This week I’m THRILLED that Andrew Schrage, co-owner of Money Crashers Personal Finance has agreed to answer some questions that will help you make swinging the financial part of a career change much clearer and easier.
In case you don’t know, Money Crashers has been featured on national media outlets including CNN, The Wall Street Journal, US News & World Report, Yahoo Finance, MSNBC, Business Insider, Forbes, and more.
Their mission is to develop a community of people who try to make financially sound decisions.
Now they’re here to help you manage your finances so you can get that new career you’ve dreamed of.
Finances & A New Career
Basically, no one likes what they do these days.
Actually I lied.
According to the 2014 Gallup poll results, 70% of people dislike their jobs. Which means 3 out of 10 of you are happy with what you’re doing. You guys can go home.
The rest of you need to read this post, because a major reason we stay stuck in jobs we hate is money.
If you had the financial freedom to make a new career choice, you would do it – or at least you would have one less major obstacle.
So read on and see what Andrew has to teach us so you can take real steps toward doing what you love:
1. People usually don’t ever feel ready financially to make these kinds of changes, and the fear is that one will discover mid-leap that they forgot something or weren’t as prepared as they thought.
Is there a guideline you can give us that can help us think about the kind of financial shape we should be in before considering making a career move that would involve a pay decrease?
Ideally, your credit card debts would be zero, but since that’s undoable in a lot of situations, you should do your best to reduce them as much as possible. Also, because there’s a chance the move might not work out, an emergency fund with approximately six months worth of living expenses would be ideal. Reducing your monthly bills as much as possible is also a must, because of the lower pay. This is a strategy that is a lot easier to implement than people think – some simple Internet research and basic lifestyle changes should do the trick.
2. Sometimes bad jobs are really bad and people just want out at any cost. Are there any circumstances where you would say it’s ok to dip into retirement savings?
It’s generally not advisable, but in the situation where the individual sincerely dislikes his or her career, it might make sense. A happier “you” results in a more productive you, which may allow you to get back to your previous salary level rather quickly. If you do go this route, make sure you have plans in place to return the money to your retirement account as soon as possible.
3. What are your thoughts about taking on debt to make a career change? We finance cars, houses, trips . . . this is essentially an attempt to finance happiness, as that’s the goal when it comes to a career change – to do work that makes us happier. What’s your take on taking on debt to finance a career move?
Again, generally you want to pay for any career change expenses in cash but if it means a lot to you, it’s possible to go the route of financing it with a credit card. One great idea if you go this route, is to take out a credit card with a 0% APR teaser rate for the first several months, such as the Chase Slate Card, which features this for the first 15 months. That way, if your move costs $600 and you send in $40 per month, you can finance the change without incurring any interest.
4. The basics of getting your finances in order are easy – make more than you spend, pay off your debt. But the reality of doing that is really hard. What’s your best advice for someone who is used to making more money who now has to learn to live on less?
There are a variety of ways to save money and live on less. You might replace one night out per month at restaurants with a cook at home evening. Do your celebrating at home for a few weekends and skip the bar hopping. You can also rent movies from Redbox for a little over $1 per day to save on that entertainment instead of attending movie theaters. With a little creativity and restraint, there are ways to make it happen.
5. Are there easy ways that you recommend that people diversify their income?
Sell your no longer needed items on eBay or Amazon. Likely there are plenty of old electronics lying around the house and unneeded college textbooks usually sell quickly as well. Participate in market research groups (try the website Delve or Focus Pointe Global for help) and you can get paid as much as a few hundred dollars for simply participating in a panel discussion on one of many different topics (like trying out a new food item a restaurant is testing) and providing your opinion. Use a website like FatWallet or Ebates for your online purchases (where you can earn cash back) and you won’t necessarily diversify your income, but you will spend less cash.
6. For people who aren’t all that great at finances who are maybe having to look closely at them for the first time, how do you recommend weighing tough decisions and holding off on things they may really want (like the career change, even) if it just doesn’t make sense financially?
Use one of the many budgeting and money management websites out there like Mint, BudgetTracker, or BudgetPulse. All of them will give you a better idea of where your money goes each month and will help you figure out what you can afford and what needs to be put off.
7. What’s your best advice for our readers wanting to change careers on learning enough about personal finance quickly, so they feel competent to make the right decisions to know if their numbers add up and they’re financially ready to make the move?
In addition to the above mentioned tips, find yourself a financial mentor. Most all of us have someone in our life who has their financial head on straight and is good with money. It might be a friend, family member, or even a co-worker. Get with them and they should be able to quickly educate you on the ins and outs of how to successfully manage your cash when taking on a career change. Just be careful when using a coworker – you do not want to let on about the impending career change, just to be safe.
Thank you SO MUCH Andrew! For more amazing advice on making good decisions with your money, go to MoneyCrashers.com