Posts Tagged Brazil

Photo by quaziefoto

It’s signup time for our annual benefits elections at work, and one of the options that we have is the ability to “purchase” additional vacation time.  What this means is that you can elect to have the company deduct from your paycheck the cost of this additional time off.  A percentage of the vacation cost is deducted each week from your paycheck, on a pre-tax basis, because it’s wages that you are voluntarily forfeiting.  It’s treated the same way tax-wise as your 401(k) contribution.

How it works

For instance, if you make $25 per hour, and would like an extra week’s vacation for next year, the company will multiply the $25 times 40 hours to arrive at $1,000.  The $1,000 will be divided by the number of weeks, 52, to arrive at a weekly deduction of $19.23.  Therefor, your weekly gross pay would be reduced by $19.23, resulting in $980.77, and lowering your gross wages for the year by $1,000.

Vacate now, pay later

You get to use this purchased vacation just like good-old regular vacation.  It gets added to your vacation “bank” on January 1st, so you get to use it right away, while you spread your “payments” out over the remainder of the year.  You could burn the entire 40 hours in January on an island vacation, and not make your last “payment” until December.  Sounds like a sweet deal, doesn’t it?

A public relations coup

Why does the company offer this benefit?  You could say that the company values healthy, rested, stress-free workers.  But I’m a realist, and see the financial benefit to the company.  You are, in effect, signing up for a voluntary furlough.  The company will save a week’s pay, albeit spread out over the entire year.  Multiply that by hundreds, if not thousands of employees who opt for the same deal, and voilà!  The company has improved its cash flow without inflicting any pain.  In fact, the company looks like a benevolent Big Brother, because it has given the employees the illusion of a benefit, improving corporate goodwill, while reducing your annual pay.  The employees think that they’re getting something for nothing.  Just like the Trojan Horse (or, if you’re a Monty Python fan, the Trojan Rabbit).  This is genius, I tell you!

Low man on the totem pole

Of course, most of the people that purchase vacation are probably newer, recently-hired employees, the low people on the totem pole, with little accrued time in their vacation banks.  For them, this looks like a good deal.  And by THEM, I mean ME, since I frequently change jobs, and many times can be considered a new employee.  But in my case, I also get a week’s worth of personal time, and two weeks’ worth of sick time.  That’s 6 weeks, counting my 3 weeks’ worth of regular vacation.  And I didn’t even include the 10 paid holidays that I get each year. If I’m out more than 6 weeks in a year, I probably should start looking for a new job, because I live in America, land of never-ending work.  Companies are more liberal with vacation time in other countries, like Lithuania and Brazil, where a minimum of 4 weeks vacation is mandated by law.

Trojan Horse

I’m not saying that you shouldn’t purchase vacation; you might have a valid reason for needing the extra time off.  I’m just saying that you should weigh the advantages (extra time off) against the disadvantages (less money in your pocket) before jumping on the bandwagon with the other lemmings.  You may feel it’s a gift from your company, while it’s really a Trojan Horse to your personal finances.  You’re really signing up for a pay cut.  I’m not falling for it, and like the French castle defenders in Monty Python and the Holy Grail, I’m flinging the Trojan Rabbit right back at them.

How about you?  Are you planning on purchasing any vacation from your employer next year? Do you think it’s a good idea, and that I’m wrong?  Let me know in the comments.

Stay tuned as I decline even more benefits from my employer: Subscribe

• Paid to Stay Home from Work? â�¯eagan How would you like to get paid to stay home from work?  If that sounds appealing, perhaps you should look into law school.  Many law firms are asking their new hires to stay home - with pay!  That's what's detailed in this CNNMoney article on Yahoo Finance.  Sounds......
• A Week Without Coffee! scholastica ees/ Back~ There she goes There she goes again Racing through my brain And I just can't contain This feeling that remains - from There She Goes by The Boo Radleys I first heard that song in the Mike Myers movie So I Married an Axe Murderer.  I......
• Layoff Aftermath Photo by law_keven A lion's work hours are only when he's hungry; once he's satisfied, the predator and prey live peacefully together. - Chuck Jones I heard that quote on Criminal Minds a few weeks ago.  As I sit here in the aftermath of yet another layoff, a metaphor......

• 7 Ways to Reduce the Cost of College You are 22 years old. You have just spent the past four years paying tuition, room and board, books, food, utilities, transportation, etc. The worst part is that it is all getting more and more expensive beyond peoples’ expectations. Where does that leave you? In a mountain of debt upon......
• Credit Default Swaps (Explained) Yet another financial term in the news these past few months. A couple weeks ago, MSN money printed an article "10 companies that could go bankrupt" in which they disclose the criteria for the list creation was the value of the credit default swaps on the companies' 5 year bonds.......
• Sunday Money Roundup - Sell An Old iPhone Edition. This past week I sold my original 2G iPhone for over $200 - more than I paid for it years ago. Score! Seems these "no longer under contract" phones are worth some serious cash. I used it on AT&T for years until I got a 3GS model, and then a......