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5 Steps To Take Before You Quit

Jobs may be hard to find these days, but according to the Bureau of Labor Statistics, about 2 million Americans quit their jobs every month. Naturally, many of these people are hoping to move onto a bigger and better opportunity, or possibly just something more pleasant.

But in a tough job market, there are no guarantees. If you are thinking of quitting your job without a replacement lined up, it is important to look before you leap. Here are five moves to make before you tell the boss:

1. Get your debt under control

There are two big problems with quitting your job while you have a high credit card balance or other large debt burden. First, it saddles you with high payments at a time when your income might be temporarily reduced. Second, if you are bumping up against your credit limits, you have less cushion to ride out a period of unemployment while you find a new job. A little austerity is a good way to prepare in case you aren't able to walk right into another job.

2. Build temporary savings

Even if you don't have much debt, you'll want to build up temporary savings to help you through any transition period. Temporary savings means money that doesn't interfere with your long-term retirement savings. It should be money that is accessible, in an instrument such as a savings account or money market account, so you don't have to break into long-term investments at the wrong time. It should also be outside of any tax-deferred retirement plan, so you don't have to incur a tax penalty for early distributions.

3. Prepare your credit

If you've been thinking of applying for new loans or credit, it's best to do it before you quit your job. For example, if you've been eyeing low mortgage refinance rates, you'll have a better chance of qualifying for a new mortgage if you haven't just quit your job. Also, if you think you might need an extra credit card to see you through the transition, it's better to apply for it before you are stretching your current credit limits. Don't take on too much new credit though, as doing so all at once can hurt your credit score.

4. Scope out the job market

Look at employment opportunities in your field. Are jobs available? Do you have the qualifications employers are demanding? If the answer to either of these questions is no, it may be wise to at least delay your decision.

5. Discuss other options with your employer

Whether the problem is salary or work conditions, it might be possible to solve the problem by discussing it with your employer, or there may be other opportunities for you within the organization. Before you quit, have a frank conversation with your employer about why you are thinking of moving on -- but only after you've taken all the other steps to be prepared.

If it turns out that quitting is the best option for you, you'll find the transition all the smoother if you've laid the proper groundwork in advance.

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