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Dear Asking for a Friend,
I hate my job and have $5,000 in savings with no debt and loans. Can I quit my job and live off my savings until I get another one?
I Hate My Job
Dear I Hate My Job,
Oh, I feel you on this! I've been in a similar work situation where the "Sunday Scaries" had nothing on the feeling of dread I'd wake up with every day of the work week. It's so tempting to just quit and figure it out. However, $5,000 may not provide you with much runway, even in your no-debt situation.
Here are some factors to consider before you gleefully put in your notice and dance your way out of that office.
Quitting without another job lined up means you'll need to reduce your expenses to a bare essentials budget situation, cutting out indulgences and even previously affordable social experiences in the short term, in order to make your $5,000 stretch for a few months.
Sit down tonight and write out a list of all your basic living costs: rent/mortgage, utilities, cellphone, insurance, food, transportation costs, etc. How much do you need for an absolutely bare essentials situation?
Whatever the number, add a buffer of at least $100 because it's really easy to forget a small cost or that an annual membership is about to renew.
If that number is over $2,000, you really don't have much wiggle room to quit before finding a new job, unless you work a particularly in-demand position. Two and a half months might sound like plenty of time to get a new job, but it's not always that easy, especially at certain times of year.
It's ideal to start building another stream of income now, no matter how modest, to minimize the need to raid your savings. You could look for part-time work or a gig with more flexibility (but less reliable income) like babysitting, dog walking, or ride-share driving.
You could also create a product to sell, or monetize a hobby or skill.
Even if you're a healthy person who rarely goes to a doctor, you still need health insurance coverage. It could take months for you to find a new job with benefits, so how are you covering your health insurance in the interim?
You have a couple of options. COBRA allows you to retain your employer-sponsored health care for up to 18 months, but you're on the hook for the full cost of premiums instead of your employer subsidizing or covering the bill. Or there's the Affordable Care Act (ACA) marketplace.
While it gives you options, either one can cost hundreds of dollars per month, or more, which is going to eat away pretty quickly at your $5,000 savings fund.
Maybe you've already brushed up the resume and LinkedIn and done a social media audit — but if you haven't, now is the time to get proactive about finding a job you're more excited about.
Sending applications into the online job portal void can get demoralizing fairly quickly, so also put feelers out to your network of friends, former colleagues, and mentors.
You can also tap into your school's alumni network and ask for an informational interview. Informational interviews are particularly powerful if you can think of something of value you can provide the other person in return.
You can also try reaching out to people you admire, but might not know personally, on LinkedIn or other social media platforms. It never hurts to introduce yourself and share why their work inspires you.
Once you've answered those questions:
Finally, set a "quit date" for yourself. It's a delicious little secret you can ruminate on each time a dreaded task comes across your desk or your boss is driving you particularly crazy.
For example, set an eight-week deadline. In those two months, you can aggressively apply to other jobs and also simulate living off your bare essentials budget. Not only will it be less shocking when you need to transition over, but you can also save even more to boost that $5,000 and give yourself more flexibility.
Best of luck!
Erin Lowry is the bestselling author of "Broke Millennial: Stop Scraping By and Get Your Financial Life Together" and "Broke Millennial Takes on Investing: A Beginner's Guide to Leveling Up Your Money." You can follow her on Instagram @BrokeMillennialBlog or Twitter @BrokeMillennial.
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