Hourly vs Salary: Can You Pass Up Overtime When In Debt?
Imagine you are just finishing up your day working 9-5 and your manager stops by and asks you to stay later or to come in on a Saturday, it probably catches you by surprise, what is your response? For many the immediate reaction is “Why would I want to work more?” Then it hits you, as an hourly employee your manager is asking you to increase your income, what reason do you have to say no? It’s at that moment from the time you say YES or NO that a million things are running through your head. They all revolve around should I work overtime and earn more or do I have something better to do?
I’m making the assumption that you have some sort of debt in your life: credit cards, student loans, medical debt, car loans, who knows maybe you owe your friend $20 for the bet you made that this was the Cubs year and would win it all (I Believe!). That’s when we all start thinking long and hard about what is important to us in our financial and personal lives. I personally have debt so to pass up extra income at this time in my life is a difficult thing to do for me and the number of us out there in debt.
Imagine you make the national average salary which is right around $52,000, then figuring out some simple math says you earn $1,000 per week and thus $25 per hour. In most cases of overtime you are paid at 1.5X your hourly rate, which comes to $37.50 an hour, which amounts to $78,000 a year if you were to make this hourly rate for the entire year. When working a full 8 day at $37.50 per hour, you would make $300 per day, all for doing the same thing you would do on a regular week day. Can you afford to pass up $300?
As a person who’s goal is to become debt free or Even Steven as I prefer to call it and reach financial independence as fast as humanly possible, I look forward to the opportunities to earn a little more to pay off debt and invest more. I know we all need to live in the moment and enjoy life, but if you are going to have a quiet weekend around the house I don’t think we really have a better choice than to come in to work and earn extra income.
Today I came into work and earned a little extra money, maybe I’ll throw it at my debt or invest, who knows I may even spend a few dollars of it while on vacation. I believe I made the right choice and worked overtime to earn more income, what would you have done?