Things To Do And Think About Before Quitting Your Job High Roller

Entrepreneur Magazine On BeachThe 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.


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.


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 2011 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.


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.  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.


With $1,000,000 spread across several banks at age 38, I consider Paul to be wealthy.  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.

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.

Suggestions for those who want to quit their jobs:

* 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:  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, except for his own business, which could be infinite.  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.

* 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.

* 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.


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.

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!


Negotiate A Severance Package: Never quit your job, get laid off instead if you want to move on. Negotiating a severance package provided me with six years worth of living expenses to help me focus on my online media business. Check out my book, How To Engineer Your Layoff: Make A Small Fortune By Saying Good-bye. The book provides solid strategies for how you too, can escape a job you hate with money in your pocket.

Looking to go on a nice vacation? I’ve got a fantastic five diamond rated two bedroom, two bathroom condominium at The Resort At Squaw Creek in Lake Tahoe. There’s ski-in/ski-out, three outdoor hot tubs, three heated pools, a spa, a gym, several gourmet restaurants, fantastic children and family activities, a golf course on site, amazing hiking, kayaking, rafting, fishing, biking, and more! Lake Tahoe is one of the best places to vacation on Earth.

You can rent out my place as a studio (two queens), one bedroom (one king, a pullout queen, fireplace, two TVs, kitchenette, dining table, two rooms), or entire two bedroom unit (studio and one bedroom combined). Click the links for availability and click this post to see pictures and information about my place. My prices are ~15% lower than anywhere you’ll find online!

Make 2015 and beyond the time of your life.



Photo: Reading Entrepreneur Magazine On The Beach. Sam.


Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship. Sam focuses on helping readers build more income in real estate, investing, entrepreneurship, and alternative investments in order to achieve financial independence sooner, rather than later.

You can sign up to receive his articles via email or by RSS. Sam also sends out a private quarterly newsletter with information on where he's investing his money and more sensitive information.

Subscribe To Private Newsletter


  1. says

    I am going with Option 3- take it down a notch and develop a side income. It would be crazy to give up that deferred comp.

    It is funny, because as you said, most people would do anything to have Paul’s “problem”. I often thing of my friend’s dad who worked in a steel mill his entire working life, and he never complained about the work. He just provided for his family and took it in stride. Paul’s restlessness is so common nowdays because I think people want more from their jobs in the past in that they want to not only make money, but impact the world or have a large sense of accomplishment. Sometimes, it can be hard to expect all of that out of a job, especially in a corporate environment.

    Paul may just find too that if he focuses on something else somewhat, he may find his current job to be tolerable.

    • says

      Thanks for your comment. I had to edit Option 3 to include “But what’s the likelihood of anybody generating $100,000 – $200,000 in side income doing it part-time”? I would say SUPER slim, which will lead to frustration of him wanting to go full time.

  2. says

    That’s a tough one. I don’t know what it would be like to make that kinda money but I’m sure it would be really hard to walk away from. If I had the luxury of a sabbatical I’d do that first and then see how I felt after. I’m the type who likes a regular paycheck, at least for now while I build my savings. If the time off doesn’t help him then it’s probably a fair time for him to start on a new path!

  3. says

    There’s a lot to discuss here, but ultimately, I wouldn’t do it. Maybe I’d retire early after investing a ton of money, but I wouldn’t outright quit my job without an alternative.

    My issue with this is that, once leaving jobs, I find that after a short stint of freedom, I tend to miss them. The people, the money, and yes, even the work. We, as humans, are genetically hardwired to need to work. That’s just what we do. You’re absolutely right when you eluded to the fact that progress is satisfying. Personally, I can’t fathom life without something to work toward; a goal.

    A sabbatical is certainly a possibility, because it might help him realize how great he has it in his current job. I don’t think it would be as detrimental to his job as he might think – people go on sabbaticals without getting fired quite frequently, and even if he does face getting fired with a leave of absence, he may have wanted to leave anyway!

  4. says

    I would combine 3 and 4. I love reading about stories like this because given my chosen line of work (teaching) playing with these huge income numbers is a lot of fun;) But in all seriousness, most guys I know like Paul are pretty driven dudes. If he takes a sabbatical for 3 months he will probably bouncing off the walls after 1. Use that energy to see if you’re side gig can develop the way you want it to. A sabbatical will also be a good indicator of his spending habits. Best case scenario is that he develops a great side gig AND finds some lost love for his old flame/job. If the worst case scenario is a 3/4 of a million in severance and deferred pay… well that’s still a hell of a worse case scenario right?

  5. says

    I’m not sure what I would do. To be honest, I find it hard to relate to this fellows incredible good fortune or his salary and assets that I will likely never attain and “predicament”. As such, providing opinion on a hypothetical (dream) doesn’t seem fruitful. 99%+ of North Americans have no way to know what it is like to be so very wealthy and to be in such a situation where they even have Paul’s options.

    • says

      Having this much is actually quite similar to having any type of money with whatever goal one has in mind. It can be just $100,000 saved up, it feels the same.

      The point of this predicament, is when is it ever a good time to hang it up? If not when you’re making big bucks, then when you are making small bucks?

  6. says

    With the possibility that a low-interest rate environment sticks around for a long time, having a lot of liquid assets just doesn’t sound all that appealing. There’s just not that much real income (less inflation) that you can make with a ton of liquid assets.

    You’ve known Paul for a while? If so, I presume that he was making the claim that he’d ditch work at $1 million in liquid assets when rates were…what, 3-4% on the short-end of the curve?

    I’d stick around.

      • says

        You should enjoy this backwards thinking, given that you denounced it in the retirement savings post, but I see another year as a 30% return on his $1M savings. What’s another year in the grand scheme of things?

        After one more year, maybe we’ll get some clarity on which way the economic winds are going. Also, if nothing else, $300k does provide for a down payment large enough for a good cash-on-cash return in SF real estate, right?

        (I should be clear that I don’t fully understand the “deferred earnings” thing and how they vest, or whether it’s cash or equity. So, when I throw that into my pick-a-choice calculator I’m basically writing it off by 50% and if I like it then, then it sounds good.)

        • Millie says

          I agree that the current trend is toward fewer opportunities to make large amounts of money the way Paul does and more layoffs into the future. I have held onto my job (which involves getting up at 5am 6 days a week to sort and deliver mail, and tough on the body to boot) because as bad as it is, it is better than nothing. So many people in the past decade or so gave up well paying jobs because they were just not fulfilled and have ended up permanently unemployed. If you happen to have a sweet deal I’d enjoy it while it is still around. Seriously.

  7. says

    Wow, Paul sounds like a cool guy!

    I agree with the sabbatical approach. Someone like Paul might be bored really quickly without his job, and it doesn’t seem like he has anything else obvious to transition to once he leaves. His compensation is tremendous, so giving it all up all at once might not be the best idea. If he has the opportunity to give it a test run, I say go that route.

  8. says

    And California loses more of its tax base? Tell him to keep working! (I kid, I kid!).

    Probably 1, 2, or 3. If he’s only 38 he’s got lots of productive years left (opportunity costs!). Perhaps he can leverage his VP position to discuss more flexible hours (read: less) or a different position which requires less hours? Just enough so that he can pursue helping disabled kids and UNICEF. Working as an animal trainer would be tougher, as I imagine those hours would overlap with his day job.

    The nice thing is he’s got options!

    • says

      I gotta admit, sometimes I wish I didn’t have to work so I wouldn’t have to pay taxes. My 2011 is eyepoppingly disturbing!

      Sometimes, having options is not a great thing. Leads to paralysis!

  9. says

    Nice job Paul. He did a great job saving over the last 16 years instead of spending it all on big house and nice cars.
    He should definitely take his sabbatical. It will give him time to figure out the next step. When you are in the middle of a full time job, you are caught up in the momentum and can’t really think about your future clearly.
    Doing just enough at the job is not a good plan. That’s a ticket to hating his job in a few years. That’s what I did and it was good financially, but not mentally.
    He should work it out with his wife and see if she is OK with supporting the family. This is a big change and she may not be good with being the breadwinner and the smaller budget.
    I think he can pretty much quit right now if he wants. Just invest the 1M in dividend stocks and that should bring in enough income for him to last a few years while he builds up his business or new career.
    Good luck Paul. Sam, perhaps you can post an update when he decide.

    • says

      You’re right Joe, Paul’s situation and age does sound kinda like you!

      Does one really start hating their job if they can take it easy, not be as stressed or agitated, and collect a $200,000/year gross salary? What is it that would start mentally hurting if they have a side project eg your blog, to work on?

      • says

        Wasn’t it you who said if you’re coasting, you’re going down hill? There are always younger, smarter, better looking people coming into the company.
        If you’re taking it easy, those people will pass you by and you will start to feel
        discontent. The management will ratchet up expectation every year especially
        in this job environment. I know some older folks (50s) who were forced to retire
        because they got promotions and now they don’t do enough to justify that
        pay grade. It will be fine for a few years or even 5, but in the long term it’s not good.
        I’m sure he’ll figure something out by then though.

  10. says

    I would take the 3 month sabbatical, but I would stay with the job until they figure out if they want kids or not. There are a million financial factors to sift through with that one. Education (from preschool to college graduation), food, clothing. Even before kids are born, what woul happen if (god forbid) they had problem conceiving and had to pay for in-vitro or the like? That is incredibly pricy. A child could run through their savings in a heartbeat.

    • says

      I heard invitro is now 80% covered by health insurance. A couple who had it done last week said so.

      Good advice about working until deciding about kids. However does he/they really need to after I read your story about managing one kid OK on your incomes? Perhaps kids aren’t that expensive yeah?

  11. says

    There are variety of things he can do with the money, however I would make sure it will continue for a lifetime. More importantly, he should give some thought as to how he will spend his time. He should spend considerable time figuring that out. I suggest to talk to people who are doing what he is interested in pursuing. Start with an information interview, then job shadow and possibly work for no compensation doing it without risk. He should also think about what he likes and does not like about his current career. I am suggesting an organized approach to switching careers that may take a year. He may want to consider getting help from a person who does this typt of coaching if he has trouble figuring it out.

  12. says

    Option #2 would actually be quite difficult in a sales environment because like running a business, there’s not much middle ground between 100% (winning a client) and 0% (losing a client).

    Another potential issue is that since he’s been a performer for so many years, everyone will have the perception of him slacking off if he is taking it easy all of a sudden and that bad rep may get him fired even if he is still performing a notch higher than his peers.

    Though I don’t really know how taking 3 months off in a sales position will work (who does his client’s call during that time when they have issues?), I’d vote for this option. I’m willing to bet that he is just deflated about his “lower” salary (for his standards) and after a while, his lower salary will become the new reference point and as long as he beats that, he will be happy.

    He’s only 38 with his whole life ahead of him. He will go through a zillion phases for years to come and since he doesn’t really have his “I don’t care I have all the $$$ I need for the rest of my life” fund setup yet, he should stick with his job that he actually still at least “likes”.

    • says

      Some very good perspective David! It’s a bummer to see such a deep derating in compensation after a decent year for sure. He’ll probably get used to it.

      I think all the big clients are there for the most part, so it’s really just naintenance mostly, and a junior subordinate to back him up while he’s away.

      How much is FU money in your opinion?

      • says

        I’m sure your friend will get used to the new reality because good salespeople are all optimists and he will keep reminding himself that $500k is still a solid income that a significant group of people he knows will envy.

        I don’t really know the details of what he sells so I can’t really comment much more on whether the sabbatical will work when a junior just “maintains” the accounts. But at the end of the day, people buy from people and that’s why sales guys get paid the big bucks. On the other hand, if he works for Microsoft and he is selling Microsoft Office or something, then he can take the sabbatical no problem since every company doesn’t really have any other legitimate alternatives yet anyway.

        I think the amount of FU money needed is really personal. For most people who would take decades to save for it, your suggested amount of $3 million is plenty because they never really had the chance to live it up. But let’s say one of your friends sold her startup for $5 million when she is 35 and nets $3 million after tax. I imagine it would be almost impossible for her not to indulge in a few luxuries in life and save every last cent and retire. I mean, wouldn’t you justify in flying first class to the city where the final signing will take place? I know I would in that position. And when she starts inflating her lifestyle, the amount of needed FU money increases because the Hyatt will seem like Motel 6 when you are used to the Four Seasons.

        • says

          It’s a funny thing, selling your multi-million dollar company… b/c after that, then what? There’s a big void.

          Speaking of which, are you next up for the multi-million sale of your blog, or have you already sold?! :)

          Looks like you’ll have to start a new thread to reply. Sorry about that.

        • says

          I think it’s only really a void when you sell for a few million because after taxes, you are comfortable but the amount isn’t quite enough for you to live anywhere in the world and still be financially set. If you sell for, say, $20 million, then it’s a different game. I mean, if you really feel bored, you can just start a company, hire two people and figure out how to have enough revenue to cover the costs, which is easy for any business owner who managed to build the type of company that can sell for 8 figures because they have the know-how and contacts in that field already.

          I haven’t sold, and don’t have plans to just yet. Though, I keep telling everyone who asks that my properties (that includes offline stuff like my house or car) are always up for sale at the right price. You should line up a few investors and send in a blind bid. :)

  13. says

    Sam, you are wise as always. I think Paul’s problem of wealth would be a very good problem to have. If he’s been able to make that much money, I would in his position, tone it down at work and ramp up the effort/investment in the side business, along with taking a sabbatical.

  14. says

    Have you talked to him about creating more passive/side income? Instead of those $100K bonuses sitting in the bank, why not put them into his rentals? or buy new rentals?

    If I were him I would go with the keep working option but minimizing as you mentioned it and turning the earned income from liquid savings to something working for you. If he paid off one or two of his mortgages his equity may be equal to his current salary (of course I am just making up numbers in my head)

    • says

      I have, given as you know I have some rentals. He’s really focused on simplifying his life, and having rentals makes things harder. Yes, he knows he can go with a property manager and pay a 15% management fee… but I don’t know.

      He’d rather just sell all his property, and let it sit in truly risk free assets e.g. CDs. His conservativeness has served him well, but he’s also not been able to hit it out of the park, as they say.

      Buying a multi-property rental building does sound good though. Doesn’t $3,000-$4,000 a month in risk free interest income sound good too though?

  15. says

    I was smiling reading the first suggestion. Lay offs would definitely benefit Paul but since he seems to be a valuable employee it might not be a path for him. It seems to me that Paul is bored. When we reach a certain point in life, we sometimes feel well-accomplished and… bored. He needs a new challenge.

  16. says

    I have done similar calculations recently, but my base is very different from the range above. I realized what it would take to quit my day job, and that had led me to want to keep the day job, at least for the time being.

    There is something to be said about security and comfort, as long as you have a job you like.

  17. says

    I think I’d choose option 4 – take time off and develop my business idea. It doesn’t seem like Paul is sure of what it is he wants to do. Perhaps a break will help him figure it out, or he’ll realize he doesn’t want to leave his job after all. When he figures out what his passion is and how he’ll generate income from it, he should quit his job. It sounds like he has plenty of money to maintain his current lifestyle, and even an upgraded one, for a very long time. Paul needs to be careful not to use his money as a convenient excuse to live his life unfulfilled. Entrepreneurship isn’t for everyone, but Paul has explicitly stated it’s something he’d like to pursue.

        • says

          If getting laid off didn’t require too much effort (or sabotaging the company), and I wasn’t absolutely miserable, I’d considerate it. However, if I found my passion, I wouldn’t want to miss out on it waiting for my employer to get rid me. I’d get rid of me and quit.

          I’m excited about pursuing my dreams. I’m under no delusion success will happen over night. Big dreams require big sacrifices and accomplishing them takes time. There are so many projects I want to complete I feel a little overwhelmed when I think about them all. Fortunately, I know how to eat an elephant. :)

  18. says

    I liked your point about the important thing being what he wanted to do if he quit his job. To me, this is the kicker. As you said, it is different for everyone. If I were him, I would throw in the towel, reduce my expenses and live modestly and travel for the rest of my life. But then again, I can say that easily because I don’t have to turn down that much money.

  19. says

    Hmm, that’s a possibility. Thanks for highlighting.

    I don’t know any alternative income you can do part-time besides blogging that can make you over $100,000. I’m sure there’s stuff out there, but I can’t think of any. Can you?

  20. says

    I have seen more numbers about Paul has earned — is Paul just an income? What a curse that Paul has earned so much money that he seems devoid of anything but money.

    Today I interviewed a woman to help me care for my son. I know she is going to do an awesome job so I sent her to interview with my friend who was stuck at the hospital for 24 hours while her son was being monitored for seizures (we both have extremely disabled kids and this woman needed more hours). Now my new hire is going to help my friend in the morning with her son, then head to my house to help me with my son.

    My friend thought she would never be able to obtain help in the morning. I am changing both her life and her son’s life by getting her some much needed help.

    I do not get paid for my services but it appears that I have much more meaning in my day to day existence than Paul.

    Tell Paul to quit his job and start doing something that adds value to his life and someone else’s…

    • says

      Hmmm, have I painted Paul in that bad a light? Here’ what he wants to do:

      “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.”

      Are we confusing having lots of money with being a bad person?

  21. says

    To me it sounds like taking the sabbatical and actually trying out some of the “ideal jobs” he has in mind would be a smart idea. They’re very wide ranging, but he could get a good feel for a few of them at least.

  22. says

    I think if Paul is not fulfilled with his job, he should quit. There’s only limited number of years in one life, and we should take advantage of every moment. From what I see, the only obstacle in making this decision is the high income he is giving up. First of all, to put it into perspective, this is a quality problem. A lot of people do not even earn a fifth of his yearly income, so he’s going to be fine. Besides, it’s not like he’s going to lie on the beach for the next 40 years. One of the loopholes of our financial system is the possibility of making money from money itself. With $1mln in the bank account, he can buy some real estate and rent it out for a steady income every month. As long as his monthly expenses are covered, he can afford to take the time to discover his passions and muses!

    • says

      If a lot of people do not even earn a 5th of his yearly income, shouldn’t he be MORE concerned about quitting this rare opportunity he has?

      Real estate definitely is an attractive asset class now imo.

      • says

        I wouldn’t make my decisions by comparing myself to others, but by comparing myself/where I am now to who/where I want to be. Just my opinion, but of course I can imagine that being in his shoes the decision to quit the high-paying job would not seem so easy to me anymore :)

  23. says

    I think I would suggest option # 3. Take a sabbatical and relax a bit. Maybe then your friend would see that having a great job is not the worst thing in the world. Or, he might realize that the corporate life is no longer for him. Either way… stepping back from it all might help him clear his mind a bit.

  24. says

    This doesn’t sound like a problem to me. We should all be so lucky.

    I also think he should take a sabbatical and take a moment to just breath and appreciate things. It may change his perspective on what he wants to do next in his life.

  25. says

    My wife and I had this same exact conversation. My goal is to quit my day job once I match my salary with our passive income streams but then she asked. “Why would you quit? You make a ton of money for relatively easy work. I’m not comfortable with leaving that money on the table” I really like my job I just don’t love it. But the thought of leaving all that money on the table does drive me crazy.

      • says

        I make 130k from the w2 job. My wife works and makes 120k. We dumb all our money into our side business with illusion that one day we both will quit our day jobs and do what we lve.

        She even specified herself that she probably would never stop working regardless of how much money we bring in.

  26. Rachel says

    I’d say the sabbatical. After being laid off and out of work for about 6 months a couple of years ago, I was ready to go stir crazy after the first couple of months. I’m guessing Paul might have a similar problem. He could use that to figure out what he wants to do with his time or just get a break if the break is really all he needs. I’m guessing if he’s used to working on a regular schedule, quitting his job with nothing else planned will make him crazy in a month or so. I wouldn’t quit until I had a plan and mapped out how I would pay for it. On a more personal note, that’s a huge amount of money. I don’t think I could do it.

  27. says

    I agree with your steps, but would only change the order of the steps. Determine first what he really wants to do while he’s still working and then put some numbers on the table. His goal seems too fuzzy right now to jump off his cash-cow. Plus, once the goal’s been hammered out, he’ll know what he’s jumping TO rather than just jumping FROM his “bullshit job.” Great story.

  28. says

    Sam, Paul needs to find a new project at work that get’s him juiced up again. The volunteer opportunities are already there too. It’s not all or none.

    Have him work with Boy Scouts, coach little league, or serve at a shelter. He can do all those things now if he doesn’t have kids. Hell he can take his wife with him to the ball fields, and see if they really want kids or not.

    Quitting is fine too as it seems to me he knows how to be successful. He will be fine whatever choice he makes as long as he adjusts lifestyle to income. I wouldn’t make any decision until he feels more strongly moved to. He hasn’t had his “ah hah” moment yet, but it will come.

      • says

        I have had several aha moments, some of which were truly great ideas, some were foolish. I have yet to figure out how to tell the difference. As to getting out of medicine, I haven’t had my aha moment yet, but I do hear a whisper on occasion. I’m waiting on the yeall.

  29. DollarDisciple says

    I’d definitely take the sabbatical options and use those 3 months off to really figure things out. I also think that with $1M in cash, he ought to be able to earn more than 3% if he really works at it. You mentioned his RE portfolio but didn’t mention that in the passive income line item.

    I’d look at the deferred compensation the same as his job income: it’s money he don’t really need that he’d get by trading his time. He could work another year but life is happening right now! Would it really be worth it?

    • says

      With 2% 10 year treasury yields…. 3% isn’t exactly a sure thing. Imagine losing 5% on a $1 million portfolio with the desire to make 5%. OUCH!

      I’m telling him to do both… live and work, work and live.

  30. says

    The side businesses are:

    Her shoe website (
    My website (
    Rental properties (We are in the process of buying our 3rd. With the hopes to buy 4 in 2012)
    My RIA (Registered Investment Advisory. This will take a lot of time)
    Her Event Planning Business. (She’s making good money, just need to ramp up efforts)
    Our Non-Profit. (Money pit at the moment, but feels good to give back)

    Unfortunately, none of the side business are get rich quick so it will take time and capital.

  31. says

    If I were in Paul’s shoes I would take the sabbatical. It’s a lot easier to see the forest if you can get out of the trees for a while. (or something like that…). With all the extra time he would have during a sabbatical maybe he would be able to sort out what he would want to do.

    If he decides the day job isn’t worth it there’s $1 million in the bank that can be turned into a decent passive income. That should help take a little of the bite out of losing his paycheck. Between the passive income and whatever income his new venture brings, he may not have to take a huge lifestyle cut.

  32. says

    Like is something that can turn to love or hate depending on how it goes. If you hate something or even dislike it then quit because what good is it to have all that money and not have happiness. Besides I can’t imagine he couldn’t get another job later. HMMM… Can he?

  33. says

    This may be my favorite post I have read of yours so far. There is so much going on. Golden handcuffs. Goals. Changing goals. The dangers of not going with your passion (in this case entrepreneurship) from the start. I love how you go through the steps of what one should do before actually quitting their job.

    As for Paul. I think it’s ok to not hold himself to a goal set so long ago. Interest rates have changed, I’m guessing his life has changed a lot. $1 million sounds like a lot more in your 20s than it does in your 30s.

    The only thing worse than a job that is not your ‘dream job’ is a job that you’re just going to for the paycheck. I get the sense Paul would be miserable taking things down a notch. If I were Paul I would spend some time soul search both by himself and with his wife. I agree with Kris that he definitely should not take any drastic action until he and his wife decide whether they want to have kids. While kids do not have to be expensive, they can be, and they also have a way of shifting your world view and motivations.

    If he really can’t go another day, go for the sabbatical. Paul makes it sound as though that is a death sentence. However, if he really is a top performer I think he should be able to get through it if he decides he want to go back to his job. And three months should give him some time to figure out what it is that he really wants to do with his life.

    • says

      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!

  34. says

    This is a fascinating read. I would probably take option #4, as it could possibly lead to option #1 (if that’s not a worry for him and is ultimately what he decides he wants), and if not, he could start pursuing #3 and see if he has a different perspective coming back. Option #5 will always be there as a last resort, so I just don’t see quitting without taking the sabbatical first, at least to take some time to step back and weigh his options.

  35. says

    Wow! Sticky situation. Sometimes you don’t realize what you have until it’s gone. Maybe he should take the short-term (3 mo.), possibly needed leave. This would give him a chance to explore his options and see if the grass is really greener on the other side ;)

  36. Mike Hunt says


    Great post- hit very close to home…

    Is this person real or made up? Because if he is the type of person I think he is (frugal, generous, humble) then why would he be telling you about all his financial details? Seems like something out of character… Did you ask him if it’s ok to write this post, and did he agree?

    Question I have is that if his expenses are 6K a month and his wife still makes $100k a year, can’t her job cover those expenses? Or is the 6K his expenses and her expenses are separate?

    I’d recommend the sabbatical option, personally. If he is still burned out then take the time to properly plan an exit. All exit plans should include finding the best way to get the deferred comp, that is huge.


    • says

      He’s real. I’ve known him for a long time, and of course his real name is not Paul for identity protection.

      $100,000 a year gross is around $5,500 a month after tax. He said he spends about $6K/month just on himself and housing.

  37. says

    Sam, I’m a little surprised that someone that was making 500k-750k a year for 6 or 7 years was only able to put away 1 million in cash actually. Your friend seems like he wants to kill the golden goose for a single dinner. Even after taxes it seems like he would be pulling 300-500k a year. Of course when you have an income stream that has been increasing, you do tend to assume that the past rate of increases will continue into the future. Our brains often have he same problem as models built in Excel with a column drag to the right…

    • says

      Let’s do some math for fun. Say he averaged 550K a year ($300,000 after tax) for years and saved 40%. $300K X 7 = $2.1 million X 40% = $840,000. He’s saved $1 million, hence he saved closer to 45%. Not bad. What do you think he “should” have saved? His networth is around $3 mil given his properties he bought.

        • says

          Cool. BUT, even if he had nothing else to show for… $1 million in liquid networth at 38 is not bad. When you make more money, you tend to spend more money and run in different circles as many of us know.

  38. Simple Rich Living says

    Very interesting post! (I wish I have this million dollar problem :)). What’s his passion? Figure out how to be let go from his company, then take a few months to recharge and figure out what he wants to do as a second career, begin his second career. His current savings/interest income can certainly sustain his living so he can take the time do take some ‘him’ time and rediscover himself.

      • Simple Rich Living says

        I don’t disagree that finding one’s passion is overrated. And, it does change over time so we can change with it, no? I haven’t found mine yet. I feel like I am going through a bit of mid life crisis right now (trying to figure out what to do if I leave my current job). Unfortunately I don’t have the financial security as your friend does. However, if I do, I would quit job immediately and go back to school to become a high school math and science teacher. I would take the summer summer holidays to travel.

  39. says

    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.

    • says

      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.

      • says

        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…..


  40. pgb says

    Great article as usual Sam. Here’s what I recommend
    1. Watch this TED talk about the power of time off
    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.

    • says

      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 to discuss further.

      Cheers mate, Sam

  41. Mike Hunt says

    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 Hunt says

        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.


    • says


      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!

  42. Leah says

    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.

    • Janna says

      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.

    • says

      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!

  43. Mike Hunt says

    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.


  44. HMI says

    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,

    • says

      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!

  45. says

    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!

    • says

      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!

  46. says

    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.

  47. Jason David says

    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.

      • says

        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 :)

Leave a Reply

Your email address will not be published. Required fields are marked *