I see and hear cases all the time where people quit their jobs and say they are done with conventional work forever, only to go crawling back when things didn’t go quite as planned. I think the problem lies with not having the proper plan and when financial issues do come up, we snap back to that comfort zone of a job to get the solution. So, that is why this site concentrates on that plan. A written plan for when things do go haywire, you have a step-by-step methodology to get you back on track.
struggled with this same ‘lack of a plan’ mindset thing years ago. I went part-time at my job to dip my foot in the water so to speak of making a go of it on my own. I had some pretty good web marketing skills, learned some SEO tricks to get local business websites ranking, and had some success under my belt with some part-time clients. I made a deal with my boss to go part-time. I worked from home in the morning and went to my job in the afternoon.
I crashed and burned miserably. I didn’t have a good plan. I didn’t have a good client-gathering system in place, so most of my time was spent trying to get work rather than doing work that made me money. The second problem was that it was our busy season. I was a salaried employee, so I ended up spending way more than part-time hours at the job just to make sure everything got done. I’m not trying to blame anyone for my failure.
The problem was ultimately my fault for not having a proper plan and not having my stuff in order before going part-time. I ended up going back full-time. So now, I took what I learned, and assembled a system to create a plan before going out on my own.
Leave the Nine to Five; Getting your mind right about leaving
One of the first steps to getting out of the nine-to-five is understanding the right mindset. If everything isn’t very clear in your mind and you’re doing this on a whim, the chances of relapsing back into a job are pretty good. Think of this as a business decision. You are your own business. You need to treat yourself like a business. Businesses don’t have just one client. (well, most don’t anyway) Getting out of the nine-to-five and getting more clients to pay you money is just being business savvy.
We have been trained for years that a job is a safe and comfortable place to be. It’s getting less and less as time goes on. Businesses are making business decisions to cut salaries and cut employees to make more money and make themselves more efficient. But yet, when I mention to some business owners that employees should take the same mindset and try to make the most money for themselves, they think it’s arrogant. They feel the employees should be grateful to have a job in the first place.
The economy is shifting. Good talented people need to treat themselves like a business and market themselves and their skills to other companies to get the highest price for their skills possible.
Leave the Nine to Five; The world is just a bunch of businesses
I see the world now as a bunch of businesses working together. I see it not as Google with a bunch of employees, but as Google with a bunch of side businesses working with them to create a product with the Google name. Having this mindset for a while will begin to break the mindset dependency chain to having a regular job. Once you get that dependency broken and a good plan in place, it will seem like the job is holding you back.
Another thing to do is to explore the world of people who have already done it. This will give you a sense of you not being alone. Some people have quit their jobs to build the life they want first with the making money aspect coming second. They range in lifestyles from the stay-at-home moms earning money while spending as much time with their families as possible to people designing a life of continual world travel.
You need to have it firmly in your mind that people are doing it and you can do it too.
Leave the Nine to Five; Getting your finances in order
Now that you have your mindset locked in and you’re ready to get started on the plan let’s get started on getting your finances on order. This was another big problem when I went part-time. I was out of debt, but my monthly bills were too high, and my nest egg wasn’t big enough to give me the cushion I needed.
The saying goes, everybody’s threshold to pain is different. My actual threshold for physical pain I believe is quite high. I get hurt, and I grit my teeth and bear it. My wife is just the opposite. She is one of the most confident people I know when it comes to the ‘it will work out’ mindset. Nothing ever seems to phase her. I envy that. What you need to do is get to know yourself and take a measurement of your threshold for organizational and financial pain.
Your threshold of pain will determine your levels of organization and the amount of nest egg cushion you will need. But, you will need to get some basics in place before getting out regardless of your threshold to pain.
Leave the Nine to Five; Getting out of Debt
This is a primary reason to have a nine-to-five job. Having a steady income to pay your bills and getting side money is the fastest way to pay down debt. I don’t believe it is even a good idea to leave a job while having a ton of debt. Debt is like that big cloud hanging over your head, following you around everywhere you go. I’m sure there might be some people who could survive outside of a regular job with a ton of debt, but I don’t recommend it. You will have too many things on your mind to worry about besides finding extra money to pay off that credit card or student loan debt.
You will probably need to live very frugally for the first while after quitting your job until you get accustomed to how the money will flow in and out. If you are earning money through freelancing, you will have periods where work will most likely be slow, and you will need to adjust to that without worrying about paying down debt.
Leave the Nine to Five; How much of a nest egg cushion do I need?
This is another crucial aspect for me, at least, to break out of the nine to five. You need to have enough money in the bank to pay the bills in case something doesn’t go as planned. Everyone’s amount will be different. Mine is quite high. I needed to have a year’s worth of income in the bank before I was comfortable with leaving. Some people say six months. That is probably the most common amount I’ve heard.
But, I’m a bit squeamish. I needed a year. But, regardless of the amount, don’t go without having something. Like I said with paying down debt. You will have enough on your financial mind to worry about without having to deal with paying your rent every month. I also break up my nest egg into different accounts in the bank for various reasons.
First, electronic theft is increasing. Breaking your nest egg into smaller chunks will make it hurt less if you are ever the victim of identity theft or some electronic crime. This is also why I never use my debit card at public terminals. I always only use a fraud-protected Visa card for public electronic transactions.
The second reason to break up my nest egg is to treat it like you would a budget. The different accounts are like different budget categories. Instead of the money just being in a different column on a spreadsheet, it is in a different bank account entirely.
Leave the Nine to Five; Having a solid money-making plan in place
This was probably my biggest downfall when I left my full-time job for part-time. I didn’t have an excellent structure in place for how I was going to make money. I had some clients, and I knew what I needed to do to get more, but I didn’t have the automated system and the plan to keep it rolling.
What system I did have, had major flaws if you stopped working it for any part of the time. It was also too labor-intensive to get the clients, do the work to earn a full-time living, and still go to work part of the time. (Pushing more toward full-time because we were busy; just with part-time pay.)
With a substantial nest egg cushion, you might not need to make a full-time income before you leave your job, but you should have a solid plan in place, and it should be growing toward a full-time income. Having a plan and having backup plans to keep you out of full-time employment is the important thing. I would also recommend having multiple streams of income set up before you leave your job.
If you had a blog you worked at, coupled with some freelance work for clients, then did some arbitrage on the side to fill in the gaps, that would be a pretty good diversified income stream. Then, you would always have your nest egg to fill in the minor gaps if you got in a pinch.
Leave the Nine to Five; Still planning for retirement
I think people get into that ‘big score’ mindset and forget about setting up for retirement. Retirement money looks a little different than when you are chained to a nine-to-five fixed income, but you can’t neglect this, it’s way too important. Retirement income for entrepreneurs and business people looks more like investments than it does IRAs or 401 Ks, but it is all retirement money in my eyes.
Investment income should be the goal for people working nine-to-five jobs anyway. Roth IRAs are ok. I don’t like 401K’s or any type of managed mutual funds. There are too many ways for investment brokers to scam money in the form of fees. I lean more toward easy-to-understand investments, but that is a story for another blog post.
The main thing to keep in mind is to not drop retirement planning in the search for the big money score. The truth is everyone’s plan will look a little different. Some will have different thresholds of planning and financial pain. Some will build different personal businesses to provide income. Many will have different ideas of what their perfect lifestyle will look like.
Through all the differences, there are overarching similarities that we can use as a template to create the perfect plan to leave the nine-to-five and stay out. At a core level, we need to get our minds right about leaving; we need to eliminate debt and build a nest egg of money to smooth out and to be an emergency fund while we adjust to not having consistent pay.
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Be safe,
Kevin