Taking A Leap Of Faith And Retiring On My Own Terms

Hawaiian SunsetTonight I do not have to set the alarm because tomorrow I do not have to go to work.  After 13 years of climbing the corporate ladder, I finally reached the roof and discovered everything was as imagined.  A lot of sun with the occasional pigeon cooing out yonder.  I can now see through the entire valley, down towards the ocean.  I am officially retired!

Ever since my first job in 1999 I’ve been saving like a juggernaut so that one day I might retire early.  I’ve definitely had my ups and downs with the internet bubble, housing bubble, financial sector meltdown, and now the European debt crisis.  There were several times I wanted to quit due to the immense pressure.  But despite all of this, I stuck through it and “The Nut” continued to grow to the level of self-sustainability.

When I first graduated from college, I was presented with two choices.  Choice number one was to go to Shenzhen, China and become the head of operations for a family friend’s new eyeglass factory after two years of training.  It wasn’t a sexy job, but I would be able to fulfill my goal of working abroad, becoming fluent in a second language, and riding the China boom.  The idea was to get some work experience and then do something on my own in the wild, wild East.  Just two years prior, I got a chance to experience China for the first time as an exchange student and loved it.

The second option was equally exciting, working for a powerhouse firm in New York City to get rich the old fashion way.  I was told around 8,000 people globally applied for 60 spots and for some reason, I got one of them.  Although I had nothing to lose by going to China, I decided to play it safe and stay in the United States.

Despite appreciating the past 13 years, I’ve always wondered what it would be like if I took the other route.  Perhaps it’s the reason why I’ve traveled internationally every year since graduation.  Too bad we can’t live two concurrent lives!  I’m an adventure seeker who moved around as a kid every two to four years thanks to my parents’ work.  Staying in one place longer than five years was absolutely foreign to me.

After playing things conservatively for so long, I finally feel like now is the time to shake things up!

TAKING A LEAP OF FAITH IS EASIER WITH A LONG RUNWAY

About two years ago (2010), I decided that perhaps maybe, just maybe there might be a sustainable entrepreneurial business for me online.  The markets were rebounding from its slaughtering a year prior and traffic on this site continued to grow.  Yakezie.com launched and a group of some of the most talented personal finance bloggers on the web banded together to share ideas, contacts, and leads.

Shortly thereafter, I had friends and other bloggers sending notes of thanks for giving them the motivation to quit their jobs.  It was surreal because many of us started with nothing the prior year.  Furthermore, I still had a day job!  There is a curse of making too much money because it prohibits you from pursuing other things.  If I was making under $100,000 a year from my day job, I’d probably have quit with no parachute two years ago.

The more money you make, the greater the opportunity cost for doing something else.  I was beginning to feel stuck making a decent income at a job that was beginning to dull after so many consecutive years of doing the same thing.  I knew I had to create a plan!  With Financial Samurai, I discovered my various income streams, tracked my spending habits, learned about new investments, tested the housing market, and discovered new avenues after the private sector.  My site helps me learn and keeps me accountable, which is why I encourage all of you to start your own.

Given I’ve been saving about 70% of my after tax income for the past five years, I decided if I could create enough other income to equal 30% of my after tax income, I would retire.  When I did that in 2011, I couldn’t pull the trigger because earning 30% of my day job income meant I wouldn’t save a single penny.  For someone who has saved for so long, and so regularly, not saving was out of the question.  As a result, I set a target to earn 50% of my average day job income.

In early 2012 I achieved my 50% goal, but again, felt like leaving my job cold turkey was not the right decision.  Instead, I needed one last push.  A push that would make me shout for joy!

THE CATALYST 

Over the past two years, I’ve helped a number of people engineer their layoffs and receive healthy severance packages in the process.  With each assist, I felt a greater urge to follow suit.  Each person’s reason for leaving their job was different.  One was burnt out, another had just given birth and wanted to be a SAHM, while another wanted to follow her dreams as a full-time artist.

It was now my turn to put my advice to good use.  I told myself that if I could negotiate a severance package after 11 years of work, I would sign the dotted line and commit to being a full-time entrepreneur.  I was well aware of what a potential severance package could be for someone with my experience, and I was very excited to see if I could make it happen.  After about a month of negotiations, I sealed the deal!

During the entire process, I took meticulous notes on the steps it took to get laid off.  I wrote down the key players involved and did endless hours of research to understand my rights as an employee.  I interviewed five friends from various industry backgrounds whom I helped layoff to recap their experiences.  With all this information in hand, I began to write and write my first book until 42,000 words were formed.  My team and I then edited the book down to 37,000 of the most impactful words in 16 chapters.

Writing the book was an incredibly rewarding experience.  It has brought me closer with loved ones as we shared more of our life stories.  The book also forced me to open up a personal side I’ve never written before in a couple important chapters.  When we take a step back to reflect, everything becomes clearer.  We remind ourselves that time is fleeting and we learn about who we really are and what we truly want to do.  I’m very excited to interact with all of you after you’ve read the book and follow your journey as well!

FILLING THE HOLE

Although I am happy for every person who tells me they quit their jobs, a part of me also cringes inside.  My friends were leaving real money on the table to their employer’s delight.  One buddy told me that the very next week after he quit his job of 10 years, his entire department got laid off with two weeks severance per year worked plus free health insurance for a year!  What a painful mistake.

I am also afraid of what happens to my friends after they quit their jobs.  Will they run out of money in six months?  What if they can’t find another job in the industry they want?  What if nobody believes in their entrepreneurial idea?  What if they turn around and start blaming me for quitting their jobs and failing!  I had to write something that could provide concrete advice to reduce these probabilities.

Other people told me they didn’t want to get laid off because it might burn bridges and look bad if they apply for another job.  That might be true if you do it wrong, but it is certainly NOT the case if you do it right!  I was a manager and I cannot tell you how many times I wished an underperforming subordinate would come to me and ask to get laid off.  I would even take a high performing subordinate if they approached me the right way because letting people go is difficult.

Cyclical industries are notorious for going through boom and bust cycles.  There are also surveys after surveys that show how unsatisfied workers are in their jobs.  If you spend your time off building a business, writing a book, or doing anything productive, nobody is going to look down on you if you decide to re-enter the work force.  Instead, they will be inspired and wish they could do the same!  The problem is, I don’t hear many stories of people taking matters into their own hands and doing something about their situation!  As a result, I know there are thousands of people out there who will find the book beneficial.

There are so many books about how to get a killer job, but there are no books about how to graciously leave your job and make a tidy sum in the process.  People don’t realize their employees rights are incredibly powerful!  For anybody who has ever felt trapped in their jobs, know that there is now a resource for you!

SO WHAT NEXT?

Develop Products: I will launch my book in the next week and share with you more details for those interested in doing something else with their lives.  The book has been a two year process and has gone through over 30 revisions to make it as high quality as possible.  I strongly believe the book will help everybody who is disgruntled with their jobs or simply looking to do something else.  Unless you plan to work till death, there will be a backstop!  I plan to write a series of books in different styles that promise to be edgy, helpful, and entertaining.

Financial Samurai: Due to my increased time I will increase the posting frequency by 30%-50%.  I plan to work with more FSOS clients, roll out new consulting services, build valuable content around my book, and be a little bit more open about my personal finances now that I’m no longer under Big Brother’s watch.  Perhaps I’ll finally redesign the site after so many years.  I will look into some commercial aspects of blogging as well given this will be my main source of income.  I’m looking forward to steering this ship in a slightly new direction by providing insights into entrepreneurship, financial self-sustainability, early retirement, and travel.

Extended Travel: Two weeks off at a time is the longest duration I’ve ever spent since 1999.  I’m looking forward to taking three to four weeks off at a time in Hawaii, Lake Tahoe, and abroad with San Francisco as my home base.  After taking six weeks off total a year for my last two years, I’ve discovered that my ideal amount of time off is somewhere around eight to ten weeks.  It’s going to be a challenge hitting that mark!  I say “challenge” because I really enjoy working and probably won’t be able to stay away too long.

Discover New Occupations: I’m going to look at retirement as an extended sabbatical to see if there are any good fits in other industries.  Anything internet related seems like a natural extension.  The problem I foresee is that although I’ve got my graduate degree and experience, I will probably have to start at a lower relative level if I want to get in.  This is something I accept as part of my desire to do something new.  There are so many opportunities out there for all of us!  We just have to look.  My main issue is that after working for myself, I will never want to go back to working for someone else again!

Go At My Own Pace: Part of being retired is finding a pace that feels most comfortable.  It’s kind of like finding your steady body weight where you feel good, look good, but still get to stuff your face with hot fudge sundaes on occasion.  I think my ideal routine is four hours of work, one and a half hours of exercise, and the rest of the time spent with family and friends.  If not, I’ll adjust accordingly.

Reset To Zero: I’d like to completely rely on my entrepreneurial income to survive and ignore all the capital that has been accumulated since college.  If ramen is all I can afford, ramen is all I will eat!  I don’t want to get comfortable living off my passive income streams because I fear laziness will eventually take hold.  Instead, it’s more fun to be a bootstrapping entrepreneur who doesn’t know whether he’ll be able to pay all his monthly bills.  That way, I hope to keep the hunger going for as long as possible!

DEFINITION OF RETIREMENT

Retirement has always been about doing whatever I want, whenever I want without having much financial worry.  I imagine retirement means the same for many of you as well.  I was so tempted to pull the trigger these past several years and I’m glad I waited until now.

Please believe me when I say the sacrifice of studying like crazy, getting into work before the sun rises, leaving work after the sun sets, starting a venture in your spare time, going to school part-time, and always trying again after failure is well worth it!  Do it while you still have the energy!  Once the foundation is set, you will have the optionality to do whatever you please.

Always remember that hard work requires no skill.  Here’s to another great three years and thanks for all your support!

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Before Personal Capital, I had to log into eight different systems to track 25+ difference accounts (brokerage, multiple banks, 401K, etc) to track my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing and when my CDs are expiring. I can even track all my monthly credit card spending to make sure I’m spending within budget. My favorite feature is that Personal Capital tracks my net worth progression to make sure I’m on course. There is no better tool online that has helped me reach early retirement. It only takes a minute to sign up too.

Best,

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.

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Comments

  1. pcash says

    Congrats Sam! I just only recently found your site, but it has been a tremendous inspiration for me. Your article on “30 year vs ARM mortgages” even convinced my friend to refinance his home mortgage to a 5-1 ARM (in spite of me actually disagreeing with you!).

    My goal once (yes, once, not if) I retire early, is to pursue a Phd or at least a masters in a field that interests me (not for career growth). Do you know of anyone with a blog who has followed that path in early retirement? Would love to get some inspiration and guidance from them as well.

    The fact that your # of entries will only go up as a result of your ER, is truly the best part.

    • Financial Samurai says

      Hi Mate, your friend is a smart, smart person! :) I am an absolute fanatic when it comes to studying the bond market, US Treasury yields, and refinancing mortgages. He will be so happy to have saved tons of money.

      Have you read this post on the PhD yet? If not, have a read.

      I don’t know of anybody who has retired early and then got a PhD in the PF sphere yet. It’s what I’m thinking, but it is a looong slog.

    • Financial Samurai says

      Thanks Sunil. I’ve got to learn from you and Mike from TFB on creating more online passive/sustainable income!

      I only post about 3-4 times a week, but my queue is so damn long now, some posts are getting stale! I should just publish them!

  2. Mike Hunt says

    Hi Sam,

    Big congrats to you on achieving this plan that was long in the making…!

    You are correct, engineering a severance is definitely the way to go. May I also say that having a big severance liability can cause a company to keep you on rather then let you go so if you can downshift into a job with less responsibility but the same salary this is another good option as well.

    Will your travels bring you Thailand / SE Asia? If so I’d like to buy you dinner and a few drinks!

    -Mike

    • Financial Samurai says

      Howdy Mike,

      I would LOVE to take you up on the offer to catch up for a meel and Singha beer! Bangkok right? I seriously need to start taking some long vacations now that I’m untethered and can work from anywhere. How long do you plan to be out there?

  3. Mike Hunt says

    Hi Sam,

    Yes- it is Bangkok. I have also changed jobs internally where I am now the Head of Sales for our larger business unit across Asia- about $150M USD of business per year. I travel to Singapore somewhat often.

    I have been playing music as a hobby lately (the New Years resolutions finally got to me)

    Here is a tune that I recently did, including playing all the instruments and vocals. Maybe we can have a jam session when you are in town?

    http://www.youtube.com/watch?v=QDNTrARR5wQ&feature=plcp

    Cheers,

    Mike

  4. Money Reasons says

    Congratulation friend :)

    Based on your energy and knack for entrepreneurship, I wouldn’t be surprised if you surpass your old “employed” income in 5 years!

    It will be exciting to see how your develop, and where and what you do from this point out.

    As I remember Evan once saying, it’s all about choices…

    Have fun in your new adventure in life!

    • Financial Samurai says

      Appreciate it Don. It’s been a fun journey since we started hasn’t it? It would be fantastic if I could pull off the feat of matching my day job income in 5 years, but I won’t hold my breath. It’s not my goal as I’m happy with the 50%, but if it happens, fantastic!

      Hope all is well and you are still enjoying your mortgage free living!

      • Don says

        Yes, it has been fun :)

        The problem with being debt free is that I now need to put that saved money from no payment to work… So maybe I will use some leveraged debt to buy assets…

        Good luck with your new book, sounds exciting!

  5. Liquid Independence says

    Congrats Sam. That’s really big news. My idea to achieve financial freedom someday is very similar to your retirement plan. It’s really encouraging to see that it took you 13 years to become the successful individual you are today. When I started saving money I was 22 years old. My dream is to become financially free by the time I’m 35. That should give me 13 years as well to accomplish the goal. Thanks for proving to me that it’s totally possible to achieve greatness in such a short amount of time as long as you work hard and persevere. :)

    • Financial Samurai says

      Thanks Steve! Maybe it’s b/c I respond to your e-mails quickly, making it seem like I have nothing else to do with my life?

      I’m sure you can take 10 weeks off a year, or at once. You got your online store!

  6. Kathryn C says

    I’m DYING. This is amazing. I am so excited to hear about your new business ventures, and also see your book.

    Wow, I am kind of in shock. What a great story….. I am so so excited for your new adventure.

    • Financial Samurai says

      Thanks Kathryn! From your previous comments, it sounds like you might be taking a leap of faith too?! Folks in your industry will love the book. One of the most cyclical industries on earth! Boom shakalaka!

  7. Invest It Wisely says

    Hi Sam,

    I don’t consider myself retired, but I am still on my own, and I’m still loving it. :)

    I’m not shocked about your decision at all, because I could feel that you were building to this point over time. I’m really happy for you, and I believe that you deserve and have earned your way to where you are. Thanks for being such a great inspiration to the rest of us, and for me, personally.

    Good luck in the adventure, and keep us posted! :)

    • Financial Samurai says

      Will definitely keep you posted Kevin! It’s a surreal feeling to not HAVE to work on anything anymore to survive and be happy. Being able to engineer my layoff was a massive cherry on the cake for me. I didn’t calculate this financial windfall AT ALL when I was thinking of calling it quits. I don’t think many people realize this either and that’s why I’ve writing my book.

      Your question on “being a good performer, so how can I?” is addressed!

      Cheers

  8. BeatingTheIndex says

    In the past few months, it seemed you were itching to reach this point in time. Contrary to many others who quit to persue enterpreunerial life, I think you have almost 0 downside…ie I don’t see you desperately running back into the market if all else fails.

    It’s well deserved and earned, enjoy your new retirement!

    • Financial Samurai says

      Thanks Mich. Definitely been itching, just like I’ve been itching to release my book. However, I am very methodical and would like to get things right the first time around.

      I don’t know about 0 downside, b/c if I die tomorrow, I will kick myself for not retiring earlier and really experiencing the max freedom retirement allows!

  9. Sean @ One Smart Dollar says

    I branched out on my own a few years ago after being laid off by Bank of America. I love it. While there is a lot of stress it still allows me freedom and that can’t be beat. I am looking forward to reading your book when it comes out.

  10. Tim Stobbs says

    Way to go Sam! I’m always glad to see someone else join the ranks of ‘doing my own thing’ retirement (I’m not there yet, but I’m in a very nice part way there situation). Enjoy the new world and I look forward to hearing how it goes.

    Tim

    • Financial Samurai says

      Thanks Tim. I have to say that it’s really the journey that is the MOST fun! Now that I’m here, I will enjoy it probably for several months, but will likely have other goals and work towards them just as diligently. Hope you get there when you do!

  11. Jason says

    Congratulations Sam, and good luck. I am not far behind myself. To be honest, the main reason I haven’t already is because I am still learning things from “climbing the corporate ladder.” As soon as I feel I no longer am… I should have enough by then to call it a day.

    As somebody who has perviously taken entrepreneurial and investment risks, some of which worked out and some of which did not, I would like to offer you this advice: don’t risk killing the golden goose that you have. You’ll need to take risks, to take bets. But don’t bet the farm. Even if it means you have to pass on the dream opportunity. I was “there” 18 months ago, and in my nirvana I took a risk that risked my financial freedom. It didnt work out, and I had to go back to working. NOT fun.

    • Financial Samurai says

      Thanks for your advice Jason. Do you have a post about the risk I can read and learn more from?

      I don’t bet the farm on anything anymore because I want to preserve my nut I took so long to build. My NW is split 30/35/35 in CDs, stocks, and real estate. Online biz is the X Factor.

      What would be my Golden Goose that I would risk in your mid?

  12. Paula @ Afford Anything says

    Congratulations!! You absolutely deserve this retirement — you have one of the best-designed, most well-planned retirement stories I’ve ever read. You’ve thought about every detail, including the non-glamorous parts, and you have a super-realistic approach to the reality of retirement. I’m so happy for you! And I’m excited to see how Financial Samurai, and Yakezie, thrive in your new retirement.

    • Financial Samurai says

      Thanks Paula! If there’s one thing people do accuse me of, it’s being very methodical when it comes to making big decisions. Best of luck with your new rental remodel and your freelancing work!

  13. Glen Craig says

    Congrats Sam! Looking forward to your book and seeing where this takes you now.

    You keep mentioning getting laid off over quitting a job. Are you saying an employee should work with their employer to see if they can lay them off rather than quitting? Just want to make sure I understand. I think to some it may seem like the same thing but I can see how it can make a big difference especially if you can get severance and healthcare.

    • Financial Samurai says

      Thanks Glen! There is a HUGE difference between getting laid off and quitting. If you quit, say goodbye to $1,800 a month in unemployment benefits here in California. Say goodbye to months or years worth of free health care provided by the employer after you separate. And say goodbye to potentially thousands, and in many cases I know tens of thousands of dollars in severance.

      A surprising amount of employees do not know this difference, nor do they know how to proceed. The book is power to the people!

      Hope you enjoy!

      How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye

  14. Dominique Brown says

    Whoa!

    I like your style Sam.. you didn’t b.s around you had a plan and you pulled the trigger. Congratulations on the retirement and I’m sure you will be successful at it :-)

    Old habits die hard, have a little fun while you can and don’t spend all your hours working on the new side gigs.

    • Financial Samurai says

      Old habits do die hard Dom! Gonna make sure my handicap stays below 10, for good!

      Just booked a 2.5 week cruise that departs from Amsterdam next month. I will do my best to bring a lot of fudge brownies on board!

  15. Khaleef @ KNS Financial says

    Congratulations on making the move. I figured that your sabbatical would push you over the edge; but I didn’t realize that you had been battling with the decision for so long.

    I’m sure that you will make full use of all of your new-found free time to travel and to work on various projects. Just try not to spend all of your free time piling on new projects…enjoy yourself a little.

    Oh, and since your schedule has now freed up a bit, are we going to see you in Denver at the conference?

    • Financial Samurai says

      Thanks Khaleef! Two years isn’t that long, is it? :) Yes, it’s quite a long time, but it wasn’t really a battle b/c I was doing what I loved on the side anyway (writing). Wish someone wrote this book for me back in 2010! Better late than never.

      You going to Denver? I’m planning on going!

  16. J. A. Saglimbeni says

    Congrats Sam! I have bought the book and hopefully it will be an engaging and informative read. I only recently got to know your quality blogs and I am grateful, maybe one day I will be ready to retire and do what I love….
    Thanks,

    Joe

    • Financial Samurai says

      Joe, great to hear! It all comes down to preparation, relationships and knowledge. When the time comes to make the move, I’m confident you will be much more prepared. It took me a couple years, and after realizing I had so many rights, I got the courage and got it done. If I had the book as reference, I would probably have engineered my layoff within six months. Excited to hear your feedback after!

  17. Jacob @ iheartbudgets says

    I am a little late to this party! CONGRATULATIONS SAM!!!!!

    Love how you don’t just talk about finding a way to pursure your dreams, you’re taking action on it! And though quitting your job has some risks, it really seems like you’ve outweighed them all with your diligent planning and awesome savings strategy. I wish you the best on your next venture, we’re all on the edge of our office chairs :)

    • Financial Samurai says

      Thanks Jacob! Don’t be on your edge too much as my life isn’t that exciting! :)

      It really becomes a no brainer if you can engineer your layoff and get 6 months, 1 year, 2 years, or 5+ years of living expenses paid for in the separation package. Wouldn’t you quit if someone gave you a couple years too? You could get a job in a month and not only earn two years of income, but also earn your new income!

      Best, Sam

  18. Kris @ Everyday Tips says

    Congratulations Sam!

    I figured this would be your eventual decision, your passion for Yakezie and this site (and other online things) is so evident. I am truly happy for you!

    I know you are going to do great things, and Ramen is NOT in your future (unless you have a craving of course).

    Looking forward to see how your career unfolds!

  19. Cat Alford @ BudgeBlonde.com says

    I’m glad one of your other posts led me to this one Sam. It was good to learn more about you and read about your journey. I think you have retired quite swimmingly and seems like you are really enjoying your time!! Thanks also for the insightful comment on my blog. To answer your question, I’m not sure why so many Gen Yers are perceived as lazy. Like another commenter of mine said, every previous generation seems to think that of the ones after it. I think there’s a mixed batch, but the majority of my friends and colleagues are high achievers. Still, these are well educated folks and might not be representative of the Gen Y group as a whole. I’m interested to read your upcoming post about it and hope that you know not all of us Gen Yers are that bad haha. Talk to you soon! – Cat :)

  20. Laura says

    Congrats Sam, hope you’re enjoying the fruits of your labours. If you insist on eating ramen noodles I do hope you choose the organic variety.

  21. Andy says

    Loved this story and admire people taking a leap to do what they want. Sadly, the income curse is something I deal with. Maybe one day I will have the courage (especially if I can engineer my layoff!)

  22. Derek - ThePointsGuide says

    Sam! I don’t know how I missed this post but found it after reading your post on GRS. What an adventure of retiring at 35 years old!

    You know you have nothing to worry about. You are very talented and have a massive following.. write a book and you’ll be taken care of. People follow you for your knowledge and wisdom. Ive been reading your blog for over a year.

    I’m trying to get to a place where I can ‘engineer my layoff’. Its just taking more time than I’d like :)

    • Financial Samurai says

      Hi Derek, glad you found the post! I don’t know if writing a book (I did) and kicking back is all it takes, but it’s a good idea! :)

      Engineering your layoff is one of the most beautiful things ever. You leave on your own terms and feel empowered w/ money in your pocket! Good luck!

  23. Squid4Life says

    I retired from the workforce when I realized I had enough money coming in to not have to work again. So after some yrs out of the work force, I went back to work, doing something I love, because I wanted to and not because I had to. I get paid to play with toys all day :) I cannot complain. I choose to work there because it is fun, and they offer a pension, paid sick leave, vacations etc. So it is a nice perk to have, working on what I love, having time to travel, work on my crafts, learn new things etc. I love being retired but not sleeping on a couch :) unless I am so exhausted from a night out that I don’t make it up to my room, all the way on the third floor. Being retired is a beautiful thing.

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