Pete the Planner: So you think you want to take a lower-paying job? Here’s how

Dear Pete,

I want to quit my job. The problem is, it pays a lot, and the next job I want doesn’t pay nearly as much. I think I can make it work, but I feel foolish throwing away a brilliant career. To make it work, I’d have to sell my house, because I wouldn’t be able to afford the mortgage payment. I have a good jump on retirement savings, so my problems wouldn’t necessarily exist in the future, just the present. I’m single, so this decision only impacts me. Am I crazy for doing this?

—Miles, Avon

No.

I can’t tell you how tempted I was to end the column with my last sentence. Alas, I get paid by the word. Kidding.

Miles, congrats on putting yourself in this incredibly envious position. Honestly, most people work their entire life to earn the right to take a deep breath and pivot.

Here’s the wild part about your email. Most people have the near term figured out but can’t make the long term work. In a beautiful twist, you’ve flipped the script. This is why I think your plan will work. It’s a much bigger risk when you can’t make the long term work.

Run through the following ideas to ensure that you’ve really thought of everything as it relates to this exciting opportunity.

Needless to say, you need to alter your spending. But don’t wait until you’ve already quit your job. If you can stand it, keep your current job until you’ve successfully changed your spending for two to three months. If you can’t “survive” on your new projected take-home pay, then you might not really be able to pull this off. Besides, it might take two to three months to get your house on the market and sold.

Once you alter your cash flow, how does your emergency fund look? Lower income can lead to a lower margin for error. Therefore, your emergency fund must be fat and ready. A larger income can better absorb unexpected expenses. You’ll need to break that trend.

Your insurance coverages could change significantly, too. This means your health insurance premiums could increase, and the quality of your coverage could decrease. Before you make the final leap, be sure to thoroughly investigate how your finances will be impacted. If any part of your plan should give you pause (since you already acknowledged your willingness to sell your house), it might just be your future insurance realities.

As far as selling your house goes, I can’t think of a better reason to sell a house. Sometimes a house can provide much-needed stability, and sometimes it anchors you to a lifestyle and decisions. In your case, your house would be anchoring you to a past lifestyle.

The fact that you even identified this reality makes your plan seem reasonable to me. One of the scariest things I see on a regular basis is when someone has the courage to alter their career/income but doesn’t have the courage to alter their lifestyle to achieve it. Have you ever seen those cliff-diving videos on the internet when someone gets scared at the last second and throws on the brakes? Sliding down the cliff is a much different experience than flying gracefully through the air toward a soft(ish) water landing.

My favorite part of situations like yours is when a lifestyle shrinks and then retirement actually gets easier. I’m about to make a nuanced point that can feel condescending if you miss the nuance. If your lifestyle decrease is purposefully permanent, then Social Security retirement income and your current retirement assets will have fewer significant tasks. Yes, at a certain income level, retirement is easier because Social Security retirement income represents a higher percentage of working income.

There’s another term that captures what you’re going for here—financial independence. You’re trying to become financially independent. Various people get to this point in various ways, and all the ideas I’ve just outlined are almost always the main points of consideration. Once you prove your ability to reduce your expenses, jump. Don’t hit the brakes and tumble down the face of the cliff.•

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Dunn is CEO of Your Money Line powered by Pete the Planner, an employee-benefit organization focused on solving employees’ financial challenges. Email your financial questions to askpete@petetheplanner.com.