I recently joined the Great Resignation and quit a toxic job….without having a new job lined-up. Actually, the job itself wasn’t toxic. Management, and by extension the company’s culture, were. This is what I chose to leave.
However, the decision was neither easy, nor quick. I had internal debates for months. I also talked to close friends and family for months. Ultimately, I was the only one who could make the decision. I finally did, after a couple of incidents that gave me the push that I needed.
There was also another important factor that made me more comfortable with my decision.
I Could Afford to Leave My Toxic Job
As simple as that. Or almost. If you’ve been following my blog, you know I’m a huge fan of the good, old emergency fund. If you haven’t been following my blog, now, you know! My view on this matter hasn’t changed in 8 years of blogging.
I have always been diligently stashing money away. Not all of it is actually for “emergencies”.
In fact, I have several savings accounts with different purposes. You should too.
You may be wondering what kind of savings accounts you should have. A lot depends on your personal situation, but let’s take a look.
Fund for Actual Emergencies
In its basic definition, an emergency is a “serious, unexpected, unplanned, and sometimes dangerous situation requiring immediate action”.
For me, examples of emergencies are:
- Covering an insurance deductible; it happened to me twice
- Strata levy/condo special assessment; it also happened to me twice. The first time around, I didn’t have enough savings and had to borrow money
- Unexpected car repairs -an oil change isn’t unexpected-
- Medicine or medical treatment not covered by health insurance
- Plane ticket to France for a family emergency/death
- Any other black swan event
Escape fund, Back-up Fund or F*U Fund
Whatever you want to call it. This is where you would save a few months to a few years of living expenses, depending on your needs and situation.
This fund would be used if you:
- Quit your job, whether toxic or not. Case in point with yours truly. Because I resigned, I wasn’t eligible for E.I. I found another job since, but I was without income for a month. My bills didn’t stop coming during that time, and I was able to cover them
- Become sick
- Go on maternity/parental leave
- Need to leave an abusive relationship
- Separate or divorce
Depending on your personal situation, you might need:
- A home fund: if you’re a homeowner, you’ll have some maintenance and renovations costs at some point. If you’re planning to becoming a homeowner, you’ll need a down-payment and to cover closing costs
- A wedding fund: congratulations!
- A baby fund: congratulations again!
- A vacation fund
The list is endless. Basically, you need a fund for anything that can be 100% planned or expected. I have a property tax fund I contribute to each month. Just like death, taxes are unavoidable.
Why Separate Savings Accounts?
It’s easier to have separate savings accounts for different purposes. It allows you to better track your money and progress. It also avoids mix-ups and misunderstandings.
How Much Should You Keep in Your Savings Accounts?
Unfortunately, I can’t answer this question. You’re the only one who can. Too many factors are playing out here. Most “experts” recommend having 3 to 6 months of living expenses saved. Depending on your situation, you could need more or less.
Insurance as a Mitigation Tool
Having the adequate insurances will help you further mitigate the unexpected, and stretch your dollars. I’ve previously discussed the matter here.
A Word on Using a Line of Credit or a Credit Card
It’s very common for people to use a line of credit, or even a credit card to cover for most, if not all their expenses, including emergencies.
I’ve said it before and will repeat it again: a line of credit is not an emergency fund or a savings accounts. Sure, you can use it to pay for the costs, however you’ll need to pay it back at some point.
In hindsight, I realize that quitting this job was unavoidable. I took many steps to try to make it work, but ultimately, the toll it was taking on me wasn’t sustainable.
From the moment I started contemplating my exit, I updated my resume and started applying for positions. Because I had a job, it gave me more leverage. I wasn’t desperate and didn’t have to take the first offer that came my way.
When I handed-in my resignation, I was actively interviewing. I was offered a job a week after my last day in my previous job. And yes, I gave notice and remained professional until the end. I had a month off, which was great to rest, relax and recover from the toxicity of that employer.