After spending years writing a 200-page book on how to profitably quit your job with a severance, you'd think I'd have executed everything to perfection. However, let me share some mistakes I made when quitting my job so you don't do the same.
By the time I returned all grizzled and gray, I'd have an increase in savings to boot thanks to passive income from real estate, CDs, dividends, and private equity.
The fact of the matter is I made some mistakes which I'm now kicking myself for missing. One could blame my naivity for not further maximizing my severance package. But, ignorance is no excuse for anything. Ignorance is an excuse for the weak and unprepared.
When it comes to engineering your layoff, you must meticulously plan. Every single mistake you make is a learning experience.
It doesn't matter whether the mistakes are made in contract negotiations, investing in the stock market, or buying real estate. We are all bound to make mistakes. It's what we do after the mistakes that counts.
Mistakes I Made When Quitting My Job
1) Not using sick days as vacation days.
I find sick days to be for wussies who drink too much the night before and are too lazy to come in the next day before everybody else. It was so annoying to see staff call in sick on a Friday or right before/after a holiday. Managers know when you're lying about your illness. For those of you who like to call in sick, you're putting your career at risk. Ironically, this may be ultimately what you want to do!
Unless you are deathly ill, you have the ability to come to work. Lucky for you times have changed. We've become a softer society that coddles our youth and holds each other's hands while competitors eat our breakfast, lunch, and dinner.
Just like a convenience store employee doesn't get paid enough to stand up against a robber, your colleagues don't make enough to accept catching your cold. They will be pissed if they start hacking up a lung the next week. Read “Never Call In Sick On A Friday, Slacker!“
The great thing about leaving your job is you get all your vacation days paid. The value of each vacation day is worth the value of each salary day. In other words, if you make $10,000 a month and have 30 days of vacation carryover days, you will get a $10,000 gross check! On the other hand, sick days have no value. They are a non-transferrable benefit.
I was one of those workaholics who was too proud to use “not feeling well” as an excuse to not come to work. I loved my job for the first 10 years and wanted to get in on the action every single day. If I didn't go to work, I felt like I was falling behind. Besides, I never got that sick either.
I would at least come in for three hours and then go home. Over the last 10 years at my previous employer, I probably took a total of eight sick days, half of which was because I woke up late and was too embarrassed to come into work.
Two months before I decided to engineer my layoff, I decided to take a five day vacation to Hawaii. With flights only costing $315 round-trip, I just had to go. If I was smart, I would have just swallowed my honor and called in sick if I knew I was leaving the firm.
My integrity cost me thousands of dollars less in severance. Do you think I did the right thing about being honest?
I had 132 sick days to use over the course of 11 years and only used eight of them. Perhaps if I didn't manage an employee who took 10-12 sick days a year for five years in a row, this point would have never crossed my mind!
2) Not using my corporate credit card rewards points.
Only until the fourth month after I engineered my layoff did I remember my 105,000 American Express rewards points I left behind! I never bothered to use my corporate credit card rewards points consistently because I thought I would just hoard my points to one day buy something sweet like a set of new golf clubs for my father. Besides, I was happy using my Citibank ThankYou® rewards card for things such as a home movie theatre system.
105,000 rewards points equals about $800-$1,000 dollars of credit depending on what one buys. Whether you have a corporate card or a personal rewards card, never forget to actually use your rewards points for something. Credit card companies count on you to forget or never use your points to save them money.
For your reference, the AMEX Rewards telephone number is: 1(800)297-3276. Funny enough, I just called them to see if they could claw back my points despite having closed my corporate card eight months ago. Thankfully, they said YES! I decided to use my points to get seven $100 gas cards, one $50 gas card, and one $50 Williams Sonoma gift card delivered to my door.
3) Not planning for even more opportunity.
The main reason why I wanted to leave my job was so that I could dedicate all my time building an online business. I wanted to give entrepreneurship a good 12 months and didn't want to have any regrets when I looked back on life.
Since leaving my job, I've written a book, which has been a life goal of mine. I went to Denver to meet up with hundreds of bloggers at a conference. I've written two hundred more articles on Financial Samurai. My tennis team won the San Francisco tennis championships. Finally, I lost some stubborn weight. So far so good right? Well, it could have been even better.
The first several months after retirement were as busy as ever. I was anxious to do so much of what I couldn't do while I was working that I probably worked even more.
I was so caught up in my own business and travels that I failed to branch out to see what else was out there. Sure, I talked about getting a PhD and enlisting in the foreign service. However, what I didn't realize was that there are plenty of programs that fit my interests in business and communications perfectly.
For example, Stanford University has a fellowship for mid-career journalists who want to spend 10 months working on a personal project that will help the rapidly changing media industry.
Here are their words, “Our fellows are in the vanguard of 21st Century journalism: men and women who will be forces for innovation, entrepreneurship and leadership. Fellows spend their year experimenting, testing and creating ideas and prototypes that enable them to be effective innovators immediately and for years to come.”
I'm not the typical candidate given I don't have a journalism background. However, given my years in finance, my thirst for entrepreneurship, and the desire to evolve the Yakezie Network into something greater, such a fellowship might be a great fit.
If I timed my exit better, I would have applied for a fellowship in the fall of 2011 for the entering class of 2012. Instead, I didn't find out about such fellowships until the summer of 2012, making me only eligible only for the class of 2013, a full 1.5 years after I negotiated my severance.
Although the acceptance rates for such fellowships are only around 6%, we all know we miss 100% of the shots we don't take. It's best to put in the effort now for the chance for opportunity in the future.
Related: Three White Tenants, One Asian Landlord
4) Not getting life insurance.
I received 5X my base salary in life insurance through my employer for the past decade. I continued to receive employer provided life insurance for the three months WARN period.
However, I completely forgot to get an equal amount of term life insurance once my life insurance ran out for the subsequent five months! Check PolicyGenius to compare competitive life insurance quotes if you're looking. During the pandemic, my wife was able to double her coverage for less.
In other words, between the time my WARN period finished and now, my loved ones would not have received any significant life insurance money. I do have a small term policy I took out a while ago for $50,000, but $50,000 won't last someone very long in San Francisco.
It's actually kind of scary to think I totally forgot about getting new term life insurance that matched my old employer policy. But, perhaps it's logical since I do not have any children yet.
Furthermore, my liquid to semi-liquid assets are more than my debt obligations (positive net worth), so in the case of my death, my beneficiary can simply sell all my assets.
However, if I die I don't want my beneficiary to have to turn her life upside down because she will already have to deal with a difficult loss.
I now have a new term life policy that is equal to my old employer provided life insurance policy. The right amount of life insurance depends on each individual.
I also recommend everybody also look to get an umbrella policy if you have significant assets worth protecting.
Don't Make My Same Mistakes When Quitting A Job
Some of you might say these aren't all mistakes because the first one is a moral issue which I chose not to cross while the second one turned out to be fine since I was able to redeem all my points.
I really do think the third point is an error on my part for not planning enough. A fellowship sounds perfect for my interests but it's a long ways away. So much can happen from now until then. The point is that we need to constantly be on the look out for new opportunities and plan!
The only thing I can do now is continue thinking about my future and make sure I am doing what I really want to do. I told myself in “A Day Job Is So Much Easier Than Entrepreneurship” that I would give myself until June, 2013 to make a decision on whether I want to continue focusing only on my entrepreneurial endeavors or do something else.
Right now I'm considering a startup, joining the foreign service, or returning to the financial world as a backup. Let's see what the future holds.
The one message I cannot stress enough is to never quit your job without negotiating a severance and thoroughly exploring all options beforehand. Plan and plan some more so that you have as long a runway as possible to pursue your dreams.
Quitting without a severance is a big mistake. If you're going to quit your job anyway, you might as well try and negotiate a severance!
Related: If I Could Retire All Over Again, These Are The Things I'd Do Differently
Recommendation For Leaving A Job
Quitting your job instead of getting laid off with a severance is the absolute biggest mistake you can make.
If you negotiate a severance like I did back in 2012, you not only get a severance check, but potentially subsidized healthcare, deferred compensation, and worker training. Since you got laid off, you're also eligible for up to 27 weeks of unemployment benefits. Having a financial runway is huge during your transition period.
Conversely, if you quit your job you get nothing. Check out, How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye, on how to negotiate a severance.
I first published the book in 2012 and have since expanded it to 200 pages from 100 pages in the latest edition thanks to tremendous reader feedback and successful case studies. Quitting is for losers. Negotiate a severance!
X Factor – Starting Your Own Site
It's been over 12 years since quitting my job and starting Financial Samurai. Today, I'm actually earning enough online to provide for a family of four in expensive San Francisco.
If you enjoy writing, connecting with people online, and enjoying more freedom, see how you can set up a WordPress blog like mine in 15 minutes. It's cheap and easy to start. Everybody should brand themselves online and take advantage of over 3 billion people online today. You can find consulting jobs, new jobs, and potentially make a lot of money online as well.
Quitting my job to be an investor and blogger has been a dream come true. Give it a go. You never know where things will take you.
Recommendation For All Parents
If there's one thing the pandemic has taught us, it's that life is not guaranteed. We must do everything we can to protect our children while they are still dependents.
As a result, please get life insurance. Not only should you get enough life insurance to cover your liabilities, your life insurance term should last long enough to get them through college. Quitting before getting life insurance is a mistake.
The best place to get life insurance is through PolicyGenius. PolicyGenius will help you find the best plan for the lowest price tailored to your needs. PolicyGenius provides free, no-obligation quotes so you can get the best rate.
In the past, you would have to get a life insurance quote by applying to individual carriers – the process was completely opaque. Now, you can have multiple qualified life insurance carriers compete for your business after applying on PolicyGenius. It's so much more efficient!
After eight years of owning life insurance, my wife decided to check on PolicyGenius for free to see if should could do better. Lo and behold, my wife was able to double her life insurance coverage for less money. All this time, she thought she was getting the best deal with her existing carrier.
Mistakes I Made When Quitting My Job So You Don't Do The Same is a Financial Samurai original post.
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41 thoughts on “Mistakes I Made When Quitting My Job So You Don’t Do The Same”
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I just quit my 6yrs long job and I’d wish I had found your Book and Blog a lot sooner. I also am living in San Francisco, so the cost of living is up there. Now, I’m traveling and figuring out my next step without severance.
Well, better late than never. Congrats and good luck on your new adventure! How long have you been out of college working?
Thanks and I was one of those that jumped straight into the workforce 9 years ago.
And I love reading your blog because being a native San Franciscan, I can sort of relate with your stories.
What are your thoughts about a voluntary buyout?? Is it better to stay in the safety of a corporate job or should the cash incentive (one year salary plus health care coverage for 3 years) be enough to jump ship and explore other options – even if you’re unsure what you will be doing post buyout??? BTW, In this case my company has promised no to lay off people if they don’t take the buyout. It’s purely voluntary!!
I guess it all depends on the costs as it’s different for everybody.
My base was rather large after the 2008-2009 crisis (gov’t wanted finance sector people to earn less bonuses, so our bases just went up by 60-100%). Put a 5X multiplier on that, and my insurance was good enough, and was very inexpensive to boot. My employer had very generous insurance programs.
For health insurance, I’d check with eHealthInsurance online. They are based here in the Bay Area and have the largest network of health insurance partners to offer the lowest quotes.
That’s a good relabeling. It kinda goes to show that we all know there’s a lot of gray when folks call in sick. Personal days is a better label for sure.
Thanks for sharing your insight Sam! Great point on the life insurance, a point I think we all too often overlook. We actually just got my wife another $50k in term through USAA. She called for a completely different matter and they offered it to her with no questions asked for $5/month.
I also left my job nearly a year ago now to help run my wife’s business and I could not agree more on the planning and then planning some more. Everyone is going to make mistakes, we’re all human after all, but the planning can help you go much farther.
Sounds like we got that same $5/month term deal John! I got it several years ago as a supplement given it was so cheap, what the heck. They said the premiums you pay can get rolled over into another policy if interested fyi.
I seem to remember my wife telling me that very thing. It’s definitely something we’ll consider, especially if it proves to be of similar value.
You don’t have any dependent so I don’t think the lapse is that bad.
My mistake was quitting a bit early. I guess I could have stuck it out for 6 more months and negotiate more. I couldn’t take it anymore though. It wasn’t all bad though because I sold all my options and a bunch of stocks before I quit. If I waited until 2013, I wouldn’t have made as much because the stock dropped like 25%.
In your case, it just sounded like you had to live for your health and sanity’s sake.
In my case, I could have just cruised on for at least another year, but I didn’t feel it was fair to myself, to the company, and to potential colleagues who all worked very hard.
That’s good you didn’t lose those corporate card point! I just got a notice that I have 18k miles that are going to expire soon. It’s easy to lose track of those things so best to use them while we can. And as for sick days I find it so obvious when people are faking!
Dang… I wonder what you can do w/ 18K miles….. transfer them, or use them for portion credit for a flight?
Depending on the plan, you can sometimes prevent the miles from expiring by doing a small ‘activity’ like redeeming some points, buying some points, or using one of their partners. For example, I have 30,000+ Air Canada Aeroplan miles, but don’t often fly. To keep my miles valid, I simply ‘redeem’ a tiny amount (500 miles) and donate it to a charity. Win win! :)
I think there may be an option to make a small purchase from an affiliate vendor to extend the miles too. I feel like I did that a year ago. I really should try to fly with them next time I travel and try to get up to 25k. Or figure out if it makes sense to purchase the missing miles I’d need to get a flight out of them. That just feels weird though.
I feel the same way about buying miles. The whole flight reward system could be much simpler, don’t you think? Networked airlines, expirations, promotions, ineligible dates, non-transferability… it seems more overhead that it sometimes might be worth.
I can see why you would consider those mistakes – there are definitely opportunity costs associated with each of those points. I don’t think you should be too hard on yourself though because the “mistakes” you made were really life things that you were figuring out along the way. I have to imagine that when you made the transition initially there were lots of other life issues you didn’t miss that made quitting your job the success it has been, right? I think that this is a great cautionary tale, insisting that people not just plan for the transition but really try to weed down how it’s going to affect the day by day changes in your life :)
Nunzio, you win some, you lose some. Hopefully this post helps others win some more. The transition out is really complicated, hence my book and my series of posts.
Overall, I feel fine. But, I want to present the losses as well so readers know that I make plenty of mistakes as well.
Wow these are some major mistakes, but on the flip side you have more major wins. Retirement being the biggest one that many people can’t achieve. Keep up the great work.
Mistakes are just a part of life. It’s what you do with those mistakes. If you fix the mistakes that you have made, then you are good. If you don’t, then it becomes an issue. You have to be willing to focus on the solutions to the issues that arise. But good for you for admitting faults-something I admire in people. I’ve noted your solutions for my own use.
Great points in this post. Mistakes are great things to reflect on as lessons learned.
I am curious about your life insurance point. Are you married?
It never fails…hindsight is…you know the rest. That’s the beauty of life though, my man.
So I will be quitting my job REALLY soon. Funny enough, I have 30 sick days. I am the same as you…I feel like a tool using them. But I will think about this for sure.
That said, you have a done a ton for ALL of us over this time. And we thank you!
Tony, figure out what your firm’s vacation carry over policy is and consider your options! This is real money we are talking about. And also, don’t quit your job, get laid! Cheers
Sam, you do not get fired from the public school system unless you quit!!
Well, don’t get fired, get laid off! Ask the administrators if you can work out a deal. If you are leaving anyway, it doesn’t hurt to ask.
Don’t beat yourself up too much! There is no perfect negotiation and hopefully the money left on the table is very small. I have the same philosophy regarding sick time! I am fortunate that I can save it for retirement. Over 11 years, I accumulated 125 days. By the time I retire, I will be able to add a year to my retirement years.
Accumulating 125 days, or 365 days of sick days…. now THAT is a benefit teachers and many public workers should cherish! The private sector can’t hold a candle to those type of benefits + a pension!
Great pic! Thanks for the laugh.
Your book is great, and I am currently attempting to implement several of the strategies with the ends in mind.
The “sick days” is something you may be being a little rough on yourself. First, everybody has a price, but a few thousand dollars is not your price. Second, the idea of “sick days” is intended for just that purpose; your employer is attempting to provide a benefit for that purpose. You are right not to take advantage; your employer was pretty good to you on the way out, and you were pretty good to your employer during your service. No need to gild the lily, you did the right thing.
It’s interesting though… for if I add 11 years work of sick days, that’s 132 days of which only 8 I used. Hence, theoretically, that’s like “losing” 1/3 of my annual base salary if I could carry over all those days as vacation days. Fun theoretical thought process.
I love this idea, and I wish I had leveraged it during my corporate days! Another thought is to make sure you use up all your insurance benefits before moving on to a new plan, new employer, or new entrepreneurship venture. For example, when I quit my job at a big company, I got $300 orthotics made, a new pair of prescription sunglasses, and a 90 min therapeutic massage – all for $0 out of pocket. :)
Interesting. I had assumed AMEX credit cards points just belonged to the company. I’ll need to check my status as I’m sure I’ve racked up a ton on these points with extensive travel. Thanks for the tip.
It depends if you pay your expenses and get reimbursed, or if the company pays the bill and you file an expense report. If it’s the former, than you own the card as it goes under your credit file. You also have to pay the annual fee.
I’m actually really impressed that Amex let you cash in the rewards points on a card that had been canceled for 8 months. Good job by them, I guess it goes to show it can never hurt to try!
I’m with you on sick days, I think I’ve used maybe 2 or 3 in the past 6 years. I don’t know that I should use them more liberally, but if I knew I was leaving the company in a few months time I would probably start to do so.
I was pretty shocked myself. Remembering my AMEX points just hit me one day and I figured why not try and ask. I was a member for 10+ years, so I’m glad they didn’t pork me, even if I did shut the card down months ago.
Those aren’t huge mistakes, but I agree with your feelings about sick days and I think that the concept of a sick day was created when women started entering the workforce.. Luckily we just get FTO where I slave at.
Eh? Never heard that one before.
How long more do you plan to work at your place? FTO sounds good!
“The great thing about leaving your job is you get all your vacation days paid.”
This varies by company. My current company has two different pools of vacation time. One bucket fills up at the beginning of the year and you draw throughout the calendar year. Anything left at December 31st is surrendered, and it’s also not payable upon leaving the company. The other bucket adds 4 hours of time per pay period. It caps out at 96 hours but it rolls continuously, and the time left upon leaving the company is paid out.
Unless there are laws in California that mandate that vacation is paid, I think you have to look at each company and each HR policy for that company to understand this.
MB, yes there is a law in California mandating vacation to be paid when an employee departs. The number of days one can accumulate probably vary from state to state. Easy for each person to look up.
I had never really thought about the corporate credit card issue until a few months ago when a friend was leaving his job and was telling me how he was debating on how to use his AE points. I think he had roughly the same amount as you.