Trapped: How to Get Out

After writing earlier this week about how a blogger was stuck in her current job because of poor financial choices, I ran into this piece (though it's not really new.) It tells the story of a lady who hates her career and would like to make a change, but, you guessed it, she's trapped because of finances. The quick summary:

My younger sister Melissa is struggling with a common problem: She hates her career. She'd like to go back to college to train for something different, but money stands in her way.

Melissa has managed payroll and human-resources departments for many different types of companies. She's between jobs right now, but her experience makes her much in demand, and all but ensures she'll command a good salary and benefits from any number of employers.

She needs both. Melissa and her husband Joe recently bought their first home, relying on her salary for the mortgage payments, and Melissa's health-care benefits are much better than what she could receive through Joe's employer. (Melissa has a chronic medical condition, so comprehensive health insurance is essential.) So she's stuck: She wants to quit, and find work that's more fulfilling, but she can't.

Yes, this situation is complicated by the medical issues, but it would be a problem even without them. She makes a good salary and their lifestyle is high enough that they need that salary to survive. She's trapped.

So how do you get untrapped? Here's an example how one couple cut the husband's job so he could spend time at home with their son. The summary:

Two-career couples with very young children often worry about leaving them with a nanny or child-care provider. But the high cost of living and the need to save for college and retirement leaves them feeling trapped in long-hours jobs. With a 2-year-old son at home and a new baby daughter due in May, Mr. Kunitz, associate publisher and managing editor for Politico.com, a unit of Allbritton Communications, decided to cut the budget, take a break from both his career and saving for retirement and college, and stay home for a while.

The details of how they did it and my comments on them:

I gave notice two days after we learned my wife Danielle was pregnant. I wanted to move on and focus on the family. I had thought about staying home full-time with Joseph, and I was hoping I could swing it.

Yikes! This is NOT the way to make such a change (quit first and try to figure out the details later.) If you don't believe me, see Career Reminder: Very Few Jobs are Worse than Unemployment.

How about this as an alternative: develop a plan first, make sure you can afford to quit and THEN give your notice? Sounds a bit more sane to me.

We had to make some big changes to make it work. As soon as I decided to quit, we put our house on the market. We were thrilled to get an offer; we came down a little on our price and took it. We were able to move a few blocks away to a rental with a much more affordable monthly tab. Our mortgage was $3,300 a month, and our rent now is $2,200, so we're saving over $1,000 a month there.

Yep, making a change of this magnitude is likely going to force you to do some things you might not like or want to do -- such as renting versus owning a home.

The other big saving was, we let our nanny go. We had sometimes shared her with another family; we paid her between $1,250 and $1,900 a month.

We also let the housekeeper go, saving $90 every two weeks. Homeowners insurance was $75 a month and renters' insurance is only $15. We don't watch TV, so we dropped our cable service, saving $70 a month; I get my news on the Internet. We dropped our land-line phone, saving $40 a month. I quit my gym membership in the building where I worked, and that saved $50 a month.

Looks like they're making the tough choices required -- but ones they can live with. This is required for most people downsizing.

"I'd bought a condo before we were married; we're renting it and the income we receive pays the mortgage and gives us a little extra money. I made some good investments and fortunately, I was able to save a lot. We made a decent profit when we sold the house and liquidated a lot of equity. With some cuts we can make this work for a while."

They could always sell the condo if need be. Or, he could work from home part-time (he is a writer after all, a job well-suited for working from home.)

"We did not cut our budget sufficiently to break even every month. One huge loss is in our retirement funds and college savings. I'd been putting money aggressively into those funds, at a rate of at least $1,000 a month, and now I'm not."

Again, this is why you plan first and then take the leap, though even with a plan it's likely that savings would take a hit. But for goodness sakes, PLEASE at least cover your current expenses!!!!

"I made a generous executive-level pay package at Politico. My wife doesn't make as much; we couldn't sustain this lifestyle on her income."

Usually it's wiser for the person with the lowest salary to quit, don't you think?

"There's a huge opportunity cost, of course, with me not making money, and not contributing to retirement and college savings; I'm not inclined to do this for more than a couple of years."

He's right here -- this is a HUGE opportunity cost. Plus he's messing with their most valuable financial asset -- something that's very risky.

"I've never been happier than I am now. I take my son to toddler classes, music class, gym class, story time at the library. Among the parents, I'm usually the only guy there, which doesn't bother me at all. My friends comment on how adventurous we are. We go exploring every day – museums, riding the metro, monuments, parks. I'm keeping a blog of our activities."

Money isn't everything. They've made the hard choices and he's now reaping the benefits. Good for him.

"When I go back to work, I'll go with a really healthy mindset of having been relaxed and happy with my life, and knowing that I have this amazing support from my wife."

So it's likely that he'll go back to work sometime. That's realistic. That said, it won't be anytime soon...

"I'm not afraid to live more cheaply than we are to make travel and spending time together a priority. If an exciting work opportunity came up, I'd consider it. I get calls about jobs. But right now, the idea of taking any job vs. spending time with my son is hard to imagine."

This is the key in my opinion: spending less than you earn -- no matter what you earn. If they're willing to do this, and make the hard choices required as a result, they'll be fine. And likely happier.

Comments

[Finally Frugal]

Great post! As I go through my second or third mid-life crisis (and I'm not even in my 40's yet) I love reading about people who drastically changed their circumstances by taking a risk.

For me, I would have done as you suggest, and planned first, quit second. However, it sounds like this family is making it work---I'm curious about the higher-income earner staying home, though---perhaps the wife really loves her job and couldn't consider quitting as an option. The fact that this person was putting $1,000 a month into retirement before quitting assures me that his finances are in pretty good shape, even considering the drop in active investing.

[Trent Hamm]

The really scary (or sad) part is that this is a fairly common story in America. Lots of people are trapped in jobs they truly hate because of bad spending habits.

[Lord]

Then again, even fewer jobs are better than retirement.