This week’s question:
“I’m miserable at my job. Should I quit even though I don’t have another one lined up?”
We both know that ideally, you’d effortlessly pirouette to your next job to avoid exhausting your savings, running up credit card debt or languishing in job-search purgatory.
But that’s not where we’re at. You’re unhappy, depleted and maybe even desperate to make a change. Another job isn’t waiting offstage, ready to hand you a bouquet once you take the final bow at your current gig.
So let’s take a breath together and make a plan. Unless you’re working in an abusive environment, keep working while you double down on the job search, supercharge savings and replace the benefits you’ll lose when you quit. Build financial reserves now, and you’ll be better prepared to leave this chapter behind.
Set a deadline
Poring through job postings is tough when you feel emotionally drained or overworked. Decide on a future quit date a few months from now. That can motivate you to connect with professional contacts who may have job leads, and to spend evenings and weekends on applications.
Kim David, 25, set a deadline for six months from the date she decided to leave her former employer.
“I think I realized that I was sort of falling into a downward spiral,” she says. “The situation that my job was presenting,” including demanding hours, “was kind of taking over my life.”
She searched for jobs — unsuccessfully — and finally resigned without having a position lined up. A month later she landed her current job as a strategy director at a public relations agency in New York.
Salwa Kyobe, 30, discovered this spring that she didn’t want to pursue a career in casting in Los Angeles, where she worked at a video production agency. She gave her company four months’ notice; they had a good relationship, she says, and she wasn’t willing to pursue a promotion they’d discussed.
Giving that much notice can be a risk in the event the company decides to let you go sooner. But Kyobe’s company was supportive. She used the time to network to find her next job, which is more in line with her goal of becoming a produce buyer.
Start a ‘quit this job’ fund
If your workplace is toxic or your mental health is suffering, it may be in your best interest to quit sooner than four to six months from now. But in whatever time you have, set aside money to cover rent, food and bills (including any student and car loans) while you’re out of work.
To save more, stop eating meals out, cancel subscription services or take on additional part-time work. It’s also OK to halt automatic retirement contributions for a short time, says Dominique Broadway, a personal finance coach and founder of Finances Demystified in Washington, D.C. Pick them back up at your next gig.
Ideally, save at least three months’ worth of basic expenses; use an emergency fund calculator to come up with a total. But you may be unemployed for longer than that. Moving in with your parents — while it sounds like a nuclear option — can make sense. This is especially true if it helps you get out of an unhealthy job, and you can all agree on how much you should contribute to household expenses.
Safeguard your benefits
This is particularly important for young people, whose retirement savings have a long time to grow: Your 401(k) isn’t an emergency fund. Act like that money isn’t there, Broadway says. Instead of cashing out a 401(k), roll it over to your next company’s plan or into an individual retirement account.
Make sure you’ll have health insurance during the transition, too. Most employers with 20 or more workers must offer temporary health coverage to former employees through the Consolidated Omnibus Budget Reconciliation Act, known as COBRA. If that’s too expensive, consider applying for coverage through the Affordable Care Act’s special enrollment period. You can sign up within 60 days of losing job-based coverage, and if you have no income, you may qualify for Medicaid, depending on your state and family size.
This article was written by NerdWallet and was originally published by The Associated Press.