt now.

Get Off the Debt Repayment Roller Coaster

Why We've Decided Not to Throw Our Extra Money at Debt Now
Photo by Matt Bowden on Unsplash

With COVID-19, we’re living in unstable times.  But honestly, even before the virus, a $1,000 emergency fund was never enough.  My husband and I have been in debt most of our lives.

When we were first married, we had student loan debt, car loan debt, and credit card debt from our time in college.  We followed financial gurus who said have a $1,000 emergency fund and put the rest of the money on debt.

Some months, we had phenomenal success and paid down a significant amount of our debt.  But other months, because we were living so close to the edge with only a $1,000 emergency fund, we’d have the unexpected happen such as a $2,500 car repair.  Our emergency fund would be wiped out, plus we’d go back into debt to finish paying for the unexpected.

Going back into debt a few thousand dollars when we were trying to pay down debt was depressing.  Plus, we’d have to pause our debt repayment and start back over to rebuild the emergency fund.

We paid off the credit cards eventually, but a few years ago, we went back into credit card debt when three things happened one summer—our HVAC system died, our house had mold and had to be remediated, and our child had a medical issue that wasn’t completely covered by insurance.

Since then, we’ve been working to build a more substantial emergency fund AND pay down debt.  No more debt repayment roller coaster for me.  This time I vowed when we paid down our debt, it would stay gone.  But for that to happen, we needed a bigger emergency fund.

The Economy Is Too Uncertain

Now that COVID-19 has hit, we’re not paying any extra on our debt.  We’re funneling all of our extra money to our emergency fund with the goal of hitting a 6-month emergency fund.

Why?

No one knows for sure what the economic impact of this virus will be.  I want to make sure my family has enough cushion to survive.  That means creating an ample emergency fund.

Prepare for Potential Job Loss

Why We've Decided Not to Throw Our Extra Money at Debt Now
Photo by Alexander Mils on Unsplash

We’ve been lucky that my husband hasn’t lost his job.  He’s in the higher education field, which is being hit especially hard by this pandemic.  He has to furlough for 39 days this upcoming year, which means we will essentially be losing two months of pay in the next 12 months.  However, we’re grateful that he still has a job.

But what will happen next year?

There is a very real possibility his job could be in jeopardy next year, depending on how badly this year goes.  We want to be prepared.  Sure, it would be nice if we could get our debt load down, but right now, we’re just focusing on piling cash in the bank.  We want an ample security net.

Much of the country is in the same predicament.  If you work for or own a small business, how long can the business hold out?  We’re already seeing some small businesses closing permanently, which means all of those employees will be looking for jobs.

I don’t want to advocate irresponsibility, but if you’ve lost your job and aren’t able to get a new one, you can always negotiate with your creditors or worst-case scenario, not pay your bills.  However, if you don’t have money in the bank, you’re left without resources.  Having a savings account in this situation always comes first.

Only Pay Down Debt After a 6 Month Emergency Fund Is Established

If you pause paying down your debt and only pay your minimum payments due, you can always change your plan later and pay more on your debts in a few months.  That’s one of the major reasons why we’ve decided not to throw extra money at our debt now.

We’re going to save, and save, and save.  If we, as a country, as a world, ride out this virus and it is no longer a threat, things can change.  Let’s say my husband and I do save a six-month emergency fund.  If, in another year or two, his job is stable, and the world is back to normal, we can change gears.  Maybe we take three months’ worth of our emergency fund and throw it on our debt to pay it off.  We can do that.

Final Thoughts

Though you may want to be debt free or carry a lower debt load, there are several good reasons to pause that goal.  The main reason why we’ve decided not to throw extra money at our debt now is because having money in the bank is priceless, especially in the age of a pandemic.

We can later decide to take some of that large emergency fund and put the money on our debt.  However, if we pay down our debt and stay with a $1,000 emergency fund, we’re extremely vulnerable financially to what may happen in the upcoming months.  We intend to protect ourselves as well as we can from economic instability by saving as much as we can.  There will be time later to aggressively pay down debt.  We don’t believe now is that time.

 

Why I’ll Always Keep a Full Pantry Now

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My husband and I had a feeling the virus would cause a shut down (though we had no idea that things would get as intense as they currently are).   So, starting in early February, we slowly added items to our pantry as we could afford them.  Yet, I remember the sense of panic I felt when I went into a grocery store one Thursday in March and saw empty shelves.  Even though our pantry wasn’t stocked enough for not going to the store, it was likely more stocked than other people’s, but I still panicked.  What if I can’t feed my family!  Thanks to this experience, there are several reasons why I’ll always keep a full pantry now.

Why I'll Always Keep a Full Pantry Now

Our Pantry Experience

Throughout our marriage, my husband and I have tried to keep a fairly decent pantry.  I just find it reassuring to know that if something happens, we have enough food for about two weeks.  However, I never wanted to keep more than that because I felt it was wastefully, and in my mind, I always thought, when would we ever need that much food?  After all, we don’t live in an area prone to any natural disasters.  But I was wrong.

Why I’ll Always Keep a Full Pantry Now

Sure, we are living in unprecedented times, but that just goes to prove that anything can happen.  I have learned this lesson, and I’m confident many other Americans have, too.

Why It’s Important to Keep a Full Pantry

There are several reasons why I’ll always keep a full pantry now.

Emergency Fund Money Can’t Buy

We all know that it’s wise to have at minimum a $1,000 emergency fund, but ideally an emergency fund of three to six months of living expenses.  However, a full pantry can also serve as its own emergency fund.

During the initial days of the virus, even if you went to the grocery store, there wasn’t much food available.  The shelves were empty.  (This is probably the first time for many of us to see the stores like this.)  Even though people had money to buy groceries, there simply weren’t groceries available to buy!

Why I'll Always Keep a Full Pantry Now
Photo by Richard Burlton on Unsplash

Although our pantry wasn’t as stocked as it should be, I was very thankful that we had our own food emergency fund that got us through the first couple of weeks when groceries were in short supply.

Why I'll Always Keep a Full Pantry Now
Photo by Martin Lostak on Unsplash

Stock Up at the Lowest Prices

When we’re not in times of crisis as we are now, having a full pantry allows you to stock up on groceries at the lowest prices.  Since our family has a number of food intolerances, we can’t eat the way typical Americans do.  We have to buy specialized foods that don’t contain a lot of preservatives, chemicals, gluten, or dairy.

I was able to keep our grocery bill lower by stocking up on our favorite items whenever they went on sale.  I would buy enough for the next six to eight weeks, which would be enough to last until the next sale.

Now that the virus is here, I’m no longer going to the grocery store but instead relying on pick up.  I can’t bargain hunt at several different stores for our favorite items now that those foods are running low in our pantry.

I’ve immediately noticed a several hundred dollar a month spike in our grocery bill.  This isn’t because we’re buying so much more but because my pantry is no longer stocked with items I bought on sale.  Instead, I have to buy them at full price.

Easier Meal Planning

A full pantry makes meal planning so much easier!  You can typically make a week or two worth of meals just with items that you already have in your house.  There’s no need to run to the store for an item or two that you’re missing to complete the recipe.  If you really can’t make one particular recipe without a certain ingredient, you have enough food to give you flexibility to choose a different recipe that you do have all the ingredients for.

Likewise, if you live in an area prone to winter storms or other challenging weather, it’s nice to have food available until you can get to the store again.

How to Avoid Waste in Your Pantry

I’ve explained why I’ll always keep a full pantry now, but with a full pantry comes responsibility.  If you don’t carefully build and use your pantry items, you could end up just wasting money by letting items go unused before their expiration dates.  Here’s how to care for your pantry so nothing goes to waste.

Mark and Order by Expiration Dates

Whenever I bring items into my pantry, I take a Sharpie pen and mark the expiration date in large print on the front and side of the item.  Then, I put the items on the shelf based on expiration date.  The oldest items come to the front, and the newest items go to the back.

Every month or so, I routinely check to see if any of the items need to be used up in the next month or two.  If so, I put them in a separate area of my pantry and focus on finding recipes for those items.

Only Buy Food You’ll Actually Eat

Most importantly, when building your pantry, only buy foods that you actually like.  I know a lot of people keep Spam and canned vegetables in their pantry because they both last a long time and are shelf stable.  But there is no Spam or canned veggies in my pantry because no one in my family likes them.

I only buy foods that I know we will like and eat.  That’s the biggest secret to avoiding waste.

Final Thoughts

I don’t know about all Americans, but the virus is one of the major reasons why I’ll always keep a full pantry now.  This situation has proven to me how important a well-stocked pantry is.  You truly never know what the future will bring.

I used to have a pantry challenge once or twice a year and try to completely eat down my pantry before buying new.  However, I don’t think I’ll ever do that again.  Having a well-stocked pantry all the time is much too important.