For the majority of the last six months, I have been psychologically hamstrung by a crippling thought process:
In order to leave work behind, I must first be generating an online income that is equal to what I currently earn in my full time job.
There are several key weaknesses in this line of thinking. In this article, I intend to reveal every single one.
I am also going to break a taboo. I will suggest (nay, recommend, given the correct circumstances) that you quit your job before you have a sustainable online income that matches your existing fulltime wage.
Understanding the Value of Time
In order to be successful, you need many assets. Determination, skill, intelligence, and so on. However, by far the most valuable asset is time.
Success is hugely influenced by time in two intrinsically linked ways:
- Simply by its passing. In theoretical terms, if you work consistently over an extended period of time, you will eventually reap the rewards.
- By your use of it. Time only gives you back as much as you invest. It’s no good letting months pass in the hope of achieving success if you are not actually investing any time in your business.
Let’s say your current job brings in $2,000 per calendar month after tax. You think that you need to make at least that much from your online business in order to consider leaving your job. It’s the “safe” and “sensible” plan.
Your problem is that you will not be able to invest a great deal of time into your business. Perhaps 18 hours a week if you spend say 2 hours a night and 8 hours on a Saturday, but I’m guessing even that many hours will be a struggle.
Because you can’t invest much time, the length of time that will need to pass before you hit your goal will be far longer than if you had more time to dedicate to your business.
Time only gives you back as much as you invest.
Leaving Work Behind Doesn’t Have To Be As Difficult As You Think
So you feel that you need to match your online earnings before you quit your job? Rubbish. You don’t need to make this endeavor so tough for yourself! You need to ask yourself three key questions:
- How much are my monthly outgoings, on average?
- How much could I reduce those outgoings by if I made bearable sacrifices?
- If I lost my job on the 1st of next month and had absolutely no income to rely upon, how many months could I rely upon my savings before I ran out?
I am willing to bet that there is potentially a huge gap between 1 and 2. There certainly is for me. If there is a big gap, you need to ask yourself if the additional creature comforts you have are worth staying in your job for. Because if you remove those costs, the time it will take for you to leave work behind will be reduced – probably by a drastic length of time.
My average monthly outgoings have over the past six months been about $3,680. I am confident that I can reduce my outgoings drastically – to about $2,240. How? With some big material sacrifices.
But that is all they are – material sacrifices. All being well, given time, I can get them back again. My wish to leave work behind far outweighs my materialistic desires.
What Are You Worth?
If you are trying to match your fulltime income with your part time online income whilst you are still in your job, you are fighting against a strong current. You don’t have to make it so difficult for yourself.
Let’s consider an assessment of your worth. Ultimately, you are employed because your employer profits from you. He assesses your skills and worth, and is happy that the income generated will exceed the cost of employing you. That cost is your wage, taxes, overheads, training, and so on. Why can’t you cut out the middle man and extract that income direct from source?
Let’s look at a simple example. Your basic wage is $25,000 per annum. The employer has to pay additional taxes of $2,500 to the government every year. It will cost $5,000 in total to train you up, which amortized over 5 years employment (which is the company’s average employment period) equals $1,000 p.a. It costs an additional $5,000 p.a. in overheads to simply sit you in your chair. And on top of that, they are in business, so they want to make a profit from your services! So let’s add a 15% profit margin onto the total.
( $25,000 + $2,500 + $1,000 + $5,000 ) * 1.15 = $38,525
I’ve kept this real simple – I haven’t even mentioned health insurance or any other potential perks. Notwithstanding that, your employer hopes to generate an income of $38,525 p.a. with your skills whilst they pay you just $25,000 p.a.
You can draw one of two conclusions from this:
- Your employer is an idiot, and you are not worth the cost
- Your employer is making money out of you that you could ultimately be making for yourself
This line of reasoning essentially asks you one brutal and potentially life changing question: do you value yourself as highly as your employer does? If you do, congratulations – leaving work behind just became a hell of a lot easier.
The Necessity of a Safety Net
There is just one piece in the puzzle that absolutely needs to be filled, and must not be compromised on. You must have a safety net. I am not here to tell you to take stupid risks. I am here to tell you that you might consider taking calculated risks.
So what is your safety net? It would traditionally be an amount of money that equals several months’ worth of outgoings. But it could be something else – for instance, the guarantee that a job is waiting for you if you change your mind. The point is, you need to be comfortable that you won’t be left in a position where you are unable to meet your outgoings.
I do need to make a clear distinction here. We are not talking about you being 100% certain of your security. Because no one ever is. For instance, employment does not guarantee 100% security (far from it). You just need to get comfortable enough with the situation you propose to expose yourself to. The definition of “enough” is up to you.
Could You Leave Work Behind Now?
I’ve covered some key principles in this article:
- You need time to make money – the more time, the better
- You probably don’t need to make as much money as you think
- If you have a safety net, you have an open door to opportunity
I don’t know what your online endeavor is. I don’t know if you even have one yet. However, I believe that plenty of people who thought of leaving work behind as a pipe dream may now have a completely different perspective.
If you think that you cannot work towards building a viable online business with an additional 8 hours a day, you are not yet in a position to leave work behind. However, if you believe that you can use your skills to execute the simple formula of time + application = income, you may well be ready. Right now.
What are you waiting for?
Images courtesy of The Chive, ToniVC and prescottspies
Hi Tom – The article is absolutely spot on…You have hit the right tone to answer the queries and apprehensions that people might have – more of a proactive approach, i must say.
This is especially so very true for people like me.
Keep up the good work!
Joy
P.S: Have separately dropped a note in your email id…Do pls respond when ever you could find some free time.
Hi J.C,
Thanks for your kind words; I really appreciate it. I actually think that this is one of the most valuable blog posts I have written, and yet it took 2 1/2 months to get a comment! Such is the fickle nature of blogging…
With regards to your email – I’ll get back to you as soon as I can.
Thanks for dropping by 🙂
Tom
Hey Tom – Much appreciate the fast response( this one as well as on my mail)..
Would go through it and write back asap!
Thanks a ton 🙂
take care…Joy
And talking about this article – i thought this was absolute ground reality and these are the kind of deliberation a person would typically do when he/she is contemplating leaving his well settled job to become his own boss / to do what his heart desires/ to earn more and most importantly, to enjoy freedom !
Superb stuff for first timers who are hunting the net high and low for such words of inspiration – trust me, reading it was more or less like talking to myself !
joy
Beauty of a post.. Its a huge change in mindset, but As Gary Vaynerchuk, say there is no reason to be unhappy, doing what you are doing in 2012…
Keep at it…..
Absolutely right Darren – you can always work towards being happier. Just make big decisions and never stop working at it. Thanks!
Have really enjoyed your posts (and funny images) on WPMU so have followed you onto here!
I am just about to quit my job and do WordPress Outsourcing full time so the advice you have given here has been invaluable, Cheers
Hey Matt,
Glad you like my images over at WPMU – someone has to 😉
Congratulations on your new direction! I wish you all the very best.
Cheers,
Tom
HI Tom. This post is timely. I’m leaving my job in June after 3 years of preparation and what you said about having a safety net (in some form) and taking calculated risks is one of the most important factors. What’s the saying “Plan for the best, but prepare for the worst”. As well, the amount of $$ you need is much less than you think.
Thanks
Hey Craig,
Congratulations are in order! Roll on June, right? Sounds like you’ve got a solid plan in place. Best of luck.
Cheers,
Tom
It’s funny you bring this up. I’ve been struggling with the same thing in recent months, before coming to the conclusion that I need to be making $1,000/month and have $8,000 in the bank before I can leave my job. That’s not enough to live on, but I can probably get by for about 6 months on the combination of living expenses and savings. I’m certain that will be enough time to grow the income to a full time level once it’s achieved low four figures every month on a part-time basis.
With all that said, taking the leap is scary as hell. 🙂 The first time I did it, it was basically forced on me (lost the job two weeks before I was going to give notice). That won’t be the case this time. I’ll be leaving the best paying job I’ve ever had.
I know it’s worth it though. I’ve already had a chance to “live” the other side of the coin.
-Mike
Hey Mike,
You’ve got a great story, and I feel confident that your most successful chapter is still to come. I’m rooting for you mate.
Cheers,
Tom
Thank you Tom! The kind words are appreciated more than you know. 🙂
Great article! I’ve slogged my guts out trying to make an online income of $2000 a month. I figure this is how much you need to live somewhere that has good weather and hot women (no, I’m not thinking of California!).
I’m not there yet, and I think I need to get round to thinking that I don’t need to be either.
That was certainly the message of this post! Everything in life is a risk, quitting your job is just another one. Not to belittle the decision, but too many people blow it way out of proportion. I used to think that I would need to be earning at least as much as my job brought in before I quit, but in the end, I walked away from my job when my income was way below my outgoings. It’s gone fine for me so far! 🙂
Great post Tom,
A related thought that I believe many battle with is the tradition of retirement. I have recently made the decision not to retire and this has liberated my thought process regarding my current day job and how I plan to move forward.
Why have I decided not to retire. Well I have a long post I can write on this one day but in a nutshell it comes down to the following:
1. I may not make it
2. I may not like it
3. I want to do things I enjoy now, not later
4. I don’t want to be forced to stop making a valuable contribution to society
When you start to think of your life in these terms it makes you think about what sort of job you can do until the day you die. Traditional jobs will make you stop working so the only real choice is to work for yourself and do things you actually enjoy.
Good on you for making such a brave step – I plan to do the same at some point and when I do I will be guaranteed work for life.
That’s an interesting perspective Mark. Given my age, it’s not something I consider. Having said that, I certainly will have to do in the future, and I suspect that my attitude would be similar to yours!
Hi Tom,
Although it’s believed that it’s very easy to exactly pen down your thoughts and more importantly it should instantly connect with your readers, however it is one of the most difficult thing to achieve. The key is simplicity and you connect so well with your readers I am sure. This post has left an impact on me for sure…… Subscribed for life……
Glad to hear it Akbar 🙂
Hi Tom,
Amazing thing – crunching the numbers and seeing more options than you ever thought possible.
You give such a balanced, intelligent viewpoint – I’m just starting – motivating and supporting people is my goal; specifically those whose tribe (in the traditional sense) think they’re nuts because the accepted route is killing their soul.
Wonderful post,
Thank you, Cari
My pleasure Cari! 🙂
Hi Tom,
Great post and one that summarises what I’m juggling with right now.
Like you say on a very limited amount of time it’s very difficult to replace your current wage before leaving your job and there is always a danger that if you get halfway there you’ll get used to living on you wage + your other income making the target ever increasing and impossible to achieve.
Working out the minimum you need and some kind buffer is a great start to accelerating living on your own terms.
All I need is someone to buy my house and I’m off……. 🙂
Cheers
Andrew
Hey Andrew,
You can usually tell how keen someone really is to quit their job by assessing how hard they are budgeting and saving.
Good luck with the house sale! 🙂
Cheers,
Tom
Being your own boss would probably be harder than working for one.
One would have to discipline themselves to get things done without any distractions.
Just make sure that you are making the same or more money than you day to day job before taking the plunge. Good luck to all.
Cheers!
I don’t agree in the slightest about making the same or more money Enzo, but it certainly does require discipline to be your own boss. It is most definitely worth it though, in my opinion.
Hey Tom,
“Let’s consider an assessment of your worth. Ultimately, you are employed because your employer profits from you. He assesses your skills and worth, and is happy that the income generated will exceed the cost of employing you. ”
Absolutely and in North America I love that salary is called compensation – much more appropriate I think! I made a post about that on my blog : http://help-pay-bills.com/the-time-money-exchange I hope you don’t mind me posting that there – it’s just really GREAT to find your blog, I love your matter of fact writing, it’s great and inspiring. 🙂
It would be really interesting to read some posts on here about what you ACTUALLY do to earn your money online – I’m fairly new to this blog so apologies if you already post about that – or if that’s not what you want to share on this blog.
It’s all very well wanting to leave your day job but without a plan of how you are ACTUALLY going to earn the replacement income – it’s still just a dream. As Alex Jeffreys says – earning money online is not easy, but it is simple – lol – as in the principles are simple to follow – the time / money thing again!! Look forward to reading more from you!
All the best, Clare x
Hey Clare,
I’ve written quite a lot about freelance writing – from sourcing job listings, to making applications, to negotiating rates. It’s all tucked away on the blog somewhere! There’s a search engine you can use (although I need to grab hold of a better one) 🙂
Cheers,
Tom
Hey Tom – Yeah, I dug a bit deeper and found LOADS of great stuff 🙂
Dya know what’d be great? If you had a category widget so new people like me to your blog can find older content 🙂
I can’t remember how I found the other stuff – think it was a link in another post – it was really interesting you broke it all down – excellent 🙂
Hey Clare,
I’ve played around with a few different ways of readers finding old content, but I’ve never really been happy with them. At the moment I’m sticking with lots of interlinking in posts, along with a search engine. I’m gonna go implement a much improved one right now.
Cheers,
Tom
Hi Tom, Thank you for this most informative post! I too quit my job in Dec. 2011 to take up freelance writing full-time. I am just wondering, how are you doing on your end? Have you been able to pick up new clients? And also, how are dealing with getting around sans car? I must travel roughly 130 miles each way to care for my mother, so I could never go without a car. Thank you again for posting this inspiring content!
Hey Halina,
I’m doing very well thanks! Picking up clients has been no problem – they have come to me, via this blog, and bylines over the web.
I still have the car I’m afraid – can’t afford to sell it at the moment (i.e. it would cost me money to do so). It’s a drain on the finances, but a lesson well learnt!
Cheers,
Tom
You forgot one important reason being on a job and employed: You can learn a lot, have a good network and much more insights. Thats why Robert Kiyosaky says: Never work for money! If you do not work for money, you work for experience and training. And thats worth a lot.
Hi Rico,
I don’t disagree with you but you can get the exact same benefits from running your own business, as I have discovered to great effect this year.
Cheers,
Tom