Author Topic: Early Escape From Wage Slavery  (Read 11266 times)

okobrien

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Early Escape From Wage Slavery
« on: April 13, 2016, 10:49:54 AM »
I am looking for some feedback on my new life-changing plan.  After teaching high school economics/personal finance for seven years, I have decided it is time to call it quits and enjoy life.  Do I have enough to retire early and live on the 4% rule?  No! I have about half that, and my expenses aren't getting much lower any time soon.  I'm 33, have a (mostly) low maintenance stay-at-home wife, an attention hogging three month old son, and a high-energy cattle dog.  All three of them support the plan to quit my job. 

Ok, so what is the plan?  Well, part of the beauty is that I don't have much of one.  Figuring out how to solve problems is the fun part.  I do have a couple of rental houses that cover my own housing costs and a little bit more.  I also have set aside enough money to cover a frugal lifestyle for the next two years.  In those two years I will have time to enjoy my little family, explore some of my passions, and hopefully create more income sources so that I don't have to return to indentured servitude. 

About the change, my wife and I have thought, discussed, prayed, and completed pro/con lists.  We both are leaning towards this new path of freedom and creativity.  What think y'all?  Why am I an idiot/genius/naive doofus?

*Important to know about me is that I am a big fan of creativity, freedom, and walking by a different drum beat.  I know it is safer to continue working until I have enough saved enough to live on 4%, but what if my kid(s) grow up, my dog gets fat, and my wife gets lonely while I am working?  What good is a safe retirement if I missed so much of the journey?

Gimesalot

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Re: Early Escape From Wage Slavery
« Reply #1 on: April 13, 2016, 12:21:40 PM »
There are two things that come to mind right away:

First, how much additional income do you need after your rentals?  For example, if you only need $1000/month that is a lot different than needing $2000/month.  Where I live, $90/day is the going rate for subs, so you could make $100) in just about 11 days for working.  Not ideal but better than full time! 

Second, how much are your hobbies/passions going to cost?  For example reading is relatively low cost compared to skiing.  Sticking to low cost hobbies or monetizing expensive ones ASAP will make your plan a lot more feasible.

Axecleaver

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Re: Early Escape From Wage Slavery
« Reply #2 on: April 13, 2016, 12:42:29 PM »
Consider the value of the pension and healthcare benefits you're walking away from. Might be worth hanging in there until your pension vests. That would be another three years?

But aside from that, it sounds like you're setting a time limit of two years to build up some additional passive income sources. That is a reasonable goal, especially if you break it up into manageable chunks. ie, can you build 1/24th of what you need in the next 30 days? Sounds like a good journal, I'd enjoy reading about someone coalescing a plan around building passive income from scratch.

ohana

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Re: Early Escape From Wage Slavery
« Reply #3 on: April 13, 2016, 12:45:42 PM »
I'm all for your walking.  But put in a little homework first; you deserve more than "having no plan is a great plan!"

1)  Figure out your true expenses.  Track them for a year. 
2)  Figure out your true income if you limit yourself to the houses.  Factor in management, time between renters, maintenance, etc.  Be conservative.

Do they make sense?  Everyone here wants you to be free, but we also want you to succeed (which means do some homework).

Good luck.

okobrien

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Re: Early Escape From Wage Slavery
« Reply #4 on: April 13, 2016, 01:10:55 PM »
There are two things that come to mind right away:

First, how much additional income do you need after your rentals?  For example, if you only need $1000/month that is a lot different than needing $2000/month.  Where I live, $90/day is the going rate for subs, so you could make $100) in just about 11 days for working.  Not ideal but better than full time! 

Second, how much are your hobbies/passions going to cost?  For example reading is relatively low cost compared to skiing.  Sticking to low cost hobbies or monetizing expensive ones ASAP will make your plan a lot more feasible.
Good points Gimeasalot.  Bare minimum I will need about $1,200 more a month but long term I would like more.  As far as hobbies and interests, I'm talking things like expanding my garden, writing a book and a blog, photography, wood crafts, etc.  I see all of my projects as income potential as opposed to net costs.

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AZDude

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Re: Early Escape From Wage Slavery
« Reply #5 on: April 13, 2016, 01:45:59 PM »
What is the economy like around you? Big city in the midwest with plenty of opportunity to make some extra cash or small town in Texas where you will be mowing grass for minimum wage?

$1,200 a month is low, but its not a trivial amount. Making that much without a full-time job will be difficult. I can make $500 to $600 a month easy working an extra 10-20 hours a week, but that is using specific easy to market skills. An enterprising man with lots of free time should be able to pull it off, but just make sure you have a time limit for when you need to be solvent or else... back to the grind.

Which brings up the good point. In most places around the US, teachers, especially middle school teachers, are in high demand. This means that if you quit, enjoy life for a while and then fall on your face, financially speaking, you will probably be able to find similar employment again. The only real risk is if you become disabled or if you die, so be sure to have adequate insurance for that possibility.

onlykelsey

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Re: Early Escape From Wage Slavery
« Reply #6 on: April 13, 2016, 01:57:50 PM »
Agree with AZDude, except teacher hiring tends to be very cyclical, as you probably know.  There are freezes for years and then jurisdictions are desperate.  You may be able to play some geo arbitrage, but only if you feel like relocating with your family.

To me, your numbers are way too low.  it seems like just one upset (kid has an accident, unexpected pregnancy or illness, need to travel) would throw off your whole plan.  Two years of bare minimum budget does not count even as FU money to me, especially if you don't have a second income.

Relatedly, is there a possibility for her to also bring in some income? $600 each is a lot more doable, you'd think.

okobrien

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Re: Early Escape From Wage Slavery
« Reply #7 on: April 13, 2016, 02:39:44 PM »
Axecleaver, I will double check the benefits to make sure I am not screwing myself too much with lost pension. I like the way you break it up into chunks.

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okobrien

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Re: Early Escape From Wage Slavery
« Reply #8 on: April 13, 2016, 03:24:22 PM »
AZ and Kelsey, I live in Denver where I foresee economic opportunities.  I do have significantly more assets than the two years, I just don't want to use up half a decade of living  expenses "living free".
My wife is an RN and could use her skills to bring in money if needed. Our hope is that she would only work if she gets bored at home though.

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Mother Fussbudget

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Re: Early Escape From Wage Slavery
« Reply #9 on: April 13, 2016, 03:40:13 PM »
There are more paths to that 'long sabbatical' than time to document them here - your path is just as valid as anyone else's (IMHO).

Even MMM suggests that if you find an investment that returns enough for your to retire on, do it.  If you like real estate, and want to be a 'lazy landlord', you could easily find a REIT that returns what you need.  MMM's example (symbol SNH) returns a dividend yield of (today) 8.59%.  If you have $280K to invest, you could get the $24K of annual cash from dividends alone.

Pension:  do check your pension eligibility requirements, and calculate potential payouts here.
Insurance:  search for health care plans here.

Between at-home-nursing demand on the upswing (thank you Baby Boomers!), and substitute teaching, you should be fine.

Suggestion:  consider posting a full "Case Study" so you can get more face punches, ideas, etc.

And most of all - great success to you!

CindyBS

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Re: Early Escape From Wage Slavery
« Reply #10 on: April 13, 2016, 05:39:04 PM »
If you have a 3 month old (which I assume is your only kid) and your wife is a SAHM (who I assume was previously working), sounds like you have gone through some major changes in roles/lifestyle in the last couple months.

Becoming a parent is a huge change, IMO you should wait at least a year to make any decisions.

Also, you said if you kid grows up - hate to break it you, your kid will grow up.  Right now he won't remember anything about the time spent with you.  When he is 5+ years old he will remember the time spent with him, vacations, etc.  Something to think about is that if time off now means time working later when he can remember and is also old enough to do cool/fun things with, is it worth taking time off now?

Cassie

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Re: Early Escape From Wage Slavery
« Reply #11 on: April 13, 2016, 06:12:38 PM »
I think you will be living on the edge and if your wife has to back to work before she wants she may end up resenting you. At least vest your pension. Nothing is worse then being old and poor and ,most likely you will get old. I think you should post your budget.

expatartist

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Re: Early Escape From Wage Slavery
« Reply #12 on: April 13, 2016, 07:38:50 PM »
There are more paths to that 'long sabbatical' than time to document them here - your path is just as valid as anyone else's (IMHO).

MF, these are some very good, creative ideas. Useful for many readers. Thanks!

okobrien

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Re: Early Escape From Wage Slavery
« Reply #13 on: April 14, 2016, 06:43:24 AM »
Mother Fussbudget, thanks for the ideas and encouragement. The pension is vested but not significantly large with my short career.

CindyBS, I said "if my son grows up while I am working." you cut out half the quote to be a smartypants. As far as the time off now or later tradeoff, that has been one of my biggest hangups so far.

Also, maybe I didn't make this clear enough in the initial post, I am not trying to take time off to relax. I am quitting in order to give myself time to explore more entrepreneurial ventures.   


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lthenderson

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Re: Early Escape From Wage Slavery
« Reply #14 on: April 14, 2016, 06:51:49 AM »
I'm all for sabbaticals and doing stuff while you are young and can enjoy them. In my case however, I chose the work hard and retire early route instead of taking sabbaticals and working longer. As someone who retired just before age 40, I would offer one word of caution. With two young people at home, yourself and your wife, expenses tend to increase over what they were when one or both of you were working. You now have the extra time to go do and see more things and thus costs increase.

expatartist

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Re: Early Escape From Wage Slavery
« Reply #15 on: April 14, 2016, 08:07:26 AM »
I'm talking things like expanding my garden, writing a book and a blog, photography, wood crafts, etc.  I see all of my projects as income potential as opposed to net costs.

They will remain potential until they actually become profitable. This takes time. My suggestion? Because you have a family, and are not yet FI, wait to quit your job until they're sustainably profitable. Until you've pushed yourself and done the experimentation and series of small failures it takes to find out how you work, and how the changing markets for these hobbies work. They all sound complementary and doable. No need to quit the job yet, you can start on them today with a professional attitude: research the markets, find your niche by trying out different approaches.

Say, give it a year to start, see how things are going halfway through, or whenever your contract is due to be renewed. This builds a structure to your work habits while you still have the regular schedule and income of the dayjob. For most people, the transition from dayjob to 100% free time is a challenge. If you've already got your workflow and income going with the hobbies, the sudden increase in free time will allow you to hit the ground running, rather than have to start from scratch in a completely new set of circumstances.

onlykelsey

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Re: Early Escape From Wage Slavery
« Reply #16 on: April 14, 2016, 08:09:55 AM »
I'm talking things like expanding my garden, writing a book and a blog, photography, wood crafts, etc.  I see all of my projects as income potential as opposed to net costs.

They will remain potential until they actually become profitable. This takes time. My suggestion? Because you have a family, and are not yet FI, wait to quit your job until they're sustainably profitable. Until you've pushed yourself and done the experimentation and series of small failures it takes to find out how you work, and how the changing markets for these hobbies work. They all sound complementary and doable. No need to quit the job yet, you can start on them today with a professional attitude: research the markets, find your niche by trying out different approaches.

Say, give it a year to start, see how things are going halfway through, or whenever your contract is due to be renewed. This builds a structure to your work habits while you still have the regular schedule and income of the dayjob. For most people, the transition from dayjob to 100% free time is a challenge. If you've already got your workflow and income going with the hobbies, the sudden increase in free time will allow you to hit the ground running, rather than have to start from scratch in a completely new set of circumstances.

Working on your projects now is good advice.  Could you woodwork through the summer, buy the equipment you need cheaply and figure out how the local market works, for example?  Cashflow takes a while for most folks to get a hold on.

Playing with Fire UK

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Re: Early Escape From Wage Slavery
« Reply #17 on: April 14, 2016, 08:22:41 AM »
Jacob from ERE had a guest post from someone who wrote a book called “Radical Immediate Retirement,” which might have some more useful ideas for you. http://earlyretirementextreme.com/guest-post-can-anyone-retire-immediately.html

If you and your SO are willing to try it knowing that you may need to go back to work - give it a shot.  I would caution (having seen people through good money/time after bad in a business that is perpetually 'just about to take off'), you to decide now what criteria you will use for whether or not you/SO go back to work in two years (or other specific timeframe), and not rely on a gut feel.

Axecleaver

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Re: Early Escape From Wage Slavery
« Reply #18 on: April 14, 2016, 10:35:53 AM »
Quote
decide now what criteria you will use for whether or not you/SO go back to work in two years (or other specific timeframe), and not rely on a gut feel.
This is good advice, OP. I'll go one step further and suggest you write it down. A list of written goals, along with criteria for an exit plan. I used this strategy when I launched my consulting practice, and it helped to motivate me to work harder when I knew that if our cash reserves got below 6 weeks of expenses, I had to go back to work for The Man.

okobrien

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Re: Early Escape From Wage Slavery
« Reply #19 on: April 14, 2016, 11:46:54 AM »
Quote
decide now what criteria you will use for whether or not you/SO go back to work in two years (or other specific timeframe), and not rely on a gut feel.
This is good advice, OP. I'll go one step further and suggest you write it down. A list of written goals, along with criteria for an exit plan. I used this strategy when I launched my consulting practice, and it helped to motivate me to work harder when I knew that if our cash reserves got below 6 weeks of expenses, I had to go back to work for The Man.
Awesome plan! I will follow this advice guys.

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CindyBS

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Re: Early Escape From Wage Slavery
« Reply #20 on: April 14, 2016, 03:22:01 PM »

CindyBS, I said "if my son grows up while I am working." you cut out half the quote to be a smartypants. As far as the time off now or later tradeoff, that has been one of my biggest hangups so far.

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Ah - a misread on my part - sorry.  I still believe my overall point is valid.  Wait a year and see where you are at.  I do some really cool things with my older kids and enjoy parenting them more age 5+ than I ever did when they were little. 

Mother Fussbudget

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Re: Early Escape From Wage Slavery
« Reply #21 on: April 14, 2016, 05:49:14 PM »
lthenderson -  When I say "long sabbatical", I'm speaking of FIRE / retirement.  In conversations with people who aren't on the forums, and don't generally understand the 'FIRE' concept, it's easier to discuss as a 'plan for a long sabbatical' - everyone understands what a sabbatical is. 

*MY* 'long sabbatical' is equal to FIRE.  I'll stop working, and not go back. 

lthenderson

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Re: Early Escape From Wage Slavery
« Reply #22 on: April 15, 2016, 07:20:59 AM »
lthenderson -  When I say "long sabbatical", I'm speaking of FIRE / retirement.  In conversations with people who aren't on the forums, and don't generally understand the 'FIRE' concept, it's easier to discuss as a 'plan for a long sabbatical' - everyone understands what a sabbatical is. 

*MY* 'long sabbatical' is equal to FIRE.  I'll stop working, and not go back.

I understand. I used sabbatical too when I actually retired. People didn't question me as much when I said I was on a sabbatical at age 40 (back when I retired) than telling them I retired at age 40. But I used sabbatical not due to your comment but due to the OP post where they admitted that their break was only for a couple years until they could get an new income stream from one of their hobbies. This is more along the lines of a true sabbatical.

jim555

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Re: Early Escape From Wage Slavery
« Reply #23 on: April 15, 2016, 07:28:34 AM »
I would never do what the OP is doing.  Very risky, lots of possible bad outcomes. 
Good luck, hope it works out.

DebtFreeBy25

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Re: Early Escape From Wage Slavery
« Reply #24 on: April 15, 2016, 09:29:02 AM »
I would never do what the OP is doing.  Very risky, lots of possible bad outcomes. 

I actually admire OP for being willing to take a risk. The only advice I have is to ensure you have a rock solid back-up plan. What would you do if you aren't able to earn a living income doing something you like? If you're confident that you can return to your previous work at a similar income if necessary, then this is less of an issue.

Personally I don't have the stomach for this sort of risk. I finally left a job I hated in February. I kept working in a terrible situation for 7 months because I wanted to find another job before leaving. Had to finally accept that with the hours and travel I wasn't likely to find another job anytime soon. I have about 10 years of basic expenses and am freelancing so I don't have to tap my savings but am still concerned that I need to return to a full-time position ASAP. I'm worried that the longer my sabbatical lasts the lower my earning potential will be. I'd like to be someone who's okay with earning only what I need to get by and save a little, but I'm not.

okobrien

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Re: Early Escape From Wage Slavery
« Reply #25 on: April 26, 2016, 08:06:12 AM »
I appreciate all the comments and advice given and will consider my options.  I will let the community know when a decision is made.

Fishindude

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Re: Early Escape From Wage Slavery
« Reply #26 on: April 26, 2016, 09:09:48 AM »
Doesn't sound like a very solid plan to me.  I would at least fully vest your pension, figure out some long term health insurance and make a plan for where the additional necessary income is going to come from before doing anything.    Don't you already get summers off, spring break, Christmas break, etc. as a teacher?  Most working stiffs would be envious of the free time you already have.

Cannot Wait!

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Re: Early Escape From Wage Slavery
« Reply #27 on: April 26, 2016, 08:20:23 PM »
I like your no-plan-plan.  If your team is behind you and flexible, I say go for it!
Your hobbies sound like they have potential to be profitable and you have 2 solid careers (nursing and teaching) to fall back on.
If you like your job, sure, go ahead and stay longer to build your nest egg.  But if you're done, you're done.
Two years is a nice long trial to see if you can make a go of something else. 

Goldielocks

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Re: Early Escape From Wage Slavery
« Reply #28 on: April 27, 2016, 12:44:58 AM »

My DH gave me some good advice..  Don't quit something, make a change to move to something.

( it does not have to be paid, but it should pull you, rather than a nasty career pushing you). Keep looking for your 'pull'. If you have it, and the means or will to make it happen, then do it!


Crap, if you can't do it now when everyone is healthy, when else could you?

James1

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Re: Early Escape From Wage Slavery
« Reply #29 on: April 28, 2016, 11:15:29 PM »
Why don't you take an actual sabbatical? My district allowed me to take a 1 year sabbatical after my daughter was born. Then another year after that. It was reassuring to know that I still had my job in case things didn't work out.

MrMonkeyMustache

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Re: Early Escape From Wage Slavery
« Reply #30 on: April 28, 2016, 11:30:58 PM »
You say you have half of what it takes to FIRE based on the 4% rule, but then mention you have the money to cover a frugal life style for two years. I didn't do the actual math, but that doesn't seem right.

okobrien

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Re: Early Escape From Wage Slavery
« Reply #31 on: July 25, 2016, 02:26:11 PM »
Well, I jumped!  I quit teaching and don't plan on taking another job.  I appreciate the feedback and took it all into consideration.  I will be launching a blog shortly so that others may learn from my mistakes :)