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Preparing Financially for a Career Change (part 2)

So in the previous post I explained that I’m planning to change jobs. But I’m not just looking for another admin assistant job with a better salary, location, or hours. I don’t think I’m really cut out for it. I know I’m not cut out for the one I have, anyway, and it would take something radically different to be fulfilling.

My plan is to re-enter a field I’ve been in and loved (library) and work at something I believe in (Ok, maybe testing newborns’ ears isn’t feeding the hungry, but it’s so important because many problems can be fixed if caught this early).

One of the biggest disadvantages of starting a new career is finding yourself in a lower pay grade. In your own field, your experience may be valuable, but your new employer sees you as someone who’s still got a lot to learn.

I’m ahead of the game in library, but I don’t have enough credentials to get a full-time well-paid job. Pity, because I think that’s the kind of work I could actually do 40 hours a week.

So if you’re going to be taking a large pay cut, here are 4 steps to prepare financially.

First, know what you spend.

We budget and track our spending. I started off being kind of detailed, but now I prefer to just do it by category. Maybe it’s lazy, but I’m more likely to want to do it and motivation is important.

Plus, we have all the regular expenses divided by things like “cell bill, “water,” “cable,” etc.

Second, figure out what you absolutely must spend.

We can cut out our basic cable. Mr. Micah needs the internet for work and I’ll need it if I’m going to freelance. But we almost always watch our tv over the internet the next day (I love since we go to bed before most of our favorite shows are on. Plus, we can pick up waves for some of the really basic stations.

We’ll try to keep expenses at a minimum, no eating out if possible, that kind of thing. We’re already pretty good at this, we’ll just have to stay good.

Third, build an emergency transition fund.

I think it’s important to differentiate it from a conventional emergency fund, though you could use the emergency fund. It’s just that you’re more likely to use the emergency transition fund.

If you don’t already have some, build a savings account of at least a thousand dollars. This isn’t a conventional emergency fund, but is there specifically for emergencies as you’re transitioning into your new job and lifestyle.

Maybe the car breaks; maybe you underestimated how much your commute will cost. This fund is to help smooth your transition. It’s not there to subsidize your lifestyle.

We have a decent emergency fund. We also have a cushion—see below.

Fourth, if you’re able, build a cushion to subsidize your lifestyle.

Suppose you’re becoming a freelance writer. If you’re diligent, you predict being able to pay for rent and food. That’s great! However, your income will probably differ from month to month. If possible, build a financial cushion right now. My husband and I are working on one for this summer when he’s going to be changing jobs. We live mostly off my income, but our rent will be going up in June, so we need to prepare for it.

We do have a financial cushion beyond our emergency fund. Well, it’s all the emergency fund in a way, the 3 months living expenses, but we plan not to need the full three months worth, since Mr. Micah gets some money from teaching and I plan to be employed. With the money we do have, that cushion should last us for 3-5 months or more–depending on how things go.

You can keep the cushion going by putting in money whenever you’ve gone over your predicted income for the month.

{ 3 trackbacks }

» Weekly Blog Roundup II, Heroes (Season One) Edition on Consumerism Commentary: A Personal Finance Blog
November 4, 2007 at 10:14 pm
MYO Patchwork Full-Time Job » Mrs. Micah: Finance and Life
November 11, 2007 at 8:59 pm
Mrs. Micah: Finance and Life / Mrs. Micah at Get Rich Slowly
November 28, 2007 at 12:33 pm


Mrs. Nathan November 1, 2007 at 9:37 am

My dear:

I’m glad to hear you are taking steps to leave the awful place of temp. admin work. I left mine to take a much lower paying position (at a bookstore of course) but in the inbetween time the Catholic newspaper came out of the blue and hired me. So. You just never know. πŸ™‚

Suggestion re: copyediting. What about advertising yourself as a dissertation copyeditor? At UD we get a zillion requests for it and I see all kinds of people hiring themselves out to do it. Apparently there’s a large market of ABDs who just can’t bear to do the grammar/punctuation bit. I’ve heard of people charging around $300 here.

PiggyBankBlues November 1, 2007 at 11:09 am

great post! as someone in a similar boat- trying to change “careers”- you list some great ways to survive the process. good luck πŸ™‚

frugalchick November 1, 2007 at 4:58 pm

MrsMicah, this post is very timely. My bestfriend is also an English major and is planning on changing careers. I’ll tell her to check out your blog.

mrsmicah November 1, 2007 at 5:03 pm

Thanks frugalchick. πŸ™‚ I hope your friend’s career change goes well for her.

sfordinarygirl November 1, 2007 at 7:23 pm

Freelance writing is tons of fun! I’ve been doing it for almost a year now and my writing has improved so much from each story I write. it’s important to write what you love and are passionate about – otherwise the words and copy is ten times harder to crank out. I was never into politics or necessarily hard-core stuff in journalism. So when I decided to try freelance writing I wanted it to be about subjects and areas I love. And it’s brought a lot of opportunities. If only I was dilligent and organized enough to repurpose some of my stories into different angles for other publications then I’d be rolling!

Good luck!

wealthy_1 November 1, 2007 at 8:44 pm

Marsha Sinetar wrote a book entitled, Do What You Love, The Money Will Follow.

I admire that you’re moving in that direction!

Continued success.

Curtis November 5, 2007 at 8:50 am

Very good words of advice. We are working on paying off all our consumer debt with my 2 jobs (consulting and teaching) as well as some hopeful income from a new business I’m starting. It’s all geared towards me making a real career change (as opposed to a job change) so that I can find something I’ll enjoy well past retirement age.

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