Transitioning to a New Job

I just got a terrific job offer Monday and decided to accept it.  I'll no longer be working from home, which means no more shorts-and-t-shirt uniform and no more bedroom-to-home-office commute.  But his is a positive move because I won't be required to travel and I'll be able to have more face-to-face interaction on a daily basis with peers and coworkers.

Moving from one job to another can be a stressful experience.  In this economy, it can be difficult to find something that not only pays well, but also fits your interest and experience.  So if you finally found that dream job, first, pat yourself on the back.  Next, consider a few of these points to ensure that your transition is smooth -- particularly on your finances!

Giving notice

Even if you dislike your old boss and have no intention of inviting him or her to your wedding or to your child's birthday, you should still give at least two weeks' notice.  Your new employer should respect your decision to do so and give you at least that long to begin.  Giving notice will help to make sure that you're not burning any bridges on your way out the door and will hopefully help your chances of getting a good reference in the future.  Put yourself in your boss' shoes; it's the right thing to do.

Switching your benefits

If both of your employers offer health benefits, it will be important to make sure that you don't have any gaps.  Believe me -- if you get into an accident, you probably can't afford to be hospitalized for very long.  Determine whether the benefits at your new job will kick in immediately, on the first of the month following your first day of employment, or after a probationary period.  If they're not immediate, you'll most likely need to sign up for COBRA, which will temporarily (and expensively) extend your benefits from your old company.

With COBRA, you can expect to pay up to 102% of the total cost of your benefits for up to one year.  However, you usually have a month or more to decide if you want to use them.  So if you know your benefits at your new job won't kick in for a few weeks (let's say the first of next month) and your old benefits expire on the last day of employment (let's say the middle of the current month), you can go two weeks without insurance while maintaining your option to use COBRA if you become hospitalized.  Essentially, because you have a month or two to "decide" if you want to use COBRA, you can pay out-of-pocket for prescriptions and doctor visits (which cost less than a month of COBRA) and decide not to pay the pricey COBRA fees.  However, should you incur extraordinarily expensive medical bills, as long as you're within the month or two deciding period before your new benefits kick in, you can retroactively pay your COBRA premiums and regain your insurance.  Be sure to ask your old HR representative about the company's COBRA rules.

In some cases, your benefits from your old company may be valid until the end of the last month that you work there.  If this is the case, then you may try and work for the first few calendar days of a month before switching to your new job.  This may eliminate any lapse in coverage and keep you from paying the high COBRA premiums.

Rolling over your retirement

First of all, the bad news for you is that you're going to lose any non-vested portion of your retirement savings that you had with your old employer.  You get to keep everything that you contibuted, but if your old employer matched some of your contributions, unless you've been with them long enough to become vested, you'll lose all or part of that money.  If your new employer has a similar 401(k) or 403(b) plan, they may be able to help you roll-over your money to a new account.  If they do not offer assistance or do not have a 401(k), be sure not to cash out your old 401(k) money if you're under retirement age.  By cashing out your money, you will pay a 10% penalty as well as regular taxes on the money.  If you roll it over to another 401(k) or a traditional IRA if your new company doesn't have a 401(k), as long as a check is not delivered to you, it will be like nothing ever happened to the money.

Taking some time off

Before deciding to take time off between jobs, figure out how much that time will cost you and what impact it will have on your finances.  If your new company is offering you a signing bonus, that will help pay for your off days.  But if you're not getting a bonus, or if you're living paycheck-to-paycheck, it will be important for you to do a little cash flow analysis before you end your old job and start the new one.

Ask yourself these questions:  How often are you currently paid?  When will you get your last paycheck?  How long will it take before you get your first paycheck at your new job?  Will your last and first paychecks be for a normal amount?  When will you receive your signing bonus?  How much accrued paid time off from your last job will you be able to cash out when you leave?

If you've got some cash savings, you'll probably be able to take some time off to refresh before you start your new job.  But if you're tight on cash, create a cash timeline to help you figure out if a gap in income will still allow you to pay your rent/mortgage and credit card bills.  Don't assume anything, as first and last paychecks can vary substantially.  Once, I started a job with a company that paid its employees once per month, at the end of the month.  And each paycheck paid you for last month's work.  Because of this, I started work on February 1st and did not receive my first paycheck until March 31st -- two months after I started!  So be sure to anticipate this sort of thing before making any decisions about taking time off in-between jobs.