A Plan to Escape the Cubicle

Lesson 1- Evaluate Your Current Finances

A critical step in planning to make a career change relates to your current status of your personal economy. According to Thomas J. Denham, managing partner and career counselor of Careers in Transitions, only about 40% of Americans ever plan their careers – in fact, they spend more time planning their vacations. Whether or not you presently intend to change jobs or contemplate a career change, it is prudent to be prepared for the unexpected. [1]

Step #1: Where to start

The thought of taking a hard look at the status of my personal economy can be daunting and frankly very scary. Most people that go through the process find out that they aren’t as bad off as they thought but others realize they are on the fast track to potential trouble. But you have to know where you stand today if you ever hope to get on the road to financial stability and be able even to consider making a career change.

Getting a handle on where you are now by discovering the following things.

• Where are you now?
• What is my total household income?
• What am I spending my money on?
• What are my monthly expenses?
• Am I saving and investing money?
• How much money do I owe?
• To whom do you owe money?

At the end of this unit, you will find two forms that will enable you to get a handle on your spending, a Cash Spending Log and the Annual Income and Spending Worksheet. These two forms will be explained in greater detail in Step two.

You can forget about the thought of making a career change if you do not have a good handle on your personal finances. It is important to know how much debt you have, to whom you owe the money, your total living expenses, and your total household income.

Step #2: Track your income and expenses

Start with the Individual Cash Spending Log. Record all of your out-of-pocket cash purchases and Debit Card transactions on the log. Be sure and keep the receipts so that you know exactly what was purchased. If you are married, each spouse should maintain a separate Cash Spending Log.

The next form will take some time to complete but is essential in your effort to finding out exactly where you are. The Annual Income and Spending Worksheet must be completed at the same time you are using the Cash Spending Log. Take a look at the past 2-3 months of income and expenses and enter the amounts on the form for the spending category. There are additional lines provided if you have a spending category that is not already listed on the form. This process may be painful; especially if this is the first time you have made an attempt to study your personal economy.

Once you determine the monthly amount for each category, multiply that number by 12 which will give you the projected annual amount spent for each category. On page three you will have the total annual expenses and total income. Subtract the expenses from the income, and the amount will either be positive, which means your income is greater than your expenses, or a negative amount, which indicates you are living above your means.

The next step is to study the form and determine which expenses can be decreased or even eliminated. If you combine the Cash Spending Log process with the Income and Expense Worksheet process for at least three months, you should be able to get a very good picture of what’s going on with your personal economy and make the necessary adjustments that will eventually put you in a position to even consider making a job/career change.

You should continue to monitor your cash-flow and create statements on a monthly basis. The Income and Expense Worksheet is a cash flow tool that will enable you to identify any habits, good or bad, relating to how you are handling your money. It is a vital tool and will take time and effort to get the task done. Ultimately, you will create better habits and have a much healthier and happier household.

Step #3: Virtually All of Your Expenses are Optional

• You can stop spending your money on things that in the bigger picture don’t matter
• You can change it
• You can fix it
• You can stop it!
• Most of your spending is more flexible than you think
• You are in more control of what’s happening around you than you think
• Live substantially below your income/savings
• Sacrifice now
• How to Control Spending

Does money burn a hole in your pocket? Does buyer’s remorse set in after you have spent your money? If this sounds familiar, how can you manage your spending so you can buy the things you need now and also save for the things you need in the future. In essence, you must identify spending leaks that give immediate satisfaction but do not help reach financial goals and, instead, substitute desirable spending behavior that may not be immediately gratifying but will allow you to reach your financial goals. [2]

People need to learn to handle their money. Here are some guidelines that will help control spending.

Establish self-discipline

Any bad habit can be broken. People need to learn to recognize the drive that places them in a spending situation and then when they shop they can avoid the spending pitfalls produced by that drive by having a purpose for the shopping, a time limit, and a written plan.

Make a shopping list

Make a list before you go shopping and then stick to it. Also, restrict the number of trips to the store or mall and never shop when hungry or depressed.

Control your money vs. money controlling you

How far money goes usually depends on how much people want something. As such, they need to be in control of the money, instead of having the money control them by limiting what they do.

Research major purchases and comparison shop before you buy. Ask yourself if you need the item. Try to wait a day or two, or as long as a week, to think things over rather than making a quick and costly decision you may come to regret.

Once spending has been brought under control, there should be a determination of how much needs to be spent each month. This can be done by establishing a budget. Since the basic idea behind budgeting is to save money up front for both known and unknown expenses, there must be a commitment to establish and stick to the budget. See Step 5 for more information on setting up a budget.

People need to be accountable to other persons,

for a specified period for everything they spend. If there is accountability, people will be more inclined to be more cautious in their spending habits—more of a look now, buy later attitude. So, shop around before making any purchase and learn to say no. Keep a record of your spending and share the purchases with you accountability partner.

Establish a want-to-buy list

You should keep a list of items you want to buy that are not in the budget. Ask yourself if you really need the item. Wait seven days and find two additional prices for the same item; to be sure you are getting a good buy. If you still want the item after a week has passed, you've found the best price, go ahead purchase the product. However, only pay cash and do not use a credit card. Finally, people can have only one item on the list at a time, so if they find new “wants” during the week, they will have to decide between the two. [3]

Step #4: Quit Spending Money

• You must bring your finances under total control- DISCIPLINE
• You must get better control of all aspects of your life
• Get rid of all Credit Cards- perform Plastic Surgery- Cut them up
• Develop power over purchase rather than the purchases having power over you
• Do not be concerned about “Keeping up with the Jones's.”

Many financial experts will argue that two to four cards (including any from department stores, oil companies, and other retailers) are the right number for most adults. The more credit cards you carry, the more inclined you may be to use them for costly impulse buying. Also, each card you own — even the ones you don’t use — represents money that you could borrow up to the card’s spending limit. However, having one major credit card may be necessary to make airline reservations, make online purchases, or to pay for reimbursable business expenses would work. You should if at all possible, pay your bill in full each month. Remember, paying only the minimum due each month means you’ll be paying a lot of interest for many years, and those costs could far exceed the amount of your original purchase.

Step#5: Establish written goals and budgets

• Must be in writing
• Focus on the benefits of reaching your goals, not the sacrifices you’re enduring getting there
• Set priorities for your goals
• Be specific
• Be realistic
• Stay focused
• Ask someone to hold you accountable
• Not watching your expenses

It’s very easy to overspend in some areas and take away from other priorities, including your long-term savings. Our suggestion is to try any system — ranging from a computer-based budget program to hand-written notes — that will help you keep track of your spending each month and enable you to set and stick to limits you consider appropriate. “A budget doesn’t have to be complicated, intimidating or painful — just something that works for you in getting a handle on your spending,” said Kincaid. Want some specific ideas for ways to cut back on spending? A good place to start is the Web site for the “66 Ways to Save” campaign (www.66ways.org). [4]

Develop a realistic household budget that will allow you to take control of finances and attaining your financial goals. Set your budget using the method and tools that best fits your temperament.

Those include pen and paper, the “envelope system”; a worksheet or spreadsheet on your computer; inexpensive software programs such as Quicken, Moneydance or AceMoney to name three of the most popular that are available for Windows and MAC operating systems.

There are online software programs such as Mint.com, BudgetPluse, MoneyWell (MAS OS), or Mvelopes and You Need a Budget (YNAB) that are free or may charge a small monthly subscription fee.

If people are having difficulty with income equaling outgo, they must cut some of their outgo. They need to look at their budgets realistically and see where they can start trimming. A budget is a money plan. With it, people can organize and control their financial resources, set and realize goals, and decide in advance how the money will work for the good of the family. Therefore, buying any non-budgeted items on impulse should be avoided, especially if you use a credit card to purchase the items.

Step #6: Get help and good advice

• Contact your local Consumer Credit Counseling Service
• Contact the local Better Business Bureau for recommended debt counselors
• For more guidance on how to get out of debt safely or find a reputable credit counselor, start at the Federal Trade Commission (FTC) Web site at www.ftc.gov/bcp/ conline/edcams/credit/ coninfo_debt.

Closing Thoughts

It is the natural tendency to spend what we have. It does not matter how old you are, what stage of life you are in, everyone should have a budget. Most everyone gets to the point where they realize that something has to change with what’s going on with their personal finances. The most practical thing that most people have heard is that we have to only “spend less than we earn,” right? But that principle most often gets swallowed up with the reality of each family’s circumstances. Most people realize that change is scary and hard work.

Albert Einstein once said, “You do not get out of a problem by using the same consciousness that got you into it.” So, what he is saying is that one definition of insanity is “doing the same thing over and over and expecting different results.” You have to establish a plan for change and then work the plan.

Once you select, set-up and become comfortable with the program you choose, you to take control of your finances and ultimately reach your financial goals and be in a position to take the next step in your quest to “escape the cubicle.”

[1] How to Prepare When Making a Career Change – 4 Money Moves By Michael Lewis, Posted in Careers

[2] How to Control Spending – CBNMoney – CBN.com, http://www.cbn.com/finance/crowncontrolspending.as... (accessed October 07, 2016).

[3] How to Control Spending – CBNMoney – CBN.com, http://www.cbn.com/finance/crowncontrolspending.as... (accessed October 07, 2016).

[4] Janet Kincaid, FDIC Senior Consumer Affairs Officer