“In the truest sense, freedom cannot be bestowed; it must be achieved.”Franklin D. Roosevelt
If you want to quit your job and begin living your life how you see fit, you must have a system in place. Otherwise, not long after you quit your job you find yourself broke, in need of cash, and crawling back into the rat race. I know this because it happened to me.
Five years ago I tried to outright quit my job and start a life of freedom. But I hadn’t done the proper homework and six months later I was job hunting again. The second time around I made sure things were in place to ensure never having to return. Below are the five things that allowed me to quit my job.
1. I Paid Off My Debt
Many people may groan already at number one, but the truth is this is the most critical step. Debt is a disease. It festers and spreads. Most of all, it’s a burden. The first time I quit my job, I hadn’t dealt with my debt and believe I could just make my payments after I broke free. But having debt means having monthly payments, which means you need more money every month. This makes the amount of work required to quit your job exponentially greater.
I cleared out my debt using the debt snowball method. I listed everything I owed on – credit cards, student loan, my Honda, a dentist bill – from smallest to largest, regardless of interest rate. Paid off the smallest, then the next smallest, and kept going. Every time something was paid off, the payment on the next debt got bigger. Doing this, I paid off over $33,000 in debt in 24 months. The other important part is to STOP using debt while doing this; put away or cut up the credit cards!
No debt is no monthly payments. Now you don’t need as much every month.
2. I Set Aside Emergency Savings
You’ll need this regardless if you’re quitting your job or not. Savings gives piece of mind in the event the inevitable emergency appears. Life is not life without the unpredictable. Having six months’ worth of expenses saved up ensures you’re covered in an emergency, and don’t have to quickly find a job to cover that broken water heater or house repair. If you can save more than six months, do it!
Quick note on this: savings and investments are two different things. Savings are liquid, meaning you can quickly get and use the cash. If you’re selling investments to cover an emergency, you’re doing yourself a disservice and it will set you back. Make sure your six months or more is cash – savings (even with a crappy interest rate), money market fund, or cash in a safe. It’s set aside specifically in case of emergency.
3. I Have a Consulting Business
Own a business? I thought this blog was about quitting your job?
What I mean by “Own a Business” is “have a source of revenue.” Remember, you’re only going to have six months or so in savings. If you use that to cover your monthly nut, what do you do when it’s gone? You need a revenue stream to match your monthly nut, as well as provide funds for traveling or spending time on your passion. It doesn’t have to be a HUGE business, like a tech startup or owning a McDonald’s. Many people today make plenty of monthly cash running eBay stores or selling on Amazon FBA. When you quit your job, you have time to devote to side hustles, many of which don’t take up a lot of time. In fact, many entrepreneurs make their money with a laptop and the internet.
It’s best to have this business in place already when you quit your job, meaning you’re devoting free time to it on the side. If you don’t have free time, you can always find some (trust me). The first time I quit my job (and later had to go back to work), I quit to start a consulting business. I figured I could have it up and going within six months. It took nearly FIVE YEARS until it was big enough with regular work before I could quit my job again. I found time to devote to it early in the morning, waking before everyone else and handling emails and paperwork before the sun came up.
4. I Have Investments
The reason why I like having investments is I like to feel my money is working for me. If you invest right, your money makes money for you. The can be the case in having bonds that pay yield, stocks that pay dividends, or index and mutual funds that grow over time with the market. Investments are important in the event you’re unable to work one day. If you’re not physically capable to run your side hustle or have an emergency so big you need much more than your six months emergency fund, your investments will come in handy.
The other neat thing about investing is it can become a revenue stream. Dividends and bond yields are a way of collecting income (usually at a lower tax rate too). Eventually, your dividends and yields could literally become enough to live off of. Imagine collecting a paycheck every month just for own a company’s stock. Plenty of big companies offer quarterly dividends to their stockholders. If you don’t need the money at the time of the dividend’s issuance, re-invest it using DRIP (Dividend Re-Investment Program) or just buy buying more shares with the money. That way, when the next dividend comes around, you’ll be paid even more since you own more shares.
5. I Made a Plan
This one may be the most important of all. How do get where you’re going when you don’t know how to get there? This is the work part, and it usually takes a lot of self-reflection. The first time I decided to lay out and write down everything I owed and to whom, it was tough. But once the shock and disappointment wore off, I knew what I had to do and got to work.
The worst thing is, without a plan, the day you quit your job will always be referred to as “someday.” “Someday I will quit my job.” “Someday I’ll get to do what I really want to do.” “Someday will come…someday.” It kills me to hear people talk like this. If you truly want to be free of a job you hate or no longer want to be an employee to someone else, then take a stand. Put in the work. Make a plan.
You can do this! Know how much debt you have and what it will take to pay it off. I’ll cover paying off debt much more in this blog (as I’m obsessed with it!). Research side hustles and small business ideas. Starting an eBay store or Amazon store is not hard, nor does it take long. Are you already good at something like computers or drawing? Offer your services on Fiverr or Upwork.com. Offer a class in your hometown. Write an eBook on what you know. There’s so many ways to start a business that take so little prep and tools. Start putting that side hustle money to debt, savings, and investments.
This is your Rocky moment. This is the training montage as you prepare for the title. Instead of lifting weights, you’re researching dividend stocks or bonds. You’re not pounding a punching bag, you’re punching down debt with extra payments. Put on Bill Conti’s Rocky score — I don’t know anyone could listen to “Going the Distance” without getting fired up!
Have questions? Feel stuck in a rut? Don’t know where to start? Write a comment or send me a message!