My wife is usually up and out of the house before I even get out of bed during the work week. I work from home, she works from an office that requires her in first thing in the morning.
We recently had a big financial set back. She had to have an unexpected outpatient medical procedure AND the tires on her car had to be replaced all in the same day. Well, here’s the “kick us while we’re down” moment; we were so busy taking care of this stuff that we totally forgot that Mrs. TOB is paid hourly and her employer doesn’t offer PTO (Paid Time Off)!
We were so busy taking care of this stuff that we totally forgot that Mrs. TOB is paid hourly and her employer doesn’t offer Pay Time Off
Here’s the text message I got while still laying in bed:
Did you see that second part!? She’s a genius. That is quite an excellent idea. Pay Time Off for vacations and sick days are great if your employer offers that type of benefit. However, there are a lot of people in the working world that don’t work on salary or don’t have a PTO type perk. Obviously, we fall in that category of people that don’t get PTO with Mrs. TOB’s job.
I really think Mrs. TOB is on to something. For those of you that follow the YNAB method, this is one of those things that fall under Rule 2; Rainy Day budgetting.
Mrs. TOB earns about $20 an hour. 3 days off without pay means we ended up being about $400 off of her normal paycheck. So, we basically have to add that on top of all the other costs through this situation. Not fun!
Her paycheck is deposited every two weeks. After taxes are witheld, that usually means about$1,150 is put into the bank for us to budget.
The reality is that there is no PTO and this has a very real impact on our day to day budgetting
However, her job is demanding and overtime is a pretty common occurrence with her position right now. Every hour she works overtime she is paid time and a half, like all U.S. employees! By her estimates, she thinks she works an extra hour almost every day. That means in a given pay period there will be 10 extra hours or $300 of extra gross income.
Before the budget, we probably would have looked at that as money to blow on who knows what.. food, entertainment or toys. Now that she has me thinking like this, that means we can buffer her overtime to fund planned and unplanned time off.
I whipped up this table to try and figure out what exactly this may mean. I varied the amount of overtime and tried to underestimate what we may realistically expect:
I’m trying to be conservative but by using overtime pay and rolling that into a rainy day category, I think Mrs. TOB is saving about 2 days off every six weeks. That’s about nine days a year.
So by conservative estimates and tucking away her extra earnings, she’s able to put 2 full days of pay aside for every six weeks she works. With 52 weeks in the year, that means at a minimum she is putting aside around 138 hours a year. That rounds off to about 17 paid days!!
That really is pretty awesome!
We’re definitely going to be implementing this moving forward. To be honest, we’ve always worried about when we needed to get Mrs. TOB time off. Whether it’s for personal reasons or for pleasure, it always impacted our take home pay and it always gets us stressed out. That’s especially annoying if we’re trying to plan a fun vacation OR if we’re already stressed about a stressful situation like last week!
While it’s nice to dream about her having PTO and not having to worry about this, the reality is that there is no PTO and this has a very real impact on our day to day budgetting and financial planning.
Today has been an awesome learning day for us.
I also wanted to let you know that Mrs. TOB is amazing! I don’t think I would have ever thought of this in a million years!!
UPDATE:
So, a couple of community members in the YNAB forums made a few suggestions to make this even better:
Turf_Hacker wrote: Definitely square within the methodology and a great idea! You could even extend the idea a little by deciding how many “PTO” days you want Mrs. TOB to have and budget for that if the 17 days you came up with wouldn’t be enough. Want 20 days? Budget a bit more. With some added “seniority”, you could even increase this over time.
kevman479 wrote: I do something like this. I don’t work 40 hours so I don’t get overtime. The company I work for keeps us at 32 hours or less so they don’t have to pay the full time benifits. My wife however does get PTO. and works 40 hours. So we take the percentages (I forget the excate number) and take that much off my check and put it in an income replacement fund. I usually works out to about 4.5 hours a week for me, so we just live off of 27.5 hours and put the rest in the replacement fund. Then if I have a day off for whatever reason, I take out enough to make up the 27.5 hours.
This is a great idea and will relieve so much stress. When my husband and I got married he did not get paid time off so we saved up a week’s pay for him to act as income during our honeymoon. It was such a relief to not have that lack of income hanging over our head. He does have PTO now, otherwise we would be doing exactly what you are doing.