3 steps to the new you

(Money Magazine) -- Sometime after my 40th birthday, two of my most frequent recurring dreams stopped recurring.

One was about signing up for Professor Riasanovsky's Russian history class, never attending and then facing the final. (I was happy to see that one go.)

Jean Chatzky

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The other was about winning the lottery and then doling out the proceeds to my nearest and dearest. (That one I miss.)

In their places, though, are new sleepy-time diversions. In one I'm a phenomenal baker, in another a crack private eye. In a third I'm the teacher myself.

Is there a link? I think so. I've never believed I would work in the same job forever. I get this from my father, who was a college professor before he ran television stations before he joined a large professional association in Washington, D.C. Had he not died in his early seventies, he probably would have made good on his threat to go to law school.

Were I to reinvent myself in the next decade or so, being a teacher, a gumshoe or a cook would all be high on my list.

I'm not the only one thinking this way. In the past few months alone, a handful of high-profile books on the topic of reinvention have hit the shelves, including "Thinking About Tomorrow" by Susan Crandell, former editor-in-chief of "More" magazine, and "Leap!" by Sara Davidson, best known for writing "Loose Change," an account of the 1960s. They detail (largely by interviewing those who've done it) how and why people reinvent themselves.

A divorce, death or other life-changing personal crisis gives the sense that time is running out. An inheritance or other windfall provides the cushion needed to quit a day job and do something else.

Crandell, a former editor, decided to reinvent herself as a freelance writer partly because she couldn't hack her two-hour (each way!) commute into New York City anymore.

And Davidson, a veteran TV producer, reinvented herself (again - Loose Change was published in 1977) because she had no choice. "In my fifties I was suddenly persona non grata in the television business," she recounts. "Nobody wanted to talk to me because of my age."

My father's multiple careers notwithstanding, the idea that we'll have second or third acts in our work lives has caught on only recently as expectations change about how long and how actively we'll live.

But wanting to reinvent yourself and being financially able to do so are different things. Changing course probably means you'll earn less at a time when you expected to be socking away money for retirement. How do you make your finances nimble enough to accommodate this sort of shift?

Pretend you're living on a reduced income for several months, advises Mark Zandi, chief economist at Moody's Economy.com. Figure out how much your cash flow will be compromised and see if you can make ends meet.

The longer you can sustain the experiment the better it is for your bottom line. Why? Banking the difference between your current real income and your future pretend one will beef up your emergency stash.

You won't take much psychic pleasure in your new life if your old mortgage payment is stressing you out every month.

Davidson realized that, so she downscaled, selling her expensive house in California and buying a comparable one in Colorado that cost her about half as much.

At least weigh as many variables as possible. The decision to change course has more financial ramifications than you may realize. There are the costs of extra schooling and training; a possible decline in future Social Security benefits because you're earning less in the years before you start collecting; and the cost of paying for health and other traditional employer benefits.

Will you continue to live where you are or move to a state where taxes and living costs are different?

How quickly, if ever, can you expect to get back to your old level of income? "If you need to tighten your belt, it's important to understand that so that you don't overspend without realizing it," says Jim Pearman Jr., a Roanoke, Va. planner who has worked with a lot of reinventors.

Pearman, in fact, left banking in his early forties so he and a partner could open their own financial advisory shop. "I learned that the important thing is to have as much information as possible before you make the switch," Pearman says. "It's a lot less frightening that way."

I'll remember that when it's time for me to make my dough by baking.