Cutting Costs During Transitions

Carole Kanchier —  October 29, 2018
Cutting Costs During Transitions
Cutting Costs During Transitions

Are you considering a career transition? Are you unemployed? If so, you’ll need to manage money wisely. Here are some tips:

Prepare.
Planning and the willingness to live on less temporarily will stretch the time you can go without a full-time job. You’ll not only have more time to fin that ideal position, you’ll also eliminate a financially controlled deadline.

Before making a career shift, determine how long you can live without an income. How much can you live on and where will you get it? A careful review of expenses and potential income may disclose that you can manage several months without a salary.

Create a Budget.
Identify your monthly income. List all current income sources like salary, unemployment benefits or severance pay (if applicable), interest/dividends, savings, and partner’s income. Also itemize assets that an be converted into cash including pension funds, insurance policies, and stocks. Identify future income sources such as student loans or assistance from relatives.

Next, identify expenses. Include housing, education, furniture, clothing, dry cleaning, medical and other insurance, entertainment, car, utilities, food and restaurants, taxes, job hunting and miscellaneous costs. Add 15 percent as a cushion.

Identify ways you can lower your standards temporarily. Look for ways to cut. Involve family members in financial discussions. List a lower figure for each expense.

Conserve cash.
Live frugally. Saving early in the process will enable you to have enough for essentials later. Will your old car do? Do you need to eat our as much? Discipline yourself. Use coupons. Look at your needs, rather than wants. But do treat yourself sometimes.

Identify additional income sources.
Get a part-time survival job. Work as a sales clerk, waiter, delivery person. Register with a temp agency. Can a family member help? Any income helps.

Contact your creditors. Work out interest-only or reduced payments early. Most will cooperate. Reduce credit card purchases. Pay cash to save interest charges and prevent overspending. If you must credit, pay the full balance each month. Cash in “luxury” assets. Comparison shop for insurance and other necessities. Trade down to a less costly home or share a residence.

Deduct job hunting expenses from your federal income tax if you’re moving to similar work.
These “miscellaneous deductions” require receipts. Allowable expenses include employment or career counseling, resume costs (typing, duplicating and mailing), phone and transportation. If you’re relocating to another city, you can deduct some moving expenses. Education costs are also deductible if you’re upgrading your skills to maintain or enhance your present job or salary. However, if you’re changing fields, establishing a business, or have been unemployed for more than a year, you can’t deduct these. Contact and accountant or the IRS for more information.

Review health coverage.
Under the COBRA law, if you’ve worked for an employer that provided medical coverage and had 20 or more employees, you can continue your coverage. Call US Labor at (866) 487-2365 or check their website at www.dol.gov/dol/pwba. If you’re not insured, investigate other options at the same site. Many local clinics provide services on a sliding scale fee. Better, stay healthy. Attend to minor ills.

Borrow.
Some debt is okay provided it excludes mortgage payments and doesn’t exceed 10 to 15 percent of your income. The easiest loan option to negotiate comes from parents. To maintain family harmony, agree on an interest rate and repayment schedule. Consult an accountant to determine if it’s taxable. Credit unions are often cheaper and easier than banks. If you deal with a bank, shop around. Consider borrowing from your 401K, your company profit sharing plan, your life insurance policy or stock investments. Check the feasibility of a home equity loan or reverse mortgage to tap your home equity.

Research financial assistance options.
Check The National Center for Financial Education (NCFE) website at www.ndfe.org.

Numerous state and federal programs offer financial assistance for post-secondary education and training. Contact the student or financial aid department of the institutions you are considering for additional information.

Review your employer benefit programs to determine what services they provide employees to manage transition and education expenses.

Keep abreast of changes in your job, industry and geographic locale. Adult and continuing education is required for employment in changing times.

Questers Dare to Change Your Job and Life shows how Questers cut costs to achiever desired life career goals. https://www.amazon.com/Questers-Dare-Change-Your-Life/dp/1508408963

Dr. Carole Kanchier, registered psychologist, career and personal growth expert, and author of the award winning, Questers Dare to Change Your Job and Life, has cut costs many times to navigate her life career transitions.



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