“Lock In” and Escaping the Trap

Over the course of my career, my single biggest fear – and obstacle – has been “lock in.”

What’s “lock in”? It’s probably easiest to explain it with a story.

Early on in my career, I found myself working at a pretty nice job. I enjoyed the work and enjoyed going into the office almost every day. I was freshly out of college and facing down a pile of student loans, but I didn’t feel overwhelmed.

Roll forward a few years. I transitioned this first job into a second job, one that paid a little more and offered more long-term security but that I didn’t enjoy nearly as much. At the same time, I found myself enjoying the large income quite a bit more. I went out on the town a lot, bought a lot of expensive things, and made very little progress on my student loans – in fact, I actually built up a bit of credit card debt. I was also facing a car loan, as was Sarah.

My debt and my spending choices had created a situation where I needed that job – or some job that paid at that level. I had so many bills coming in that, if I lost that job and couldn’t find a similar one very quickly, I would be in deep, deep trouble.

When you combine that with the fact that I didn’t really like many aspects of my newer job – lots of bureaucracy, a poorly-defined job description, uncertainty as to what the desired outcome of my work projects were, responsibilities that I felt severely unqualified for and didn’t even want – I felt stuck. Frankly, I felt locked in.

“Lock in” refers to a situation where you must keep your job – or a job at a very similar pay level – in order to maintain your lifestyle and continue to pay your bills. If you lose that steady income, your financial state will quickly collapse.

“Lock in” isn’t exactly the same thing as living paycheck to paycheck, but it’s close. People who are “locked in” are often contributing to their retirement accounts, their children’s 529 accounts, and so on. The problem is that their total bills – all of their contributions plus all of their debts and other bills – adds up to something very close to their current salary.

Even worse, their required bills – things that they’re contracted to pay, utility bills, food, the mortgage, and so on – add up to a very significant part of their income.

Even worse, they don’t have any other major income streams. The vast majority of their income comes from this job.

They’re locked into their job because financial armageddon occurs should they lose that job.

A lot of Americans find themselves in this position – and their bosses know it. They’ll demand more and more from those employees because they know that those employees are stuck. They can’t easily quit. They’re afraid to refuse job tasks out of the fear of being fired. So they accept punishment in the workplace.

How do you get out? How do you escape from this trap? Here are four techniques I used to extract myself from that position.

Build a Big Emergency Fund

Imagine, for a moment, that you have three months of living expenses in your savings account. Now, imagine that you suddenly lose your job. Things aren’t so bad, right? You can survive for three whole months while you seek out new employment.

Now, imagine you have nothing sitting in your savings account and you lose your job. What then? Bills aren’t going to stop coming in. You either need to get a job immediately or you’re going to be buried in debts or late bills – and if you don’t find a job soon, things get really bad.

This is the advantage of an emergency fund. If you leave your current job for some reason, things don’t fall apart immediately. You don’t have to throw yourself at the first job that’s available. You can actually conduct a real job hunt without a huge amount of pressure on your shoulders. You don’t sink into financial oblivion if you don’t find a job this week.

How do you start doing this? Simply request that your bank start automatically putting $20 or $40 a week into your savings account from your checking account. Most banks happily perform these kinds of automatic transfers for you. For every $20 you transfer each week, you’ll have over $1,000 in savings at the end of a year. It only takes a couple of years of saving $40 a week to have a very healthy emergency fund that can sustain you through a period of unemployment without everything falling apart.

Reduce Your Monthly Required Bills

Part of the problem with “lock in” is that you’re stuffed to the gills with required monthly expenses. Yes, some of them will vanish if you lose your job – like that 401(k) contribution – but the vast majority of them will stay in place right through that job loss.

If you’re struggling just to keep all of the bills paid and can’t conceive of how you’re going to come up with even $20 a week to build an emergency fund, you need to trim your monthly bills.

Start by cutting back on the non-essentials. Do you really need both Netflix and cable? Why not just choose one or the other? What about your cell phone? Could you move to a pay-as-you-go arrangement? Have you done everything you could around your house to reduce your monthly energy bill, like installing LED light bulbs?

You should also do a line-by-line audit of all of your monthly bills. Are you getting hit with fees that are unnecessary? Are you paying for services you aren’t using?

If you can trim $20 from four different bills, there’s your $20 a week with which to start funding that emergency fund.

Keep Your Resume Sharp

Many people in a “lock in” position stop thinking about switching jobs, so they stop thinking in terms of their resume. That’s a big mistake. No matter what is going on at work, you should always be thinking about your resume.

You should choose projects that will look good on a resume and focus on how the results of those projects will look great to employers. Think of a work project in terms of what it will produce and the role you can claim in what it produced. Saying “I built a system” is boring. Saying that you helped engineer a product that serves 10,000 customers is a lot more impressive.

You should take on educational opportunities whenever they arise. Whenever there’s a chance to learn a new skill – particularly a marketable one – through your job, take it. Certifications, college degrees, coursework – if it’s provided at work, you should be on board with it.

You should jump for opportunities that allow you to take on leadership roles. Whenever you can claim leadership on a project of some kind, it’s golden. It shows that you have both the know-how to make the project work, but also the skills needed to pull people together for something bigger.

You should present in public and attend meetings and conferences whenever you can. Not only are these good resume builders, they’re also powerful in terms of building connections with people who might end up being your gateway to another job or to a better job in the future.

Think of your work as not just a tool for earning money, but as an opportunity to build a set of skills and accomplishments that future employers will pay for. This will help you earn more money at work and make it much easier to find another job should you decide to leave this one.

Build Income Streams

It is always a good idea to have as many sources of income as you can possibly generate. Whether it’s simply holding down a second job or building a side business or creating things that can be sold on Amazon or other online sites, more sources of income are always useful because if one dries up, you still have others to rely on.

There are many, many methods for doing this. One approach is to simply engage in income-positive hobbies – hobbies where you’re making money instead of losing money. Another approach is to try to develop information products that can be continually sold, like e-books or musical recordings or Youtube videos. You can take on freelance projects, too, or start a business making or doing something that you enjoy or have particular skill with.

Some income streams will work well for certain people and not so well for others. Don’t be afraid to dabble and experiment to see which ones work well for you. Try writing an informative e-book or recording a set of Youtube videos or searching in the woods for geodes to re-sell.

Final Thoughts

Throughout all of these things, the goal is singular: you want to unlock yourself from your job. Instead of being in a position where your boss has all of the power (because you need that paycheck), you want to move into a position where you reclaim some of that power (because, although you find the paycheck useful, you’ll survive if it goes away).

Doing this gives you far more freedom at work. You can take risks and experiment where you couldn’t do so before. You don’t have to be scared to take vacation time and you’ll be able to shop for another job whenever you feel like it without fear of repercussion. Your stress will drop and your economic freedom will only get better.

Break out of the “lock in.” You’ll be glad you did.

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