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.