by Patricia Gilliam

Created on: May 25, 2008   Last Updated: June 09, 2008

I've been both employed and self-employed for most of my career, and in that process I've learned a lot about how to transition from different positions and businesses without harming yourself financially. Probably what helped the most was watching other people, learning what works, and avoiding common mistakes.

The following are some tips that I've found helpful, based on books that I've read, my own experience, and speaking with several small business owners and self-employed professionals:

1) Pay Off Your Existing Debt and Stay Out

Debt payments keep thousands of people in jobs they really don't like due to the fear of losing income during a job transition. If you don't have any payments beyond your normal living expenses, it's a lot easier to be mobile and make decisions based on what's right for you without harming you or your family financially.

Obviously this takes time and extra effort, but it can be done. Probably the best authority I can refer you to on this issue is Dave Ramsey, who has several books on systematically getting out of debt.

2) Have Multiple Income Sources

Probably one of the biggest myths taught in even high schools and colleges is that you should only have one job and no other income sources. If you've ever been laid off or know someone who has, you know that's the worse type of job transition.

Take the time you would normally spend watching TV and use a part of that to develop side income sources. There are hundreds of opportunities out there if you take the time to research them, and these can provide you with a safety net as well as extra income. Again, this makes transitions easier as well. Read authors such as Dan Miller, Robert Kiyosaki, and Napoleon Hill for more information on increasing your income sources.

3) If You Have Some Planning Time, Start Saving

Suppose you know you want to leave a job within a few months and don't have time to pay off all your debt. Pay your minimum payments and start putting every bit of extra money you can into a savings account. Hopefully the transition will be smooth, and you can put that money back on to your debt. If not however, you have money to get you through.

4) Consider a Part-Time Temporary Job Until the New Job Takes Off

I've had some positions where you don't get paid for quite a bit of time after you start. Taking a 20-hour job for a couple of weeks can help you with this if you think you're going to run short on money.

5) Credit Cards Should Be Your Last Resort

The earlier ideas are better alternatives to credit cards. Even though the general culture sees nothing wrong with living on credit during a job transition, I've personally seen it hurt a lot of people. It slows people into taking action and looking for something new, and the increasing balances offsets any increase in income in a new job. Plus people tend to spend more. Running your life using cash and a debit card makes things a whole lot easier long-term, and you have a lot less stress and hassles.

6) During the Transition, Involve Family Members

Children especially need to understand that any reductions in spending are temporary and are meant to help the family long-term. They need to know the situation on their level so that it doesn't cause any unnecessary stress and fear. If it's a layoff situation, it's important to handle the finances as a family and support each other.

I hope you've found these tips helpful. Best wishes in your job transition!

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