Ease the Pain of a Pay Cut

Has a pay cut sliced your salary? Twiddling your thumbs on a furlough? Those are setbacks, but neither has to ruin you financially.

For starters, you may be able to boost your take-home pay. If you got a big tax refund last year, consider adjusting withholding allowances on your Form W-4 to keep more in your pocket each month. Try our calculator at kiplinger.com/tools/withholding. Based on the average refund of $2,700, someone in the 25% tax bracket claiming three extra exemptions could boost monthly take-home pay by $228.

Look for other paycheck leaks you can plug. A gym membership likely costs you about $35 per month. Buy sneakers and a pair of dumbbells for $120 and save nearly $300 a year. This open season, switch from a low-deductible health plan to a high-deductible one and shave monthly premiums by a third or more.

Put furloughed time to good use by tackling financial chores. Transfer a high-rate credit-card balance to a friendlier card, such as Citi Platinum Select MasterCard (800-950-5114). Now’s the time to set up an account at a free budgeting Web site, such as Mint.com. Who knew that eating out once a week was costing you close to $2,000 a year?

With so much market volatility, it’s important to rebalance your investments regularly. From 2000 to 2007, you would have earned about $20,000 more on a $100,000 portfolio if you had maintained a mix of 60% stocks, 30% bonds and 10% cash, says financial planner Stuart Ritter, at T. Rowe Price. Use the free Portfolio Instant X-Ray tool at Morningstar.com to figure whether to rob your bond funds to replenish stocks or vice versa.