Yahoo Finance How to Afford to Quit Your Job
When Tess Vigeland, the former host of public radio's "Marketplace," came home from work and cried in her backyard for three hours, she knew it was time to leave her job. "I decided I couldn't take it anymore and I felt like I deserved better," says Vigeland, who turned in her notice the following week.
With her recently published book, "Leap: Leaving a Job with No Plan B to Find the Career and Life You Really Want," she is encouraging people to make similar moves. While doing so certainly involves some risk, Vigeland says it doesn't mean being reckless. "I'm not saying, 'Leave a job without bothering to think about the consequences,'" she says, adding that doing some financial planning in advance is important. Saving, trimming expenses and picking up freelance work are just a few of the ways to make leaving your job more manageable financially.
Indeed, Vigeland says that as the economy appears to recover, more and more people are looking to walk away from being an employee in order to pursue big dreams, self-employment, travel or other opportunities. If you are considering a similarly big change, Vigeland suggests you keep the following in mind:
1. Scrutinize your finances.
Vigeland recommends considering your current expenses and income, including from alternate sources, such as a partner's salary or freelance work, to consider whether you can cover your basic living costs without your primary income. "I did some back-of-the-napkin calculations with my husband and we figured his salary could pay the mortgage with me not working at all," she says. In addition, she planned to take on freelance work so her income would not go to zero. "I also knew I had a large retirement account that I could tap into if I had to, and home equity," she adds.
2. Adjust your lifestyle.
After leaving her job in public radio, Vigeland's income the following year was just one-third of what it had been previously, which meant she and her husband had to cut certain expenses from their budget. "We didn't go out to dinner as much, we didn't go on big vacation trips and we just did a lot of road trips around California, and that was fine," she says.
3. Map out the worst-case scenario.
Imagining the worst can actually help calm your deepest fears, Vigeland says. Would you have to move in with your parents? Ask friends for financial help? "For many people, the worst-case scenario does not involve abject poverty. Figure out what your worst-case scenario is. Could you handle it?" The likelihood of facing it, however, is pretty unlikely, she says.
4. Redefine retirement.
Vigeland hasn't contributed much to her retirement accounts since she left her full-time job, and she's OK with that. "I stopped living for retirement. I don't want to stop working at age 65. I'm 46 now, and I hope I'm working for the next 30 years," she says. Instead of saving money for retirement and saving your adventures for old age, Vigeland suggests traveling and living on less now, when you can enjoy it even more.
5. Save up before quitting.
Vigeland wishes she had saved more money before leaving her job, and it's something she encourages others to do now. "I felt pressure to be churning out dollars and getting a paycheck, and I think better savings, even three months, would have saved me from a lot of that," she says. Instead of scrambling to pick up freelance assignment as soon as possible, she could have taken her time more.
While leaving a steady job does come with some financial risk, Vigeland says the benefit is that it offers the chance to dream big about your next steps. "It allows you to think about possibilities outside of what you would automatically assume. When you're in a job, it's hard to have the time to explore and think about what other options might be out there for you," she says.
Vigeland's own "leap" will soon lead her overseas, where she plans to travel in Southeast Asia, telling stories about people she meets. "I feel like I need to switch it up and use my skills in a different way ... It's all an adventure."
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