Author Topic: Switching careers and making less money  (Read 3814 times)

rebeccaremix

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Switching careers and making less money
« on: October 31, 2013, 09:17:24 PM »
Hello everyone.

I am at kind of a crossroads.  I had horrible money management skills for a long time.  In the past year, I have finally gotten this issue under control via lots of self confrontation and using YNAB.   I had significant credit card debt, which will be totally paid off in the next month or two (yay), and have about 60k in student loans outstanding.

I am relatively newly married and my husband has good savings so that I don't need to worry about building an emergency fund, however our accounts/etc are separate right now because I want to pay off all of my debt before we combine.  I feel that it is important for me to pay off my debt with my own earnings, because of my terrible money management skills in the past, even though perhaps economically it would make more sense for my husband to just pay it off with his savings.  I don't want to feel like I'm getting a "bail out" (which is what my parents did for me time and time again, after giving me a credit card with no spending limit when I was 16...oy...)

I am not a true mustachian in the sense that I want to retire super early, and I do not think that I would want to live as frugally as some here do, but I admire the mindset and I do not want to be a slave to consumption. 

So this is my question. 

Right now, I am making a good salary (100,000+) and putting most of my money towards debt.  My job is OK.  It's not killing me.  However, I am really interested in switching careers, to something that would require another 2 years or so of graduate education (I could go part time and still work), and also has much lower earning potential.  I don't want to get into details about the new career, but it is something that I have been interested in for a long time and I really feel like it is more of a calling (I entered my current career more because of familial expectations).  I feel like in many ways my desire to pursue this new career has coincided with me realizing that I can live within my means and not feel like I have to sustain a certain "lifestyle", and realizing that buying things is just not fulfilling generally.

So, I am tied up in knots because on one hand I think 1) I know I want this other career, my time on earth is limited, I am already in my 30s and it will take time and dedication to become excellent at this new career; I should do it as long as I don't have to take on more debt; vs 2) I am sabotaging my earning capacity because of my weird history with money and I should focus on building savings for some longer period of time before even thinking about a switch.

Any thoughts/advice?

beltim

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Re: Switching careers and making less money
« Reply #1 on: October 31, 2013, 09:21:58 PM »
I'll be the first to say "it depends."  Although I'm not one to pry too much into details, the amount of debt that you have and the earning potential of the new career are hugely important details here.  Also important is the cost of the two years of education, although that may be less important depending on the debt and earning potential of the new career.

I can easily imagine a wide variety of possibilities based on what you've said so far.

rebeccaremix

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Re: Switching careers and making less money
« Reply #2 on: October 31, 2013, 09:31:45 PM »
Thanks for your response. 

Well my total debt right now is the student loans (60k).  I would pay that off before starting program.

The new program would be expensive (about 60-80), but I could pay for it by continuing to work full time and go to school part time.   Alternatively I could go to a full time program  that would cost only about 20k, but for that, I would not be able to continue at my current job.  I think I would still come out ahead going to the more expensive school and working at my current job full time.

In the new career, say the average would be like 50k.  It is also something where I could be (and would want to be) entrepreneurial and hopefully, make a lot more than that, but if I were working for someone else, say 50k.
« Last Edit: October 31, 2013, 09:33:28 PM by rebeccaremix »

beltim

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Re: Switching careers and making less money
« Reply #3 on: October 31, 2013, 09:49:32 PM »
My pleasure.

I think your plan to pay off your current student debt before starting your new graduate program is a good one.  If you can then pay for your new graduate program while working, that is a good option (certainly the more lucrative one).  How long would the part time program be, versus a full time program?  Also, what's the relative quality of the two programs?  From the sound of it they're not necessarily at the same school.

Another option to consider (which I'm not recommending, just throwing out there), is working at your current job until you pay off your current student loans and build up enough savings for the full time new graduate program.  Once you've amassed that amount, then you can fully devote yourself to your new studies.  That may allow you to spend more time on your new calling, and allow you to gain expertise.

As someone who has deliberately chosen a lower-paying career for the sake of professional and personal happiness, I congratulate you on thinking outside the box.  Welcome!  Those of us who are happy in our careers find it less necessary or desirable to sacrifice other interests on the altar of early retirement.

Tyler

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Re: Switching careers and making less money
« Reply #4 on: October 31, 2013, 09:56:00 PM »
IMHO, if you plan to pay off your current debt before going back to school, then it's a blank slate.  If you have margin to pay the bills and save either way, staying in your current job solely because it pays more is definitely selling yourself short.  Life is about so much more than income.

That said, I'd definitely evaluate all my options before taking on additional debt.  I'd also be careful about going to school while still working full time because 1) that's really difficult with no free time, and 2) it sounds like the new degree is in an unrelated field, so your employer may not appreciate your not-so-subtle hint that you'll be quitting as soon as you graduate.
« Last Edit: October 31, 2013, 09:58:21 PM by Tyler »

ch12

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Re: Switching careers and making less money
« Reply #5 on: November 01, 2013, 04:56:13 AM »
Another option to consider (which I'm not recommending, just throwing out there), is working at your current job until you pay off your current student loans and build up enough savings for the full time new graduate program.  Once you've amassed that amount, then you can fully devote yourself to your new studies.  That may allow you to spend more time on your new calling, and allow you to gain expertise.


That said, I'd definitely evaluate all my options before taking on additional debt.  I'd also be careful about going to school while still working full time because 1) that's really difficult with no free time, and 2) it sounds like the new degree is in an unrelated field, so your employer may not appreciate your not-so-subtle hint that you'll be quitting as soon as you graduate.

Bouncing off of what others have said, your best option might be staying to pay off your loans, saving up to pay your 20k tuition and living expenses while you are in school full time, and then making the leap into your new career wholeheartedly with nothing holding you back. It is very difficult to work and go to school, even if school is part time. You have competing needs and will honestly be forced to prioritize since there aren't enough hours in the day. My cousin did his MBA while working ~50 hours a week - not a horrible job, but not a ultra light one either - and he didn't give it his all. I suppose it's in your expectations of how much time/effort you're going to devote to putting yourself on the new track.

apennysaved

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Re: Switching careers and making less money
« Reply #6 on: November 01, 2013, 07:02:03 AM »
Not sure what the interest rate is on your student loan may be, but if it is higher then what your husband is getting on his savings, you may want to consider using his savings and "paying" him back at your student loan interest rate.  This way he makes a higher rate.  It sounds like with your earnings, you can't deduct student loan interest on your income tax return (so no benefit there).

I agree with most that I would work a few extra months and go to school full time at the lower cost.

Gray Matter

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Re: Switching careers and making less money
« Reply #7 on: November 01, 2013, 09:22:35 AM »
I agree with everyone here...follow through on your plan to pay off your existing student loans, then save up the 20K and go full-time.  I went to graduate school while working full time and going to night school, and it's difficult to do school justice (or your job) when you're trying to do both.  You would be better served throwing yourself into school full-time and trying to find part-time work (maybe even an internship) in your new field to serve as a bridge between the two careers.

I'm at a similar crossroads, though I am waiting to make the transition not due to debt but current instability in my husband's job.  I understand that, once you make up your mind to make a change, it's hard to stay, but having concrete savings goals will help.

Good luck!

yyc-phil

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Re: Switching careers and making less money
« Reply #8 on: November 04, 2013, 02:41:22 PM »
I won't add to the financial side of things which has been well covered by the other posters. But on the personal side, I can tell you my own experience. Until 2007, my entire career was at the senior executive level, making more than decent wages with all the financial and non-financial perks associated with this kind of position. But I was completely unhappy and I couldn't stand the thought of spending another year, let alone the next 15 years until retirement, in the corporate world, so I decided to leave the field entirely at 49. Not knowing what to do for about 1 year, I unexpectedly came across an ad for flight attendants for an airline, I applied out of curiosity, and got hired. While the salary was very low ($25-30K/year), I had my financial house in order, house and car were paid, kids almost out of the house, so I could afford to make much less...This decision to do something so completely different, was probably the best I ever made: the lifestyle, the free time (lots of it), the perks, the schedule, the layovers in different cities, the social aspects with both crews and passengers, and most importantly the lack of stress and the fun factor, made this job the most enjoyable I ever had. Sadly, for a reason that I still do not comprehend, I quit three weeks ago to take an offer in my field I could not refuse. This is my third week on the job, my butt and my back hurt from sitting all day in front of a computer or in endless boring meetings, and I find myself staring blankly out the window hours on end, thinking this is probably the worst mistake of my life...So my advice is, if the numbers work and you can live with less but be happier, go for it. And do not go back under any circumstances.