How to use a personal loan as a springboard to a new job
Quitting your job and leaping into the unknown is not only scary but immature. Putting in place a safety net is how strategic thinkers prepare for this move. Depending on your current position, experience and qualifications as well the demand for these, you could find a new job in days to weeks, or it could take months. Always be prepared for the worse and take into consideration not only your needs but those of your family, as well as unexpected situations such as out-of-pocket healthcare payments for emergencies.
Outline the budget
First, get a realistic estimate of the time you will not get a paycheck. Think about the number of interviews you expect to attend, the length of the recruitment process, knowing that the average is 39 days. Also, you should know that the number of CVs received for a single position is around 250, out of which only about five people are invited to an interview. Next, even if you get the job you won’t be paid for another month, so it is safe to assume that you will need at least 6-8 months’ worth of money to leave your job comfortably.
Get the money
Depending on your lifestyle, such a number could easily be more than $20-25K, and that is just considering the average salary. Most families don’t have that money just lying around or in a savings account, for rainy days. Of course, cutting down on some unnecessary spending can only help, but it won’t be enough.
However, this should not keep you trapped in a dead-end job, just because you fear to miss a few payments on your bills and to mess up your credit score in the process. There is the opportunity to take a personal loan while you are still hired and used it both as a financial cushion while you are unemployed and as a way to pay for extra studies or qualifications.
There are numerous options out there, but if you are in the “fair” score category (above 660), you might want to take a look at the Pave personal loan reviews. The perks offered by this particular lender is that they provide job loss support, meaning that you can work out a plan until you are back on your feet.
Tips and tricks
First of all, be sure to apply and get approved for the loan before quitting your job, or preferably before the two-week notice. All lenders require proof of your employment during the process, and you should be able to provide them with all the documents.
Plan this in every detail and get it right. Check your credit score and fix any mistakes that might affect your rating. Evaluate your debt-to-income ratio to make sure that with the new loan you will not exceed 50%, ideally staying at around 35%. Don’t cancel any credit cards or consolidate now. Before asking for a loan make sure all your utility bills are paid on time since you might be asked for some copies of these too.
Plan to ask for as much money as you need to get an extra qualification which can guarantee you a bigger paycheck, this way you are making an investment instead of an expense.