Last week I introduced myself and told you a little bit about me, including why I decided to quit my job and become self employed even though I still had a lot of debt and little in savings.
It was a risky move to be sure. But in the comments a reader named George told me that he made an even riskier move (in my opinion) by quitting his job without an exact plan or any revenue coming in. He also asked some follow up questions about my decision to become self employed. Here’s what he said:
Similar to you, I quit my job to pursue my own business about a year ago. However I quit before I had any revenue coming in. There are times when I wonder if I left too early.
I’d love to hear your thoughts on how people can evaluate what the right time is to leave the full-time job. How did you know when it was right for you? Was it when you had enough side income to cover your daily expenses? Were there other non-monetary factors? Would you quit without an idea of what you want to pursue (like people who travel the world while trying to figure something out).
These questions are the basis for today’s post, although I have to admit that I borrowed some of my answers from an awesome speaker presentation I heard from Tess Vigeland when I was at FinCon15. 🙂
When is The Right Time to Leave Your Job?
This was the opening line during Tess Vigeland‘s speech at FinCon and I loved her answer, “If you are asking yourself when it’s the right time to leave your job, the answer is now.”
Her point was simple. If you’ve already been pondering leaving your job because you are unhappy or you want more from life, then you should leave your job as soon as possible.
Of course, you need to be financially prepared before leaving your job, but that doesn’t mean there will ever be a “perfect time” to make your leap.
Recommendations from “experts” include doing things like having 12 months of expenses saved up, having debt paid off, and more before you leave you job. But there are times that those things aren’t possible.
In my case, I decided to leave my job with over $16,000 of consumer debt, a mortgage, and little in savings, but I did have more than and idea of what I wanted to do after quitting.
Building a Business While Working Full-Time
Instead of following the path suggested by Vigeland and other experts, I took a different path. Many of the experts make the suggestion of being financially secure before quitting because they assume you’ll be taking a hiatus to figure out what you want from life and a career and will likely be earning little (if any) income while you figure things out.
However, there is another option. Myself and many others in the personal finance community who have pursued self employment have done so by building a business while working full-time. This has allowed us to gain knowledge, experience, and a clientele before quitting our jobs. We didn’t quit without a plan, instead we quit with a side business that we knew could support us after we made the leap.
Personally, I hadn’t quite gotten to the point that my business had fully replaced my day job in terms of income before I quit my job. I had gotten within about 20% when I pulled the trigger and gave my notice at my job. However, I had the confidence in my business and in myself enough to know that if I put the 40+ hours/week that I was gaining back by quitting my full-time job into finding new clients, I could easily increase my earnings enough to cover my shortfall.
It’s About Taking a Calculated Risk
Long story short, I made the calculated risk of quitting my job without having a large emergency, with quite a bit of debt, and without having fully replaced my income, but I had a plan and I knew the risks. I also had a back up plan and I knew that if push came to shove, I could find work from other sources in only a day or two if I wasn’t going to be able to pay my bills from my business income alone.
Would I recommend my path to everyone? ABSOLUTELY NOT! It’s not for the faint of heart. I spent much of my first week of self employment stressed, scared, and crying. I was overworked from having had little sleep for months while I was building my business and working full-time. However, I knew I never wanted to go back to working a job I didn’t enjoy and I used that to push me through those tough few weeks.
Now I’m earning nearly 3 times what I was at my full-time job. I put in more work hours too, but I genuinely enjoy what I do and I love working for myself. Plus the unlimited earning potential of being self employed has allowed me to speed up my debt progress and I should be credit card debt free in just a few months.
There’s no exact plan that will work for everyone when it comes to pursuing self employment, and it’s also not the right decision for everyone. There are benefits to choosing traditional employment instead of self employment. In the end it’s about making a plan so you can pursue whichever path in life makes you happy without putting yourself into a financial hardship.
For those of you who’ve pursued self employment, when did you know it was the “right time” to quit your job?