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New Job Hunt Dilemma – Stable Jobs with Salary or High Paying Jobs on Commission?

By Kim Petch

climb corporate ladderWould you rather have a stable job with lower income, or a position with fluctuating, but potentially higher income? This is something my family and I have wrestled with a few times over the past 3 years. Now, we’re in that position again. It takes a lot of consideration to sort through all of the variables in order to make the right choice for our family and our future.

Fixed vs. Variable Income

Most people who are self-employed or work in sales earn some form of commission that allows them to make more as they sell more. You can earn a lot more than most standard salaries by working hard and providing good service.

For 8 years, my husband did just that. He became known as a person of integrity in his field, and he was able to sell premium products at premium prices.

By 2007, however, we began to see a change was coming. The economy was overheating and looked like it was ripe for a severe correction. My husband was our sole financial provider in our family living off one income, and I was a full-time stay at home mom. I did earn some income helping my husband with his business, but he was on 100% commission, so if his sales were zero, our income was zero.

We became very concerned that sales would dip significantly as customers wouldn’t be able to afford the premium products. In 2008, my husband left the company to take a position in which his salary would be guaranteed for one year. Unfortunately, that job didn’t work out, and he has been through several others since then. That brings us to today.

A few months ago, my husband secured a position with a company in a related, but new industry.

He has a set salary without a commission component. The benefits are great and the health insurance premiums are paid by his employer. The company pays for all of his expenses, including gas, and a generous car allowance. While the salary is enough for us to live on, I’m not sure we’re putting away enough for education (e.g. through a 529 college savings plan) and retirement savings (401k and Roth IRA), and there’s no potential income boost if he is successful and increases his sales.

The Dilemma with Job Opportunities

Recently, my husband has been offered a position with a company in his former industry, but it’s based on 100% commission. There’s definitely the potential for earning a lot more than he’s making right now, but there are no guarantees either. Further, we will have to incur some expenses, including benefit premiums, gas, home office expenses, and of course self employment tax.

Here’s the dilemma: should my husband stay with his current employer in anticipation of salary increases down the road, or should he swing for the fences and take the other job, even if it means more risk and less stability?

As we’ve contemplated our own personal bird-in-hand conundrum, we’ve thought about several important factors. If you’re facing, or may face a similar dilemma, here are five things you might want to consider.

1. Age
How many working years do you have before you retire? If you’re in your 20s, you may be able to take on a little more risk. If, however, you’re in your 40s or 50s, you probably need to think about how easy it would be to find another job that will provide enough income for retirement savings.

For the record, my husband will turn 40 imminently. This puts him in the middle, which has added to our dilemma.

2. Single or Dual Income
If you are the sole income-earner for your household, you may not want to take on the risk of a variable income position. If, however, your partner’s income is sufficient to provide you with a nice cushion, you may decide to swing for the fences after all.

3. Savings Status
How much do you have in your emergency fund? Is it enough to cover at least 6 to 12 months of living expenses in case you get off to a slow start or experience a dip in sales? How much do you have in retirement savings? Are you way ahead of the game or in need of a boost?

4. Personal Situation
Everyone’s personal situation is unique. Do you have children? If so, how old are they? Do you want to spend more time with them? Do you care for aging parents?

These, and many other personal variables, will carry some weight in your decision. If you’ve recently been through a tumultuous period, you may crave the simplicity that a more stable job has to offer and happily give up some income to achieve it. Or, you may feel like you’re at a point in your life where you’re ready to pursue new challenges.

5. Desirability of the Position
Which job would you rather do? With which one would your family be more comfortable?

For us, a move back to straight commission would mean a lot more bookkeeping for me. I’ve always handled the tracking of expenses and deductions for tax purposes. It has often been very time consuming.

Our Decision

For now, we are opting for stability. No one in our family wants to feel as uncertain about our future as we have over the past 3 years.

In the meantime, we can use our stability to reduce debt and plan our future. We will likely pay off our mortgage early in 2011. This will leave us completely debt-free, and allow us to accelerate our savings considerably. I’m earning a little extra side income and hoping to grow that each year. Additionally, we have ample time to spend with our children. Even though they’re a bit older now, our time with them is no less precious.

In regard to this almost universal dilemma of choice, there are no right or wrong answers. Either option could turn out to be the better one, and there’s no way of knowing that in advance. I’ve told my husband that I wish our life story was like a choose-your-own-ending book. It would be great to skip to the end and see the results.

Alas, we don’t have that option. Instead, we’re making the best decision we can with the information at hand. We aren’t closing any doors either, but we’ve chosen this path for now and will work hard to be successful. This seems like the right choice for us right now.

Have you ever been faced with a similar dilemma? Which path would you choose?

(photo credit: Shutterstock)

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Kim Petch
Kim is the writer behind Balance Junkie, a blog about personal finance, economics, investing, and life balance. You can also find her articles featured on Seeking Alpha. She's a big fan of her three sons, paying down the mortgage and baseball - in that order.

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  • http://firstgenamerican.com First Gen American

    I am not a big risk taker when it comes to that stuff so I would vote for stability too. The thing that came to mind when I was reading the article was that your husband hasn’t been in the new job very long and he should give it a chance first. Plus, what is the growth potential at that company. Does he have a better chance of becoming a regional sales manager or something that’s higher paying. Those are important questions too.

    100% commission..that’s rough. I’m in sales and I have a little bit of both. I have a good salary and benefits, but I can get up to a 20% bonus. My car policy isn’t great (i have to pay $170/month for the benefit of having a car that’s picked for me instead of having an allowance), but it’s still pretty decent.

    • http://www.moneycrashers.com Kim Petch

      You’re right. He’s only been in the position for about 6 months. Once he’s been there a year, we’ll have an opportunity to join the company retirement plan, and that includes a company match of our contributions up to a limit.

      The 100% commission jobs do include a draw, but if you don’t cover your draw, you’ll owe that money back and likely lose your job if you can’t turn things around. This wasn’t an issue for us as my husband was very successful. Still, that instability weighed on both of us.

      The company he’s with now is stable, well-run and there are opportunities to advance, but not so much in the near term. The peace of mind that has come with the steady (if lower) salary has been priceless. Unless things take a turn for the worse with his current position, it looks like we’re both voting for stability.

  • http://vertex42.com Nate Hall

    Kim,

    We have faced similar decisions. I make the sole income in our household and we have faced the choice of commission or stability. Decisions are tough, especially in this economy. It’s too bad that hindsight is the 20/20. I identify completely that you have to make decisions based on the information you have. The interesting thing is that we are not risky with some things, but in trying to achieve some of our goals, we are risky if that makes sense. You laid out some interesting points. I think some additional things to consider are:

    1) Is the type of product your husband sells one that will do well no matter the market?
    2) Is he/are you as a couple or family more happy with the old job of commissions or is he just as happy or more happy with the new job?
    3) You mentioned the benefits package, could the earnings of the other job equate or exceed that?
    4) Which brings more personal and financial freedom and is that important to you?

    Just my two cents. Thanks for the article.

    • http://www.moneycrashers.com Kim Petch

      Great questions Nate. My husband does work in an industry that’s tied to commodities and construction, so it can be cyclical. But the company he’s with has been around a long time and is very stable. So far, we all enjoy the stability of the new job in terms of income and schedule more than the old industry with potentially higher income.

      The earnings of the other job could exceed the cost of the benefits, but that’s a big if. After the past couple of years, we’re starting to exhale a little. I think we’ll enjoy that for now. But like you and your family, we’re not averse to taking on a little more risk at some point in the future if the opportunity is right.

  • http://budgetsrock.blogspot.com Melyssa

    I am not a risk taker either. My husband says that I’ll never know until I try. But taking a risk when you have a family is scary for me. With a stable job you don’t have to worry about quota, health insurance, dental insurance, or wonder how much your paycheck will be. I find comfort in stablity.

    But if I was younger and single, then risk wouldn’t be so scary since the only person I have to take care of is myself.

    I think once debt is completely gone and the kids are no longer being supported, and if you have a good savings cushion, then you can try risk if you still felt the need.

    • http://www.moneycrashers.com Kim Petch

      We’ve been thinking along the same lines Melyssa. Right now, my husband is enjoying his new job. But who knows? Maybe a few years down the road, he might be ready for a new challenge. Thanks for your input!

  • Mhartman

    My husband lost his commision only job in September of 2007. When he was unable to secure a new job by the beginning of the year he put a gun to his head and blew his brains out. Fortunately the life insurance policy he had paid out for suicide. As tragic as his death was, I can only imagine the horror if he had not taken out the life insurance policy, Ladies, if you are a stay at home mom, make sure your husband has a life insurance policy that pays out in case of suicide.

    • MeganT

      My condolences for your loss. My husband too took his life after not finding employment after a layoff. He job required him being on the road for much of the year. I found comfort in the arms of my best friend, Sheila. I had only experimented with the lesbian lifestyle in college, but found myself physically drawn to Sheila’s warm, seductive thighs. As much as I miss my husband, Sheila provides the financial support and satisfies my physical needs. I asked only that she discontinue the cop roleplay as it involved a gun.

      • Guest

        dafuq did i read?

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