Here are some things to do and think about before quitting your job. As someone who negotiated a severance in 2012, I strongly believe you should never quit your job! Always negotiate a severance instead so you have a nice financial cushion for the next chapter of your life.
The people who quit their jobs end up with no severance, are ineligible for unemployment benefits, and often burn bridges. Don't be like these job quitters.
Things To Do And Think About Before Quitting Your Job High Roller
The wooden bar shimmers with beer stains as I stubbornly try to wipe them away. Each jab of the napkin gets stuck, like a fly to Venus. Eventually I give up as my friend returns from the Thomas Crapper smiling.
“Sam, when I get my bonus this February, I will have hit my goal of saving $1,000,000 in the bank!” said my 38 year-old friend Paul over his Guinness. He went on to explain, “I've been saving my bonus every year for the past 16 years so that I can one day quit my job and do something more relaxing and fun.“
“Well done Paul!” I respond as I pat him on the back. “But what else are you going to do? Not many jobs in the world pay your type of income. Are you sure you're willing to give it all up for a life of leisure?“
“Hmm, I don't know Sam. I guess all I have to do is work another year, and I'll get another $100,000 or so in bonus after tax. Maybe I should just continue to work?” questioned Paul.
“I think a lot of people would give up their left nut to receive a $100,000+ after tax bonus every year. Maybe you should think about taking a sabbatical instead to rejuvenate?” I replied.
“A sabbatical would be great! But, I think my company just demotes, underpays, or ultimately lays off people who take them,” explained Paul.
“Well isn't getting let go exactly what you want? That way, you can get all your deferred compensation without a hitch!” I said.
“Good point! Time to kick back and get faded baby!” Paul cheered as we chugged our beers in unison.
All About Money Considerations
Paul is an account manager at a major software company. He joined the firm out of undergrad in 1996 and slowly rose through the ranks to become a “Vice President” of the firm.
Paul likes his job, but doesn't love it as the industry's go-go days are over. Ever since the 2008 downturn, Paul no longer feels proud to work at his firm or in his industry. He feels constantly assailed by politicians and people who think making over than $200,000 is evil.
Paul's job is to simply sell his company's software and make sure his clients are satisfied with the product. Whenever new software company updates come up, it's up to Paul to notify and up-sell those upgrades as well.
Software sales is not a sexy job, but it pays very well. Paul has built friendships with his clients, often going out to dinner with their husbands or wives and attending the same charity functions.
Income Growth Stalls Out
When Paul first joined his firm, he was making about $40,000-$60,000 a year for the first couple of years. In his third year, he got promoted to Associate and saw his base go up to $80,000 and his bonuses rise up to $100,000.
In his 6th year at the age of 28, Paul was promoted to Account Manager and saw a base increase to $150,000 a year with bonuses up to $250,000. By age 31, Paul got another promotion to Vice President with a new base salary of $200,000 and bonuses that could go as high as $500,000.
Paul has been a Vice President for seven years now and saw a 50% slash in his bonus to $250,000 because of a 70% decline in his company's earnings.
Paul isn't delusional, and recognizes that making $500,000 a year is still an incredible amount of money. However, a part of him wonders,”why bother” working hard anymore given his pay is no longer based on merit, but on the overall health of his company, which he has no control over.
One of his buddies a couple years ago gave him a dose of reality, “Paul, software sales is a bullshit job and you know it. Don't you want to do something else more meaningful with your life?”
Paul has been thinking about this statement ever since.
Progress Is Happiness
If ever there was a case that proved “progress” is more important for happiness than “money”, this would be it. For the years that I've known Paul, he's been on the up and up. I love him for his frugality. He drives an 8 year old Honda Accord, buys clothes from Macy's only on sale, and looks like just another regular guy.
I also like Paul for his generosity, always fighting tooth and nail to pay whenever we go out to eat or drink. It's just in his nature, and I've had to resort to paying while he goes to the restroom or is distracted with a pretty waitress.
Now that Paul's income is no longer rising at a steady clip, he's starting to lose interest in his job, yes even with his large income. Paul enjoys working with his clients, but there's this deep nagging feeling that he could be doing something different with his life.
Paul has always wanted to be an entrepreneur, but when he graduated, his firm gave him a job offer he couldn't refuse. As a result, all of Paul's entrepreneurial dreams have been put on hold.
Paul told me that when he first started working for his software company he vowed to quit his job once he saved $1,000,000 cash in the bank. Now that he has, he doesn't know what to do. For the past 16 years, Paul has only done one thing, and that's sell.
Doing Something More Meaningful In Life
Like Lyndon in “The Curse Of Making Too Much Money And Not Pursing Your Dreams,” Paul enjoys photography, but doesn't have the skill to become a professional.
Like me, Paul enjoys to write, but I don't know if he will have the discipline to write constantly and live off peanuts as he makes a name for himself online or never in the publishing world.
Maybe Paul is entering a mid-life crisis and just needs a nice new Porsche 911 Turbo? The fact of the matter is that after 16 years, Paul is bored.
How Much Does It Really Take to Live Financially Free?
With $1,000,000 spread across several banks at age 38, I consider Paul to be well off, but not rich. His wife has a stable job and makes around $100,000 a year.
The $1,000,000 in the bank is only the liquid portion of his wealth. He also has about $450,000 in his 401K, $500,000 in deferred compensation, and around $800,000-$1,100,000 in real estate equity from multiple properties. In other words, his net worth is around $3 million dollars. $3 million is true millionaire status now thanks to inflation.
If Paul quits his job, his roughly $10,000 (base) to $30,000 a month (base + bonus) in after tax income goes out the window. He also loses $500,000 in deferred compensation that vests over 3 years if Paul can't successful be laid off, as opposed to quitting or getting fired.
Paul doesn't have to worry about health care because he'll just go on his wife's plan. However, what's the fun in having so much free time if he can't spend it with her, Paul wonders.
Related post: How A Family Can Barely Retire Comfortably With A $5 Million Net Worth
Things To Do Before Quitting Your Job
First of all, don't quit your job, get laid off with a severance. I'm just using “quitting your job” for writing. Here are the things to do and think about before quitting your job.
Calculate your cash burn: Paul's total monthly expenses is around $6,000, a frugal amount considering his $10,000-$30,000 monthly after tax income. Hence, with $1 million cash in the bank, he is covered for 167 weeks or roughly 14 years.
If Paul were to sell his house and free up $400,000-$500,000 in equity and reduce his total monthly expenditure to $4,000 a month, he'll have 350 months of living expenses equaling 30 years.
Calculate your total non-day job income: Passive income is the key to financial independence. Passive income is what I mean by non-day job income. Paul generates about $3,000 a month from his cash savings in the form of various 3.5-4% long-term CDs he's taken out.
Furthermore, if Paul is able to be let go by his firm, he will receive his $500,000 in deferred income over 3 years at roughly $165,000 gross a year. If Paul maintains his $6,000 monthly expenditure, he should have no problem living worry-free for at least 3 years without having to drawn down any of his $1 million in principal.
List out all your plans. After calculating all your passive income, you've got to come up with a list of things you'd like to do that will hopefully make you money. It is a blessing to do what you love and earn a living at the same time. Unfortunately, few people have this terrific combination.
Given Paul has saved religiously for the past 16 years, he can now seek to do something he truly wants to do, and not worry so much about the income anymore. Paul lists: working with disabled children, working for UNICEF, teaching, starting his own financial advisory practice, working as an animal trainer at the zoo, and writing for a travel magazine as his ideal jobs.
Investigate what the potential income is for your new endeavors. I can tell from Paul's list that the most he'll make is probably $40,000-$50,000 a year. If we add up Paul's $3,000 a month in guaranteed passive income + $3,000-$4,000 a month in likely salary from what Paul really wants to do, he can't cover his $6,000 monthly expenditure without drawing from his savings, since it takes $8,000-$9,000 in gross income to spend $6,000. As a result, Paul needs to either downgrade his living standards, save more, or make more.
Think about family. Paul and his wife (33) currently do not have children. They aren't sure whether they do want children but will seriously think about kids over the next 3 years. A child could literally mean a 10-20 year difference between when one can retire!
With education costs soaring out of control, one could very easily spend $500,000+ on their child through college. Granted, many families live on much less for their kids, but Paul is conservative and would rather have more money than less money for his kids.
If Paul and his wife do have a child, his wife has to keep on working while Paul takes care of the child or vice versa. Paul and his wife are currently in the ideal age range to have a baby.
Put it all in a spreadsheet. It's easy to talk through the income and expenses, however you need to build a spreadsheet with every single line item to make sure you aren't missing anything. The last thing you want to do is quit your job and find out you forgot about that pesky $500 a month student loan bill!
After you've put everything in a spreadsheet, discount your income by 10% and increase your expenses by another 10% to add an extra layer of conservativeness. Then sign up for a free net worth tracking tool, like Personal Capital to stay on top of your finances. I've been using Personal Capital since 2012 to great results.
Check out the charts. The following chart is my recommended savings rate and amount one should have at various stages of their working lives. The number where I would comfortably say you can quit your job and do anything you want without any fear of going into poverty is around $3,000,000 in liquid savings, as that will throw off at least $60,000 a year in interest income at 2%. For others, it may be more or less. It depends on your lifestyle.
Will a long vacation or sabbatical do the trick? If you work at a reputable firm and have been there long enough, the firm should have a sabbatical policy. Paul's firm allows up to a three month, full salary sabbatical for every 10 years he works at his company. Since he's been there for 16 years, he's well over due.
A sabbatical will likely affect your compensation, but it's a small price to pay for 3 months of bliss don't you think? Well, it depends on how much you make. Ironically, the less you make, the better the sabbatical! There is a dark side to early retirement which everyone needs to read.
There Never Seems To Be Enough Money
Despite Paul's hefty savings and assets, Paul still has doubts on whether he should call it quits in his lucrative career and become an entrepreneur that might pay nothing for years.
Even if he joined a non-profit organization that pays $50,000 a year, he wonders if he will get tired of the bureaucracy and not be able to adjust to the pay . His promise 16 years ago of quitting once he hit $1,000,000 in savings now looks suspect. He's suffering from the one more year syndrome.
We can do all the analysis we want and probably still not be able to make a 100% certain decision on how much one needs to save to quit their jobs. I have a feeling the answer is different for everybody.
The real questions we should all be asking are: What do we plan to do once we quit our jobs? What are the alternatives? And what are our skills and interests that will allow for a rewarding experience?
The way I see it, here are Paul's best choices:
1) Figure out how to be included in the next round of layoffs so Paul doesn't lose his $500,000 in deferred compensation. Furthermore, Paul gets 2 weeks of severance for every year he's worked plus a minimum 4 weeks bonus and all his accrued vacation days paid. We're talking around 40 weeks of severance plus $168,000 a year for 3 years in deferred compensation as Paul figures out his next path.
2) Continue working at his job, but take it down a notch so that he's doing just enough to stay employed, but not enough to feel frustrated if he doesn't land that big client or fails to get recognized for good work. This is the safest route which will allow him to continue to bank $100,000+ bonus checks, earn his $200,000 base salary and provide for his future family if he so decides.
3) Take it easy at his job and seriously develop his side business until it generates an amount equal to 50-100% of his $200,000 base salary. This might take years, and could be accelerated if Paul decides to dedicate his efforts full-time on his side business. But, how many people on earth can develop a side business that generates $100,000-$200,000 if they are working full-time? Let's be honest here. $10,000-$20,000 sure… but 10X that?
4) Take a sabbatical for 1-3 months to recharge. Paul still gets to earn his $200,000 base salary while he's away, and maybe when he returns, he'll realize just how much he enjoys his job. He could use the 1-3 months to develop his business idea as well.
5) The worst choice is quitting his job, losing his $500,000 in deferred compensation and severance and having no side business up and running. This move would be done out of anxiety, but a promise kept 16 years ago.
Bartender! One more round of Guinness for the both of us please!
Recommendation For Leaving A Job
If you want to leave a job you no longer enjoy, I recommend negotiating a severance instead of quitting. If you negotiate a severance like I did back in 2012, you not only get a severance check, but potentially subsidized healthcare, deferred compensation, and worker training.
When you get laid off, you're also eligible for up to roughly 27 weeks of unemployment benefits. Having a financial runway is huge during your transition period.
Conversely, if you quit your job you get nothing. Check out the book, Conversely, How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye.
It's the only book of its kind that teaches you how to negotiate a severance. It was recently updated and expanded thanks to tremendous reader feedback and successful case studies.
Related: The YOLO Economy Is Here To Stay
Loved this article Sam,
I’ve started my own journey too, inspired by your posts and path followed.
I’m at a reflection point (having recently turned 30) where I am fed up with my corporate job having ground in out for the last 8 years. The last 3 of which have been in Toronto. I know you faced a similar challenge.
For anyone experiencing the Sunday night fear and anxiety ahead of work tomorrow, check this out – it just might lessen the burden.
methemillennial.com/
Maybe one day I will impact as many people as you current are.
Cheers and thanks for all the value you put out.
Much appreciated.
I’m really glad I came across this story, it has haunted me for over three years to quit my high paying job. I feel awful and guilty about it, I make over $400,000 a year between bonus and salary and on top of that get another $16,000(additional to my $18k throw in) in 401k each year which has accumulated $400,000 in 10 years. The real issue is that I have no leadership/stake in the company and the office has very low office morale. I did build a side gig, real estate investments, and sold some of them recently freeing up $425,000 in cash, the remaining equity from them are well over $1.25 million. My mind never stop’s, it alway’s needs new and thrilling excitement. The leadership in my current company at a local level is really detached, we don’t run as a unit and often talk bad about each other, again, office morale is at all time low’s.
My options were below :
1. Purchase an online business, get an SBA loan and use 10% down, to create a replacement income. Quit my job and do that full time with my love of real estate deal’s. This way I would effectively get away from a low office morale. I only like real estate as a side gig, I do not believe I could effectively run it full time since, purchasing a home and renovating it takes a very long time to get back the return.
2.) Stay at my current corp gig, purchase the online commerce business and grow it, lease office space and go there majority of the time, and still do occasional real estate deals. Continue to stay away from the office as much as possible. One big plus is I can work remote from my low office morale company.
3.) Quit my low office morale job, and take an offer in the same industry just different line of work to avoid non compete, I would take a hit on the income, and come down to about $200,000 a year. The new gig is a smaller company, it would give me a benefit of back end profit share and small ownership as long as the new company turns great profit based on their EBITDA each year. I would also be moving my family and selling some more of my real estate assets, for a fresh start. I would really only focus on this new gig, and since it would give me some ownership and be able to run my own new office, it may help. OR my fear, I would miss what I had before and be mad I left a decent amount of money on the table. ( I’m not thinking this would be the case but anyone have any thoughts ? )
Thanks
RtotheA
Life is too short to do something you don’t at least LIKE, regardless of the money.
Going the entrepreneur route was the most gratifying ever. Nothing feels better than creating something from nothing and watching it grow!
Related: Why Blogging Is The Best Business In The World
Leave USA and go to Europe (for example Bulgaria).
Rent a house in a countryside ($1000 including utilities per 1 month).
Leased a premises in the house and feed visitors with green food and amusements – $100 per room. After 15 days every income is clear profit (taxes here are 10%).
Drive around whole Europe, make your web business and write about your passion/hobby/etc where you are specialist or want to be such..- clear income in the end of every month!
Enjoy the cheap life and good people, food and nature.
BR
Hi all,
I have a very different good idea for You:
1step: I will take my family and go where the standard is similar, where the possibilities to have calm and interesting life with good neighbors, perfect internet to write and support privet business through internet as web site for example, and in the end, to make very attractive excursions in the countries around your new place.
2step: I will make research where is this place and visit several similar to description above places to be sure that the life is possible as a real dream.
3step: I will start with parallels: web site, writing, learn another language to be prepare for my “second life”
That is all.
..and now facts:
1. I reccomend Bulgaria, a country in Europe, part of Balkans, nation from very warm people, nature with four seasons, possibilities for work from a distance (on the first place in the world about quality of internet in the capital Sofia), and very cheap products but very quality food (the people had no time and finance to make dirty the environment).
2. From Bulgaria You have a very fast access to whole Europe + comparability to leave in her periphery (and her problems).
3. I a big cities (including capital), you could rent apartment from 100 sq.m. for $ 600-700 furnished and utilities are around $300. This is a very reasonable minimum for 4 persons’ family and many people from central and west Europe do it now and make their business from Bulgaria!
4. If you rent a house in a countryside, you could give premises to you friends or other visitor and will increase your incomes (normal price for a room is around $30-40/night x15 days =around $ 400 for month), and decrease your expenses here. The local nature permit to be developed green tourism and for clean/green food and parties You could increase your incomes with another $50-100 /day for 1 family, which makes another $500 for month (for 10 days every month).
5.Your properties in USA will be leased and give you another income and your bank accounts/stock shares/etc will be non touched!
This is a perfect life for a smart families :)
BTW in our country is available the idea about rented houses in the countryside against no rent (for free, only to be supported :) )..think over this facts!
Here is old Europe with her magnificent history, culture and buildings.. Very near to your financial strength and almost everywhere English is a second language.
BR and enjoy the perfect summer
I came across this while googling “how much money do you need to quit your job for 1 year”. I love this site, fantastic writing.
I’m 32 and living in Singapore with no mortgage/kids/debt. I’ve accumulated US$80k in cash savings and thinking about quitting my job to travel, explore other careers, and “find” myself. My job is ok but I’ve hit a wall in my desire to ascend the corporate ranks, so I spent the last 2 years saving all I could in preparation for quitting. A big part of me hesitates to quit because I think I haven’t saved enough though I’ve calculated I can live frugally for about 1 year on my savings before going back to work and still have savings in the bank. I’m far from US$3m, but US$80k seems ok for a year-long career break. Is it enough money? It never feels like enough!
Sam did you write this article about yourselves just switched your job profile :)
Fantastic article – loved it.
Paul’s story could not have hit closer to home. So I’m a couple years older but am in a pretty similar situation. $3 liquid, $3 in paid for properties between home and rentals (throws off about $10k month after taxes), and about $2 in other investments that are not so liquid but throw off nice dividends. I make about $1 a year sometimes more, enjoy what I do, have all the toys I could want, but sometimes wonder what else is out there if I just up and quit. It may sound like an easy decision, but the whole just 1 more or 3 more years can be a trap. I’m sort of going down the path to work/retire where I set my job up where I can work 1/2 as much and be willing to earn 1/2 as much. Definitely not ready to call it quits, but there certainly are days I’m ready to. I just discovered this website, I look forward to reading more.
Welcome to my site! How did you find it? To have $8 mil in net worth and make $1 mil a year is incredible. I told myself 3 more years a couple times before pulling the ripcord at 35.
I’m excited to be an entrepreneur and I really enjoy the freedom. I don’t make nearly as much, but I’m happy. Spend your time looking around!
Sam
Honestly I’m not exactly sure how I found it, I think it was a link posted in a forum on some other website…anyway I’m glad I stumbled across it because it could not be more right on with some of my thoughts. It is ironic that you came up with my same number of $15k month (after tax) for an optimal living expense where there is not a true care in the world. Tell me if you think my logic is flawed though, I’m considering that my retirement will span 50 years, so there is a theory of a 33 times multiple of your annual nut you need to cover adjusted for inflation that in no 50 year period in the last 100 years your money would run out. Essentially even if you retired on Oct 19th, 1929 you would still come out fine with a balance portfolio. So I know it is probably a little to conservative, but I calculate I’ll need about $8.3M to live in perpetuity and have next to no risk of outliving the money. The rub with this thought process is though is running the simulations about 50% of the time you end up with 40~50M in the bank when you croak…I guess if I”m lucky enough get to that point I can always adjust and start being more charitable. Anyway good problems to have. Keep up the good work and have a great Thanksgiving!
There’s another option that no one has mentioned. Move somewhere that the cost of living is low; possibly in the Pacific Islands or Central America. As long as there is decent health care available and the govt is relatively stable and peaceful you can enjoy life for many times longer on the same money that it takes to live in more expensive countries. Of course that means leaving your friends and family and having to pay for expensive travel if you want to visit, but it might be worth it. A person could live very comfortably for the rest of their lives for WAY less than a million dollars in a place like Thailand or Costa Rica.
True. The great benefit of living in SF and NYC is that I can move practically anywhere in the world, and it’ll be cheaper.
Hence, I recommend folks make the big bucks in expensive cities and move in retirement.
i was in paul’s position, and exactly the same age, but i was 37 when i left. i had saved the same amount in cash, and i realized that i have lived half my life the way i was suppose too, and was good at what i did, i was good at closing deals, and great and leading people to close deals, although i was hindered by management at times, and i could have stayed comfortably and lived it out for another 5 years, although when you get to that age, time is more valuable than money, and you have to live the life you want, and that does not mean being irresponsible, but being methodical.
paul figured out how to make sales happen and make a fantastic income, he should leave, he is still young and he can get the money he wants again when he wants to put his mind to it.
leave my friend and live your life, and chart your course, you have lived almost half your life, and make the other half the way you want.
best of luck
Thats what i have been doing lately, which is why there is increased traffic at my site, and i have travelled further into some of the yakezie members site.. i can devote time to it at work. its a win win for me…lol speaking of that almost time to run outta here!
About 4 years. I dont mind the actual work it is the people around me that bring me down. They are lazy a few get paid close to what I make. Being in finance we can see everyones salary and seeing how much effort they put forth makes me want to do less work and a boss that doesnt care.
I am pumped about my wife getting a job. I went and saw her the other day at work. She works with kid with cerebral palsy. I give her alot of credit it was tough just to walk into her class room and see. There were 5 adults to 6 kids.
What about kicking back as well like the others? Longer lunch breaks, leaving earlier, giving work to subordinates etc. Could be fun!
I would go with option 3 or 4. I am in a rut at my current job, i have lost all interest and am trying to find a way to reinvigorate myself. I am sitting at work now writing this post. I am glad they dont block much content. Having a side income stream to take over when you leave your job is critical, it is hard to shift spending styles and your whole lifestyle when you are down an income. We have lived for a while on my income solely. My wife got a job last week so we are a two income for the first time since we have been married (4) yrs. I am ecstatic and we will be able to start finally setting money aside for our future. I am still in the introductory phase of my website, but i loo forward to writing useful content for the masses.
Sorry you are in a rut. How long have you been at your job? Congrats on your wife getting a job!
As a business owner I can emphasize with Paul as I go through similar thoughts at times but I think he just needs to change his mindset and keep on working.
The reason I do so is simply because I feel a responsibility to my employees, they have made me successful and creating jobs is among one of my greatest achievements. I don’t need to work anymore but part of me wants to keep going and I enjoy seeing my employees thrive in our community and raise families.
On a side note regarding whether a 911 turbo would fix Paul’s midlife crisis, I’ve had a couple 911 turbos among other exotics and I’m sure he will enjoy it but only a change of mindset will make him feel better about work.
Sounds good mate. The difference with Paul is, he is just an employee, whereas you sound like the founder and CEO. His only responsibility is to himself and to his wife.
First world problems!
Idea! Sell everything and put it into tax free bonds yielding roughly 4.5%. 135k a yr tax free is like a 250k/yr salary. Have your wife quit, then go live in Argentina…or Thailand to take advantage to the lower cost of living. Not saying I’d 100% recommend it, but plenty of my clients from my old life used to do stuff like this frequently. 250k a yr (salary) and 3 mil in a semi liquid (I say that with caution) asset? That’s tough to pass up.
Cheers
Jason
It’s definitely not a bad idea at all! The only worry is what if your tax free muni bonds go down 10%? No such thing as a free lunch!
Cost of Living in somewhere beautiful like Thailand or Roatan is ridiculously cheap (some people say a tenth of that of the US). Your friend wouldn’t know what to do with 135k a year in these places!! A side business would be easy enough to set up in one of places for a little entertainment :)
Ah, we should all have Paul’s problems, with a cool million in cash and three million net worth at the ripe old age of 38. :-)
After a three-month sabbatical, Paul may also find that he’s not cut out to be an entrepreneur, and that he misses his friends at work.
Wouldn’t that suck though, actually working on your 3-month sabbatical? By the time you get back, you’ll be so burnt out you’ll want to quit everything!
Just stop prevaricating and do it – my advice based on experience. After being made redundant (for the 4th time in my working life) around 15 months ago, I finally took the plunge and dropped out of the corporate grind and started doing something I wanted to do, and had thought about doing for years and years. But not without a great deal of ‘what ifs’, ‘maybe’, etc. etc. I wasn’t earning anything like your friend Paul’s salary; I didn’t have anything like his savings or investments; but I do have a family to support. I’m now living on a very low income, but I’ve moved to a very low income demand environment. Life is day to day, which is what we are really wired for. Yes, we want to work, but want to work at something that means something. I had to laugh about the spreadsheet advice – total bollocks! If you’ve got a $1m in the bank, you can do it. Get rid of the clutter, downsize and start living. I brought all of our household clutter with us in a shipping container that I bought. 50% of the clutter has not seen the light of day since we arrived and is still in packing boxes in the container. You have no idea how much rubbish you waste your life and money and time accumulating just to put it in a drawer or on a shelf.
Just do it!
Thanks for sharing your story. Perhaps it’s a sign after 4 layoffs that the corporate world is not for you? With Paul, he’s risen steadily every 2-4 years for Ye past 16 years, so his case is very different IMO. If you’re not making much, ad have been shunned by corporate America a lot, it’s much easier to screw it all!
Thanks NTF. Tis true… $1 million sounds like a lot to a 22 year old, and as a 38 year old…. not so much anymore. The other thing is interest rates….. back then, you could get 4% interest savings, now it’s 0.3%. So maybe, he actually needs $12 million!!! Holy SHIT!
Dear Paul,
You seem like an intelligent, driven individual. According to Malcom Gladwell’s definition of an expert (10,000 hours in a given trade or craft) you my friend are an expert in sales. That gives you two vital components of starting any business – networking and sales. If you enjoy “insert what you enjoy here” and can network with folks who not only enjoy but are experts in that field you will certainly be able to partner with someone given your background in sales. If entrepreneurship is what you want to do it may not matter what field, often running your own show can fill the “purpose” void or solve the mid-life crisis as what it is commonly called.
All the best,
Dan
HMI, reading between the lines, I think your point about developing an expertise in sales and transferring this expertise in his own venture is very powerful. In other words, have confidence in yourself Paul, for you are an expert!
There are other alternatives, Sam:
He could be looking to spend his spare time by volunteering or working to sit on the board of a volunteer organization. That way, he could position himself with one foot in either world until there is a natural opportunity / cross over point that comes up.
Sure, it will be much more work in the short term but it doesn’t sound like your friend is afraid of hard work.
-Mike
Before he even goes on sabbatical, why not try doing some of these things as hobbies first? Suggest he start volunteering at a children’s shelter, writing travel articles, blogging, taking an animal-training course, etc.?
Or, set some non-work goals for himself. Setting a goal to run a marathon or read the top 100 novels of all time, or brew a beer that tastes just like Guiness or whatever may show him that a great salary enable you to do the things you want to do outside of work.
Trying things out while he’s getting this kind of salary is the best path to take first. Then take the sabbatical.
It’s time to hang it up at work when he’s found something he’s eager to pursue full-time. The money will come.
Good point, Leah. Paul may not have what it takes to do some of these things as a career. If he is used to having great success as a result of his efforts, working with disabled children may be very frustrating to him where success may come in baby steps. He may not have the patience for it. On the other hand, he could be great at it, and it could give his life the meaning he has been looking for. Volunteering would be a great way to get an idea of this.
Sounds good. So try them out first and discover what he really likes. Once he’s found that one or two things, then go on a sabbatical to pursue his likes, and then decide after whether to go for it or not!
You should write a blog!
Well the Millionaire next door would say that his net worth should be his age (38 divided by 10) X his annual salary. So if he is making between $300k – 500k a year, his net worth should be around $1.2 – 2.0 Million dollars. As someone who has a net worth of $3 Million that would mean he is 1.5 to 2+ times where he would be expected to be at his age, and would classify him as a PAW (prodigious accumulator of wealth).
I’m assuming he’s received no inheritances- sounds like he is a good saver and investor. Well done for sure.
He could just carry on another 2-7 years and see how it unfolds.
The biggest de-motivator is seeing the bonus comp drop. That happened to me and I went through the same feelings. Time to ride it out.
And I’m sure being a VP of Sales is less stress than rebuilding a flooded factory with a very high pressure expectation of having it rebuilt quickly and with spending the minimum amount possible!
-Mike
When you went through the same feeling, did you just suck it up and just keep on going?
When do you call it quits?
I just sucked it up. I guess I’d call it quits when there was some sort of an external “sign”, like if the company goes under of if there is a layoff, etc.
It is along the lines of living life by following the road until you find the fork or simply the end.
-Mike
Mike,
Since you just sucked it up and kept on going, how many years ago was that? And given it’s been a number of years now, what about just doing something totally different now?
My fear for Paul, and my fear for myself is that we just do “one more year, or five more years”, and when we get there, we want to do one more year after that. It never ends!
err… Principles…
Great article as usual Sam. Here’s what I recommend
1. Watch this TED talk about the power of time off
https://www.ted.com/talks/lang/en/stefan_sagmeister_the_power_of_time_off.html
2. Take the sabbatical applying some of the principals in that talk – it’s not about 3 months of sitting at the beach rather deep thinking time about your passions and lots of reflection. If he gets some rest and clarity on what that next life looks like it was time well spent. Do NOT remodel the house during the sabbatical – I did and it was a mistake and lost opportunity.
3. Decide what skills, experiences, or connections he needs in his next gig. That could be real retirement or a new career/business.
4. If he has them the go all in to the new thing. If not and if he can gain those in his current company by refactoring his job or taking extra assignments do that. Quotas will still be important but the other contribution may help deflect some of the negativity if the numbers are lower than before. Having renewed enthusiasm because he is learning and progressing towards his new goals would be powerful and likely help him show up better anyway. This would be much better than splitting his attention between current company and startup where he may not have enough focus in either.
Step 3 and 4 will change his emotional outlook from suffering while waiting for to hit a magic number to seizing the opportunity the current situation offers.
Thanks for highlighting the TED talk! Always love them. Some very good advice and I’ve penned another post on a Sabbatical either here or on Untemplater.com to discuss further.
Cheers mate, Sam
A great post – and one that strikes very close to home with me.
Even for the driven, there often comes a time when the motivation fades and its time to:
1. find a way to rekindle that enthusiasm (which is not easy)
2. let go and move on to something else (which is not easy)
3. serve time and dream about doing something else without ever getting around to doing it (which is not pleasant)
A sabatical would be my choice – I certainly wish that I’d had the option of taking one. If that doesn’t lead to some resolution, then trying to get laid off would be the next choice.
In the meantime, practice living off savings only.
What’s your situation mate?
Not sure I understand your line about just living off savings only. You mean the $3,000-$4,000 in savings interest income he receives? That could be a good idea.
About a year away from taking early retirement. It was going to be this year, but I’d like a greater margin of safety before leaving a very well paying job. Or maybe I’m just a whimp.
The point about practing living off savings only (maybe just putting the take home salary into a separate fund for a while), is to mentally prepare for the day when expenses can only be met from savings. Ask me in a year’s time and i’ll let you know whether it works in practice…..
Cheers
traineeinvestor
Gotcha. Excited for you!
How many years did you work to be able to achieve this milestone? Did you have a savings target in mind?