Cutting Costs During Transitions

June 17, 2019
Cutting Cost During Transitions

Are you considering a career transition? Are you unemployed? If so, manage money wisely.

Here are some tips.

Prepare. Planning and 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 find 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 can be converted into cash including pension funds, insurance policies and stocks. And, 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.

Try to lower your standards temporarily. Look for ways to cut. Involve family members in financial discussions. What expenses can they can cut? List a lower number for each expense.

–  Conserve your 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 out as much? Stay disciplined. Use coupons. Look at your needs, rather than wants. But do treat yourself sometimes.

–  Look for additional income sources. Can you get a part-time survival job?  Work as a sales clerk, waiter, delivery person?  Register with a temp agency? Can a family member help?

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 use credit cards, pay the full balance each month.

Cash in “luxury” assets. Comparison shop for insurance and other expenses. 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 an accountant or the IRS for more information.

Review your health coverage under the COBRA Law. Check Department of Labor’s web site to learn ways they may be able to help with your issues:www.dol.gov/dol/pwba. Surf the internet and yellow pages to investigate other health care options. Many local clinics provide services on a sliding scale fee. Better, maintain a healthy lifestyle.

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.

Seek financial assistance. Visit Credit.org: https://credit.org/  Credit.org is the country’s leading debt relief and financial education company. They provide financial consulting to ensure clients are on the right path to wise money management.

The National Center for Financial Education: www. ncfe.org, offers money management tools. Quicken Basic 99and Microsoft Money 99 give ability to track various accounts. For debt management, contact the National Foundation for Credit Counseling at 800-388-2227 or visit: https://www.investopedia.com/terms/n/national-foundation-for-consumer-credit.asp

Award winning, Questers Dare to Change Your Job and Life, offers additional ways to stretch income. https://www.amazon.com/Questers-Dare-Change-Your-Life/dp/1508408963. Carole Kanchier, psychologist, digital/newspaper columnist, coach and author of Questers Dare to Change, shows clients how to clarify and attain desired life career goals. carole@daretochange.com  www.questersdaretochange.com



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