No matter how hard we try, we all inevitably face career transition. Having had experience with my fair share of career transition, I thought I’d share some of the things that successful career-changers have implemented…
Podcast Title: Strong Considerations During Career Transition
No matter how hard we try we all will be inevitably faced with a career transition–whether that be within the same company but a new position, a new company altogether or a complete career change and the ever so famous “starting your own business”. Having had my fair share of career transition I thought I’d share some of the things that successful career-changers have implemented.
Here’s a list for your “consideration”…
They consist of the following:
Consider Cash Flow
This is what will kill a new business quick if you are an entrepreneur. And it is not necessarily your business expenses, but your personal living expenses [that don’t stop] when you are trying to get a new venture off the ground. Or perhaps you are going to a high base salary to a more commission based job. Whatever the scenario, you’d do well to have good cash flow management strategies in place prior to your transition. A good rule of thumb for your bank account is to have 3-6 months in living expenses. This can be more but not less.
Consider Your Company Benefits
If you split this into 2 categories–current considerations and future considerations–you might think of things like company benefits such as medical care as something to consider in your career transition. How similar is the coverage between Company A and Company B? If this is misunderstood, you can be leaving benefits on the table. In the future consideration camp, consider “deferred compensation” and 401(k) accounts as things to try and maximize without leaving much behind. A lot of people leave the money in the plan because they don’t know what to do with it but this is not the best choice in most cases. Another thing could be vested shares of stock or options or other types of incentive pay. These all should be carefully reviewed for the ramifications of you leaving or transitioning from the company.
Consider Your Biggest Asset–Your Home
Buy/Sell/Rent my home?
Check out another version of this explanation from my Facebook post.
One of the best financial decisions I made before starting my company was to refinance my home mortgage from a 30 yr loan to a 15 yr loan. This freed up some monthly cash flow and ultimately was the best decision for me and my family based on our long-term plans. I’d highly recommend reviewing your long-term housing plans prior to career transition to see if it makes sense to find a way to reduce interest, make improvements, etc before you take a pay cut. I often get clients caught in whether they should rent, buy or sell when they are forced to move to a new city. Well, there is some math to this. If you decide to rent out [a previously purchased home], consider if the all-in cost of renting will be less in what you could charge. And if so, is that difference big enough for you to become a full-time landlord or pay someone to manage the property. If not, save the land lording for a game of Monopoly and look to sell your home.
What if you are upside down?
When you are underwater on the mortgage, it may be best to just rent our previously purchased home because you have no other choice. But if you’re in a career that has you moving frequently and you haven’t purchased a home, you may consider renting until you get more stationary. Believe me, I know the hassle more than most being a military brat, but at some point, you have to be smart about your finances. And buying and selling homes without making any money is not a smart financial transaction and it will negatively impact your net worth.
Consider Your Mate
Hopefully, it goes without saying that if you are in a marriage relationship, you need to get your spouse’s support on any move. If you want to add unnecessary stress to your relationship, just ignore my advice here. Having been married for over 20 years, there hasn’t been any major move I’ve made in my career without the support of my wife. When things are not looking rosy, you’ll need the support of your significant other in those times especially.