Wednesday, September 30, 2015

Making a Career Transition

Sometimes it’s difficult to know when to leave a career, and the process of making such a transition can be scary as well.  However, while there may be some risk involved in making such a transition, there are ways to help minimize some of that risk.

Making the move to a new career can be a huge step in your career life.  However, there are certain steps that can be taken to smooth the transition and that once in place, could raise flags to help you know that you’re ready.

An established reserve fund
It’s prudent that before leaving a role with a steady paycheck to move into an untested career, that you have some sort of financial backup in place.  Therefore, before handing in your notice, consider using the months preceding your career change to put in place a financial reserve to support you in your transition.  The amount of this fund is up to you, as you know your spending habits and levels best, but consider at least enough money to get you through a year’s worth of expenses even if you don’t make one penny in income.

Understand expenses
To create that reserve fund, it helps to understand expenses.  Tracking expenses over that period before a career transition can be critical to familiarizing yourself better with these costs and from where exactly they derive.  Then you can rely upon this data you’ve compiled to make forecasts about future expenses and how your costs could be affected –
both positively and negatively – by the transition. 

In doing so, you can see how costs might be affected in areas like transportation (since your commute might change), clothing (for work attire), income taxes, work supplies, healthcare and retirement benefits, and other work-related budget areas.

Reducing debt or even becoming debt free!
It can be harder to take a chance and attempt a career transition when you’re still carrying loads of debt.  Working toward doing things like paying off student loans, owning vehicles outright, and paying down or paying off credit cards before making such a transition can make the move less stressful.  It can also allow you to free up extra money ahead of time to put into a reserve fund, purchase necessary supplies for your endeavor, supplement your educational background in your new career area of interest, as well as cover potential relocation costs.  This might also mean that your expenses are lower (not having to make payments on debt) during a time in which income levels could largely be uncertain depending upon your type of career move.


The author is not a licensed financial professional or career advisor or counselor.  This article is for informational purposes only and does not constitute advice of any kind.  Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.

Sunday, September 6, 2015

Free Labor Day eBook Giveaway for Systemic Series Book 1: Downfall

Wanted to let everyone know that I'll be offering the Kindle eBook version of the first book in the Systemic Series (Downfall) for free Monday, September 7th as well as Wednesday September 9th at 

Saturday, September 5, 2015

Is Uncertainty the Best Motivator for Saving?

Many people with steady paychecks don’t worry about the financial unknown until it’s too late.  Once they’ve been laid off or downsized or are hit with a huge bill for medical expenses or other unforeseen event, they suddenly find that it’s too late to start preparing emergency savings for the unthinkable. 

Looking ahead to potential financial calamities can be a good – albeit, maybe not fun – exercise for preparing to meet the worst case scenario head on.  Fear of an uncertain world and all the financial emergencies that can arise can help push you to start building an emergency fund to handle such costs before it’s too late.

Employment insecurity
As a self-employed individual for the past seven years, I’ve become quite adept at finding work and new income streams.  This doesn’t mean that all is hunky-dory in my income world though.  Having income suddenly and unexpectedly yanked out from under me can come as a shock.  And having gone through this process more than a time or two has left me better prepared for when the next blow comes.  However, the same type of thing can happened with regular employer-sponsored work roles through layoffs, downsizing, and work-hour reductions.

While this isn’t a fun way to conduct business, it’s allowed me to increase our emergency fund when times are good for when such drops in income occur so that we aren’t left high and dry or going into debt to pay the bills.

Fear of health issues
My wife is a type 1 diabetic.  And while she takes incredibly good care of herself by monitoring and adjusting her blood sugar levels, I still worry.  With kids now in the picture, my rate of concern over health-related issues or injuries goes even higher.

While it’s not fun to think about, considering health or medical emergencies and the associated costs that such emergencies could entail is enough to have us readying ourselves for the worst while hoping for the best.  We do our best to keep an emergency fund of $5,000 on hand to cover any such events.  This amount is enough to cover our deductible and out-of-pocket insurance costs.

Economic unknowns
Then there are all those economic unknowns.  From inflation and extreme government spending and debt, to a stock market or housing market collapse, there are any number of factors to plan for out there.

Personally, I think that being well-diversified is one of the best ways to be prepared for a variety of economic unknowns.  Through a combination of small and large-cap stocks, bonds, and cash in the stock market, savings bonds, money market funds, and cash, silver and gold coins, land, food and water, guns and ammunition, or whatever fits a personal savings strategy best, in many cases, the more spread out savings and investments are, the better we can protect against a variety of economic issues and conditions.  While it can take time to create such a portfolio of holdings, doing so may provide better peace of mind and cover numerous bases regarding the rise and fall of the economy. 

The author is not a licensed financial professional.  This article is for informational purposes only and does not constitute advice of any kind.  Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.

Are Lowball Social Security Estimates a Blessing in Disguise?

As Laurence Kotlikoff noted in a past PBS News Hour piece regarding lowball Social Security Estimates, “The Social Security Administration’s benefit online calculators aren’t to be trusted for use for people under age 60, even for someone who is single and was never married and will never marry.”

The article goes on to note, “The reason is that unless you change their assumptions, they assume (in contradiction to the Social Security Trustees’ Report’s own assumptions) that the economy will experience zero economy-wide average real wage growth and zero inflation between now and the end of time. That’s an odd assumption for an economy that’s experienced positive average real wage growth rates as well as inflation for each of almost all the postwar years.”

But there are other reasons why lowball Social Security estimates could be a blessing in disguise. 

An insecure future for Social Security
With baby boomers retiring in droves, the employment participation rate as low as it’s been in decades, and more and more people partaking in disability benefits, one thing I can say with certainty is that I’m very uncertain about the future of Social Security. 

Kotlikoff’s article noted that, “According to table IVB6 of last year’s Social Security Trustees’ Report, the system needs an immediate and permanent 23 percent cut in all SSA benefits starting now and continuing forever to cover its long-term funding shortfall. And for those of you who think the system’s trust fund is real, this requisite 23 percent benefit cut does take into account all of the trust fund’s assets.”

With this type of action looming, I’m already reducing my own benefit estimates by 25 percent whether the Social Security Administration does it for me or not.

Motivation to save harder
Personally, I find that when I think I’ll have less money – whether it’s now or in the future – I’ll work harder to earn and save more.  According to Kotlikoff’s article, numbers are “…intentionally used to produce low-ball benefit estimates so people will save more on their own and they won’t be so hurt if the system’s benefits are cut in the future, which seems likely.”

With Social Security’s uncertain future, I think that this is a reasonable approach, although whether it’s working or not for the majority of people could be debated.

A potential bonus in retirement
It’s often nice to get those unexpected little bonuses in life.  Whether at work in the form of a gift card, cash bonus, or just recognition by way of an award, at the store in the form of discounts or coupons, or when using a credit card in the form of cash back or rewards, there are any number of ways many of us find abundant bonuses in our everyday lives.

Well, I look at it no differently in retirement.  The potential to get a little bit more from Social Security than I expected is a bonus, and I would rather get more than I’m counting on than less.  Therefore, I’m happy that between the Social Security Administration’s estimates and my own, we’re hopefully both guessing a little lower with my future benefit totals.


The author is not a licensed financial or retirement professional.  This article is for informational purposes only and does not constitute advice of any kind.  Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.