How To Figure Out When You Can Quit

yesSpecial note from Dividend Mantra: Today, we have a guest post by Eli Inkrot. I don’t allow guest posts often, and this is the second in the last week. But Eli has a story that really resonates with me. He will probably be familiar for quite a few of you readers out there, as he routinely writes for Seeking Alpha. I actually met Eli once, as he dropped off his book for me to read, review, and recommend if I enjoyed it. Today, he’s discussing some recent changes he made in his life, and how those changes can apply to others. 

Hi my name is Eli, great to meet you. A little about myself: by age 24 I had received two undergrad degrees, a Master’s in Finance, lived abroad, wrote a book, published over 100 articles and was the vice president for two different companies. At 25 I decided to live more purposefully.

You can check out my new website “The Currency Of Time” to learn more.

Before we get started, I’d like to thank Dividend Mantra for allowing me to Guest Post on his site. I know he has a lot of Guest Post options, and I’m pleased that he put his trust in the Eli Inkrot brand.

Speaking of trust, much like the majority of this sites readers, I applaud Jason’s recent transition to writing full time. Incidentally, I actually made a similar move myself. When I said, “living more purposefully,” I meant that I quit my VP job and became my own boss.

So are Jason and I both crazy – giving up perfectly reliable paychecks – or do we just want to inspire others, regardless of the sudden monetary sacrifice? I can only speak for myself, but I would imagine that the answers to those questions would be: “perhaps” and “almost certainly.” Of course that’s probably not the question you wanted to ask. I’m guessing your inquiry would be more along these lines: “How did you figure out when you can quit?”

It’s a great question. We’re both pursuing financial independence, yet we both decided to take temporary pay cuts. For me, the answer comes down to two basic tenets.

The first ideology is psychological. You see I didn’t just outright quit my job – barreling into my boss’s office and proclaiming, “Screw you, I quit!” Quite the contrary actually: I went to my employer and proposed a pay cut in exchange for some time off. It was never about hating my job. I laid out an idea that I believed to me mutually beneficial and was simply looking for some middle ground. Instead, my employer told me that they had no interest in paying me less or having me work less. So I had to make a choice.

I thought about what a shame it would be if I “died with my music still in me;” with a song still to be sung – and all because my office chair had a cushy back, because the paycheck was steady. My decision was made. I went back to my employer and said:

“I appreciate the opportunity, but I want to try my hand at a variety of endeavors.”

Just like that, I had become my own boss. Sometimes you’re forced out, sometimes you choose to leave, and other times it’s an awkward negotiation. Whatever the situation, keep in mind that if you don’t truly enjoy it then the extra or “dependable” money likely won’t solve any problems. But you have to be ready for it.

The second underlying tenet rests in the mechanics of your financial situation. If I had a boatload of student debt or no emergency fund I likely wouldn’t be writing to you right now. I’d be sitting in a white box, taking client calls or answering emails for an employer. But I’m not doing that. Today I get write from where I choose (water view with a breeze) and interact with you lovely folks.

See the thing is, before I tried to negotiate for a pay cut, I had roughly 10-years worth of expenses covered in the form of net assets. Not enough to retire, but certainly enough to buy some intermediate freedom. If I couldn’t figure it out in a decade well then perhaps I wouldn’t figure it out at all. It’s comforting to know that you could take a year or two off (or a decade for that matter) and still be just fine. Plus, it’s helpful to understand that you don’t need to immediately (or ever) replicate your previous salary to be happy.

Allow me to give you an illustration to demonstrate what I mean. Below I have included a trailing-twelve month view of my finances:

DM Guest Post 1 Pic 1

The top blue line is my trailing twelve-month income leading up to my decision, the middle red line represents expenses and the bottom green line shows passive income received from dividends and interest. I keep track of my monetary life down to the penny, but for universality sake I decided to use “X” instead of the actual dollar multiple on the y-axis. The exact numbers aren’t important; it’s the concept that should be highlighted. Finally, the x-axis is simply a plotting of each observation period.

The above chart was the second leg to my decision process. Here’s how I thought about it:

There are basically 6 increments on this graph. My highest trailing yearly income reached about 5.5X, yet my expenses never topped out past 2X. As such, I knew that I didn’t need to make 5 or 6X to be successful. I could make 4X and be just fine. Actually that’s better than fine, if I could make just 3X I’d be ok. For that matter, with 2X coming in I would still be living quite comfortably. In fact, based on my most recent mark, I would need to start going out to eat more and buying more stuff just to hit the 2X level. “Success” could very well mean making half of what I was previously.

Putting it in graphical form squashes the notion that you need the same amount of income as your day job to survive. If you have a healthy savings percentage, your net assets and earnings ability allow you to be happy on less. As long as you’re making more than you spend, all is well.

As a bonus, I thought it might be fun to take a look at Jason’s historical finances as well:

DM Guest Post 1 Pic 2

Based upon his Monthly Budgets you can see a very similar, albeit much more consistent, theme play out leading to his decision to quit (this time with real numbers). He was making around $60,000, but the work didn’t drive him so he struck out on his own.

The thing about it is Dividend Mantra doesn’t need to make $60,000 to be successful (although at the rate he’s going, he could very well do so). As seen in the graph above, something in the $20,000 area would likely do just fine. In fact, we all know that he could even beat that mark if he wanted to. Add in the idea that more than a fourth of his needed expenses are covered in dividends and it’s easy to see that matching the previous job income shouldn’t really be a primary focus. It could happen anyway, but the focus – once you have a reasonable financial fortress built – should be on doing something you enjoy.

Perhaps most impressive is the idea that even if he can only match income to expenses, by simply reinvesting payments and allowing dividend growth to do its thing, Jason would likely reach $20,000 in annual payouts in the next 15 years or so anyway. Of course the astute wager would certainly be on the sooner side of that mark.

In the end, it basically comes down to two things: being mentally ready and being financially ready. It’s simple, sure, but I believe each has lasting realizations. On the psychological side a lot of people have the “one more year syndrome.” They think that maybe they’ll just stick it out for another year and get that much comfortable. That’s fine; yet realize that what you’re gaining in perceived security could very well be diminishing your finite resource of time. On the opposite end of the spectrum, you probably shouldn’t quit today without an inkling of a plan. There’s no pride in sitting on your couch watching Judge Judy reruns all day because you didn’t like the way someone looked at you during work. You need to have a basic outline of what you’d like to do with this new “found” time. A mental roadmap, if you will.

On the financial side there’s two basic schools of thought. My idea, as was Jason’s, was to build up a nice little cushion – trading time for money – before venturing out on your own. This way you have something to lean on if everything doesn’t go according to plan. On the other hand, you could subscribe to the Mark Cuban “no safety net” attitude whereby failing isn’t an option because that’s all you have. Either way, keep in mind that the decision is yours. That is, the only person who has to approve of your actions is the one making them.

So, have you figured out when you can quit?

Photo Credit: graur codrin/FreeDigitalPhotos.net

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72 Comments

  1. Good post! I agree with the mentally ready part too – as we are nowhere near ready, just the thought of quitting makes me panic slightly. If I had no choice in the matter, we’d manage somehow, but we’re not ready to go it alone though. Going to have a read of your site now 🙂

  2. Hi Eli,

    What a coincidence… Just now, during my break time, I was checking how much money I really need to survey if I loose my job OR quit it to live the life that I really need. I did some calculations with my expenses and predicted passive dividend income.

    You answered my questions with a simple graph. Thank you!

    Cheers,

  3. Eli,

    Thanks for the different perspective on retiring early. I think about this very subject often. Right now my take home pay is about 5.5 times my monthly expenses and my passive income covers almost half of my expenses. The trade off for the money unfortunately is working 6 days a week, EVERY WEEK and my life is a blur. Some days I feel like going to work at a garden nursery, or a guitar shop just to decompress a little. I could do this with little impact to my lifestyle and it might even help transition to financial independence. The problem is, in the back of mind, I keep telling myself “Hang in there one more year and you can leave for good.” I’m not sure that I will ever get off the hamster wheel unless I am pushed off.

    MDP

  4. The big driver is starting off with a high savings rate. That gives the double whammy of lowering your expenses and providing passive income sources. Right now excluding my passive income I could take a job that pays about 30% of my current income and we’d be doing just fine. I’ve started thinking about possible exit plans even though they’re still a few years away.

  5. I’ll have to modify my own chart to get it in the same format as yours and see how it looks. My spreadsheet right now just shows monthly income, expenses and passive income but not on an annualized basis. I might be better off than I think.

  6. Thanks for sharing the different perspective on early retirement. When it comes down to it the big saving rate is the key.

    Love the graphs, it makes it easy to understand your concept.

  7. Nice article. I wish it was this simple to decide to quit. Being a single earner for a family of 4, I don’t think I can afford to do what DM or you have done anytime soon, but with consistent investing, I can hope to do sooner than later.

    DGJ

  8. Hi Nicola, thanks for your comment and kind words! Incidentally, I believe the mental side might be even more important than the financial side. You can always make more money, but having the right or wrong attitude is what truly drives the results. Go check out that site! 🙂

  9. Hi FinancialJourney, that is a coincidence… just now I was thinking about the same concept 🙂 I think the math helps with the mental side. If you can think along the lines of: “ok, I’d be fine for the next 5 or 10 or whatever amount of years” there isn’t as much pressure. I always advocate doing the applicable math.

    Thanks for commenting!

    All the best

  10. You said it: it’s all about the trade off. I think the “one more year syndrome” you’re describing is pretty common in the financial independence community. There’s always the possibility to have more. But eventually you have to figure out when enough is enough. Eventually you’re trading a finite resource – time – for an abundant one.

    I like to think of my move as the “one less year syndrome” – hopping off the hamster wheel before independence is in hand. In a way this creates its own independence. In the end I would guess the answer might lie somewhere in-between. Thanks for commenting!

  11. The savings rate is definitely the overwhelming factor. People often ask my investing advice and it goes something like this:

    “I’m saving $100 / month, how do I generate a 15% return”

    I tell them: “save $115 / month”

    Investing isn’t magical. The most important part is to focus on the inputs – saving and consistency. After that you can get into the details, but in the long-run there really isn’t a huge difference between an index fund and a dividend growth strategy, for instance. (I personally prefer the DGI ideology, but there’s a lot of methods that work out there.) The important part is to get the ball rolling, returns will come.

    I used to only look at monthly expenses / income / passive, much like the book “Your Money Or Your Life” recommends. However, it occurred to me that the monthly volatility wasn’t all that important. I didn’t particularly care if I made 3X in one month and 1X in the next, as long as it was relatively constant in the long-term. So I like the trailing twelve month method to smooth things a bit. Plus it automatically allows you to compare this month to the same month last year.

    It sounds like you’re in a great spot, keep up the good work!

  12. Thanks Tawcan! I appreciate the comment. I agree, savings rate is often underrated outside the personal finance community.

  13. DGJ, thanks for your message. I definitely agree. For me, I didn’t have many things – financial or otherwise – holding me back. In fact, there was more support towards the move than against it. So I figured: “if not now, when?” If I had a bunch of student loan debt or a family, my thinking would certainly be different.

    With that being said, time and effort can lead to great results – regardless of your starting or current position. You’ll get there, I’m sure of it.

  14. Very relevant article as many of us are approaching FI utopia, we do not discuss the mental and psychological issues in my opinion of finding meaning and purpose in life after quitting the rat race. Perhaps teaching and guiding other people to achieve FI would be a meaningful contribution to give back.

  15. Great point Jon. Finance 101 is creating a gap between what you make and what you spend. But Finance 102 should be how to best utilize that gap – the discretionary time that comes with the process. Thanks for sharing!

  16. Eli,
    Awesome post, that’s awesome you took the plunge to being your own boss. I myself am in a position where my expenses are far less than my means. And to see someone the same age as me take the plunge that’s pretty inspiring. The “one more syndrome” really hit me. Right now I am working in northern Canada far away from family in a remote location and sometime I worry that I will never want to quit work because the “money is too good” attitude. Your post was a good reminder that our time living is precious and if we are given the slightest opportunity to live we should take it.
    Thanks for posting!

    P. S. DM I like this guest post alot more than your last guest post haha

  17. The idea of retiring or change in direction in one’s life in general, scares a lot of people, as it did for me. I made the decision that “making things happen” in life was more important than ” watching things happen”, or worse yet ” wondering what happened”. I read several books, websites ( including Mantras) and decided that as much as I love Canada, I wanted to move to a warm, cheaper, less complicated place and moved to Puerto Vallarta. I still return a couple times a year but that is to get even with family & friends who visit me and eat their food & drink their beer..lol. For those afraid of the unknown, join the club, but I only had a small pension and the money from the sale of my principal residence (600K) to my name. I had travelled & partied my whole life & had saved nothing really beyond that. I decided to take a several buckets approach and kept out enough cash for 12 months living in chequing account. I bought five laddered GIC to take me from the next year to five years hence in the second bucket, knowing that God willing, everything is good for 5 yrs. I bought 20 big blue chip dividend stocks ( 14 Canadian & 6 US) weighted equally & will let the dividends build. With the balance I bought 4 etfs ( VTI, XIC, XEI, XRE) which covers the US, Canada & reits. No bonds, no Europe, Latin American or emerging markets, because I’m not smart enough to figure out currency risks, foreign taxation or political risks beyond our two great countries. My reason for spelling out how I tackled the unknown is simply to say it can be done, and right or wrong, this is how I overcame the fear of outliving my money, and a year later can say I wish I had have done it earlier.

  18. Ace, thanks for your comment and kind words.

    You got it. Sometimes it’s important to remember that the “golden handcuffs” are still handcuffs. Certainly what I did is not for everyone, but it you should always be cognizant of the trade-offs.

    If I could do just one thing I think inspire would be up there, so I appreciate that. Thanks for commenting!

  19. Brain, thanks for sharing your story. I especially liked this part: “I still return a couple times a year but that is to get even with family & friends who visit me and eat their food & drink their beer.” 🙂

    Your approach also appears sensible. For me, it’s nice knowing that I could do nothing for the next 10 years and be fine. In the more likely scenario whereby I actually do something, it’ll last a lot longer than that.

    I think if you enjoy it there’s certainly more right than wrong involved. Thanks again!

  20. Being single is certainly an advantage in deciding when to quit. I quit my software engineering job of 18 years. I took a 3 month “sabbatical” and now work from home about 35 hours per week. My wife continues to work at the big software company. We continue to save at a high rate, but I hope at some point my wife can pull back a bit. Making more does mean more saving/investing, but it doesn’t equate to more time or happiness. At least for us. Thanks for the guest post Jason and Eli.

  21. Wade, great comment. Thanks for sharing. As far as relationship status, I think the advantage can go either way. Being on your own you make all the decisions, but at the same time if you have a supporting partner it can make it that much easier. I think this line really spells it out: “making more does mean more saving/investing, but it doesn’t equate to more time or happiness.” It’s all about finding the right balance.

  22. Great article – glad you got the opportunity to share this with us. I’m starting out in the freelance world (read: haven’t earned a cent) and I know the exact amount I need to be able to stay home with my kids. It’s not much and I’ve received “pro” encouragement that I can make this a reality before my baby is one (I sure hope so!) No, I’m not quite counting down the days, but definitely seeing the light a the end if the tunnel.

  23. This is really an insightful read and it is good to think about for the future. I know that I am not close enough to make that decision now, but who knows where I will be 5-10 years down the road?

  24. Hi Kirsten, glad to have the opportunity to share it!

    Figuring out the amount needed is often a hurdle for many, so that’s a great first step. I’ll lend a bit more encouragement: you can do it!

  25. “So, have you figured out when you can quit?” Yes, May 1st.

    Nice article. I love Jason’s writing, but the guess blogs are a good change of pace.
    Keith

  26. Eli Inkrot,

    Thank you for writing such a beautiful piece. I think DM should tag this under his “required reading” collection. I LOVE the graphs.

    I think one of the most important take-aways of the article is that only -you- can decide the right financial and personal thresholds for pulling the plug. It’s a lot like financial planning, everyone has their own goals and risk profiles.

    I have fought my own personal battles with “One More Year Syndrome”. For better or for worse, my wife and I will be pulling the plug tomorrow. I’m scared, but then again that’s just the way one often feels about any worthwhile endeavor.

    Thanks again for the article!

  27. Great post. I can really relate to this. For us, we’re going to wait until the passive line crosses the expenses line, then see what we want to do (probably 4-5 years as things go). It helps that I quite like my job 🙂

  28. Great discussion blog! It was very insightful. There is an excellent book I recently read entitled “You Can Retire Sooner Then You Think” by Wes Moss, which gives the reader some ideas on how to prepare for retirement, as well as, ideas of what a happy retirement could look like (including the need for “core hobbies”). It is a good read and definitely promotes income/cashflow/dividend type strategies regular discussed. It also supports the ideas that you propose.

  29. Eli,

    Great job writing this article. Some good ideas for everyone to think about how important it is to make sure one has enough money to buy as much of their time back as possible. I’ve seen you on SA too and will be reading those articles!

    Thanks to both Jason and Eli for this guest post!

  30. Feels like many people have a chance at Financial freedom and living a more passionate life but they are crippled by fear. Fear of change, lack self confidence, fear of failure and most importantly fear of actually paying attention to their finances instead of punching the clock. For any significant change to happen in people lives they themselves need to step outside their comfort zone. ALWAYS BETTER TO TRY AND FAIL THAN TO NEVER TRY AT ALL!

    That why I commend Mantra for taking the leap of faith from the unfulfilled but stable life to the unsecured chasing your dreams route which is really living his life. Great article Eli!

  31. Spoonman,

    Up late tonight after finishing up a really long article on Buffett’s 2Q trades for Daily Trade Alert.

    Really fantastic to hear that today is the day! It’s THAT FRIDAY! 🙂 Man, that’s exciting stuff. 🙂

    Best of luck with the transition. It’s going to be weird for the first couple of weeks, but you’ll wonder why you didn’t do it sooner after a few months.

    Keep me updated!

    Best regards.

  32. I think you have to do the rat race until the green line is above the red line. The problem for many people is that the green line isn’t save. Especially as a Dividendeinvestor, because the dividend isn’t save. But people like to be save. So they want have a safty margin. They want the green line 20 % or more % over the red line. And that can be a problem. Because life is not endless.

    Ahoj
    ZaVodou

  33. There’s definitely the risk of ‘One-more-year- syndrome when you approach financial independence. I expect it’s enough to put alot of people off actually making the dive into early retirement and instead keep pushing for ‘just another’ year’s worth of solid income. Congratulations on making the jump at such a young age and thank you for sharing this inspirational story with us.

  34. Thanks Keith! I like Jason’s writing as well, so I was hopeful to mix it up in a good way 🙂

  35. Spoonman, thanks for the kinds words. You’re exactly right with it being personal. Obviously “personal” finance but perhaps more importantly the individual or personal mentality.

    Congrats on “pulling the plug!” I think it’s natural to feel a little anxious, every transition brings unknown and excitement into the mix.

    Thanks for the comment!

  36. sendaiben, thanks for your comment. Liking your job is definitely a benefit. It’s really not about “stopping work” it’s about starting what you want to do; figuring out what you’d be doing if money wasn’t a requirement. That’s different for everyone. All the best.

  37. Thanks paperboy, I really appreciate it. I’ve heard of the book but haven’t read it – I’ll have to look into it. It seems the “sooner than you think” part is becoming more common these days.

  38. Dividend SWAN, thanks for your comment and kind words. “Buying time” is a good phrase that I think I lot of people pass over. We use a finite resource – time – to obtain money. Then we pay for stuff with said money. As such, money isn’t truly the asset – it’s simply the method of exchange. Time is the true asset.

    Thanks for commenting!

  39. Hi Asset Grinder, thanks for your message. I think you have something there with the idea of fear. Reminds me of an Edward Phelps quote: “The man who makes no mistakes usually does not make anything.”

    I commend Jason as well. Thanks for reading!

  40. ZaVodou, thanks for your message. I believe that many think they have to do the rat race until the green line reaches the red line, but as Jason and I have demonstrated that may not necessarily be the case. There’s something to think about on either side, but personally the bigger “risk” was not striking out on my own. Thanks for reading!

  41. Thanks EarlyRetirementGuy! I truly appreciate both the sentiment and encouragement. I could have easily pushed for “just a little bit more” but eventually there comes a time when you have to change. For me, putting it off would have been a risk I wasn’t willing to take. Maybe it works out swimmingly and I’ll report back with a financial independence message in a couple years. Maybe it doesn’t work out. But either way, I’m glad I went for it. Thanks for sharing your comment!

  42. Great post, Eli. I actually just quit my job! While I’m definitely not ready to work for myself 100%, I’m excited to explore other options and continue building additional streams of income. The first step for me was cutting my monthly expenses down as low as possible. I was making over $50K per year, but working way too many hours, and not enjoying the work enough for the amount of sacrifices I was making on a regular basis. I’m optimistic about my new lifestyle and I am looking forward to reaching financial independence on my own terms.

  43. Thanks Addison! I really appreciate it. I think there will be a lot more of this in the future. Long gone are the days of picking a company, working 40 years and hanging it up. I believe the concept of work will change quite a bit and a big part of that is an initial transition towards more flexible / freelance type of “keeping busy.” I’m optimistic as well. I just read your “Why I’ve Quit My ‘Dream Job'” post, good stuff. I’ll have to check out more of your site. Keep us updated and I’ll do the same. All the best.

  44. Hi Eli

    Greetings from Singapore.

    We often discusses financial independence here and it’s really picking up in this other side of the world as well.

    Just one question that I often ponder along, assuming we already have kids at this stage in life and thinking about quitting, does the calculation about projecting future expenses and income still valid as equally as being single? What I was trying to say is if anything backfires (or projection goes awry) when we’re single, I guess it’s still okay. But to have kids along, its a bigger risk to take with you. How do you see this play out?

    Thanks and good post.

    B

  45. Hi B, thanks for your message. Greetings!

    Glad to hear it’s picking up around the globe- I believe it’s an important concept. I think your question is a good one, as everyone is different with regard to how they think about personal finance and what type of lifestyle they want to live. It seems the answer is both yes and no. I’d say yes, absolutely there is something more to consider when you have other people depending on you. If I had major debts or dependents, it definitely would have changed my “number” as far thinking about quitting / reaching independence. At the same time, the concept is generally going to be the same for both. Still want to have an emergency fund, cash flow coming in and eventually cover your expenses via passive income. So bigger number, similar ideology. Thanks for commenting! All the best.

  46. Eli, loved the post. The graphs alone tell the story, and its inspiring to those of us who seek financial independence.

    I work with peers who make a lot of money. And its seems 90% of them fall into the old trap of “the more you make the more you’ll spend.” My secret, is I have done the exact opposite. Aside from additional mortgage expenses on rental properties, my family’s monthly expenses have not changed at all from 8 years ago, when I first got married and was making $10.50 /hr.

    Dm, thanks for another great guest post.

  47. I’m 30. I’m not close to having enough to retire. The only way I would be is if I get my inheritance of 3 million now. That’s unlikely. As soon as it happens, I’m retiring. 3 million dollars would be enough money for me to never work again.

  48. I don’t have a well pronounced plan when to quit. It only goes to a simple sentence: “When I generate enough income from dividends and options trading to replace my expenses.”
    I have a family of four, mortgage, and other obligations so I cannot take your approach. Actually my income is barely covering my and my family needs and we have little left to invest. So thhis trade off you speak about is not an option for me.
    Other than that I know perfectly what my trading must look like, what my account must look like in order to partially quit my job (or completely).
    But I admire you both, Eli and Jason for figuring this out so early and working toward that goal. We older guys whom the train already left the station must use alternative approach.

  49. Yes, I have a spreadsheet for that, and it will be about 13/14 years before 67, for now. I’m not impatient to come at this age, and be older than now, but confident.

  50. Awesome post. If expenses are kept low, you don’t really need much to live well. And many people greatly underestimate the additional expenses that their day job can create. Calculate your “true” hourly wage and see how much you can reduce your time at work and pursue your ultimate goals.

  51. Thanks Investing Early! I really appreciate it. I like the graphs as well. Often finance gets muddled in the numbers, so its good to have a go-to illustration.

    Sounds like your “secret” is working well. Keep at it!

  52. Hi Martin, thanks for your comment. The key is knowing the “why” part of it. I would advocate that there’s perhaps unlimited paths to achieve “success” such that our approach and another would likely work out just fine. That is, “if you believe you can or can’t do something, you’re probably correct.” But of course, this is largely personal. Thanks for reaching out!

  53. Hi Syed, thanks for your kind words. You got it. Living well on less is easier today than it’s every been. It’s a good time to be alive!

  54. I have tinkered a bit but have not set a goal to save to get there. Mostly because I am scared that the end result may be I cannot ever retire. I do mean to shortly when I get some time to write it (very jealous about both of your’s free time to write).

  55. Hi Eli, Right now I’m building my green line up and don’t plan on retiring until the green line crosses the red line. My spreadsheet is predicting this will take 6 more years. I’ve thought about doing exacting what you tried with your boss, just going in to his office and asking to reduce my compensation if I can reduce my hours. Or I thought about working part-time as contract labor before actually retiring. But, ultimately I want my passive income to cover all of my expenses so I can focus on my family, friends and traveling.

    Best Regards,

  56. Hi luckydog, thanks for your comment. The important part is figuring out what works for you. I knew that the bigger risk personally was not striking out on my own. If it doesn’t work out in a few years, I gave it a shot. If it does work, well all the better. No more 2-hour roundtrip commutes, or limited vacation time. I might very well work everyday, but then again I can take next month off if I want to as well. I think your approach is also sensible though. It’s all about going after what you want.

  57. Is the surname “Inkrot” a pseudonym or is it just an unfortunate coincidence of a writer to have the name ink rot?

    Anyway, always love math in anything financially related. It tells a better story than words to me.

    Thanks,
    WE#1

  58. The most important thing that struck me about this post was VP at 24 years old! Wow! Would love to know what type of company and what you’re earnings were.

  59. It’s really important to think of yourself as the CEO of your own life. My dad climbed the company ladder until he became a marketing executive and after a few years of doing that he retired. I respect him and his work ethic but that’s not what I want to do. I’d rather be the CEO of my own life rather than try to climb the company ladder or be the CEO of a company.

    I had to do a lot of soul searching too because I realized that if I didn’t go down that path or choose a high earning career like engineering or medicine then I probably wouldn’t make his kind of money. I really had to think about that but I think that what really helped me is reading Jeff Yeager’s book, “How to Retire the Cheapskate Way.”

    In Chapter 1 he interviews a retiree called Bruce Jackson who suggests an exercise: take some paper and just write down *everything* you enjoy doing in life. He encourages you to take your time and don’t try to organize it. Its meant to be as a stream of consciousness exercise. You also don’t need to finish it in one sitting.

    Once you’ve made your list go through it and put a dollar sign next to every item on the list that costs money to do.
    You can get fancy and write “Saks Fifth Avenue Expensive” or “Dollar Store Cheap” or you can develop your own system. After you’ve finished sit back and carefully look at your list. It should tell you how much money you’re really going to need to enjoy retirement.

    From the book: “Who knows, you may even discover that there are not that many items on your list with dollar signs next to them, and that you may already be a lot closer to the level of financial independence you need to retire. That’s what Bruce Jackson discovered when he made his list…and decided that he could happily retire at the ripe old age of thirty-nine.”

    Anyway I did this exercise myself and not only has this helped me plan for retirement but it made a huge impact on me in the present. It really allowed me to take charge of my own life. I realized that I didn’t have to go and follow my dad’s path or go into medicine or engineering, I could just take an average job and apply everything that I’ve learned from finance books to get ahead.

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