I quit my job!
20 Oct, 2024
In a recent blog post, I rebalanced our investment portfolio; this time, I’m rebalancing my life.
I resigned from my PAYE job and will finish in a week.
I’m another step closer to early retirement, and I’m VERY excited about it!
I’ve worked in an office administration role twice weekly for many years. I used to have a ‘career’, but this has been a ‘job’. The irony is that it's the lowest income I have earned and also the longest I’ve ever worked anywhere. Why have I stayed so long? Simply because I have enjoyed it.
I have been earning about $360 a week ($27 per hour), plus a 3% KiwiSaver employer contribution. My weekly wage varied as I often covered extra hours if my colleagues needed me. Last year, I made $20,000 after tax.
I always looked forward to working on Wednesday and Thursday each week, and deciding to leave a job I enjoy, plus giving up $20,000 a year, has been challenging.
Many factors ultimately led to me quitting.
None of the following was ‘the’ deciding factor, but all things combined made me feel comfortable giving up the income.
With about $540,000 now invested in KiwiSaver and an ETF fund, we can draw an annual passive income of $22,000 from our investments. If required, this can fully replace my missing income*.
* I keep a spreadsheet of our investments and added a calculation that showed how much passive income we could, in theory, draw based on The 4% Rule. It is a handy guide. When the monthly passive income exceeded what I get paid from my part-time job, I felt confident in letting that income go:
Calculation is ($540,000 x .04) / 12 = $1,800
Accounting software Hnry, which I started using in April 2024, showed me the after-tax income that my second income source, The Happy Saver, now generates. For the first time, I was dealing with facts. My self-employed income has slowly increased to a point where I can rely on it. I now pay myself $500 a week.
I have been working for $27 an hour at my part-time job and turning down opportunities to work for a higher hourly rate elsewhere. I kept asking myself why I would do this.
When I thought about working for money and asked myself what excited me the most, it was always The Happy Saver.
My work gave me social connections, but The Happy Saver and my life outside of work gave me social interactions I enjoyed more.
Jonny’s two-day-a-week job is steady, plus he was offered a couple of extra projects that will go some way to offset my missing income.
I was always getting on a roll with The Happy Saver and it would have to come to a halt so I could go to work. I’d always look at the two blocked-out days in my diary and think, “I’d rather be writing, talking, emailing, and podcasting about personal finance”.
Better use of my time.
I genuinely enjoy The Happy Saver. I’ve found ‘my thing’. I love helping people think about money. I love working out how to manage our own money. I never have a shortage of ideas; if anything, I have too many ideas I want to pursue. The number of people emailing me with questions is increasing, and I am getting further behind in answering their emails. I don’t like letting those people down, and my connections with these people motivate me to help even more.
When Wednesday and Thursday rolled around again, and it was time to go to work, I was finding it harder and harder to shift from thinking about The Happy Saver and all the other things I like to do with my days to thinking about work.
Ultimately, Jonny and I concluded that I should pursue what I enjoy most.
Is giving up $20,000 a year risky?
Giving up $20,000 a year when many Kiwis seem to be doing it tough is counterintuitive, but it's a reminder that we each get to focus on what we can control. And changing the way we work and receive income is within our control.
The blog has organically evolved from a side hustle into a small business. I’ve always been happy working for others. I never set out to work for myself, but creating an income from The Happy Saver has crept up on me. Then, when I started using the accounting software Hnry, where I pay all my taxes, ACC and accounting fees as I go, for the first time, I knew with absolute certainty how much money The Happy Saver makes each week and month. Although income still varies month by month, I have worked out the minimum I will likely make after all deductions, which was higher than I realised.
I now know I can comfortably pay myself $500 a week, which will increase once I have given The Happy Saver more attention. Jonny makes about $620 a week from his two-day-a-week job, and more recently, he has accepted a few freelance projects. Also, we still have some money set aside from when we applied the 4% Rule back in 2024.
In case you are wondering, me working less does not translate to Jonny ‘having’ to work more. Projects happened to appear, and he decided to take them, leading to more income. Doors close, others open, and if we think we would enjoy the opportunity, we take it.
It’s not enough just to know our income, though. Using PocketSmith, I also know in detail what we spend each month and year. Using Sinking Funds and being a good saver, I’ve created a cash buffer for ‘just in case’. Did I know I might use it because I quit my job? No. Am I glad I set it aside? Yes.
So, all in all, we know our financial position. I wouldn’t have made this move otherwise.
A final thought on this, too, is that the value of combining our money comes into its own here. Because we think of ‘household income’, not ‘mine’ and ‘his’, we can each make significant adjustments to how we work, knowing we can always rely on each other. I’ve got his back, and he’s got mine.
Replacing lost income and continuing to invest.
Although we would be fine without this $20,000 a year, it’s in Jonny's and my DNA to seek income. Plus, we are not yet financially independent; we still need to grow our investments so they can support us in early retirement. Given that $360 a week will no longer magically show up in our bank account and money won’t get added to my KiwiSaver via my employer, I’m making adjustments. I’ve cut back some expenses, but we will most likely make up for the shortfall so our wealth continues to grow.
As my last day of employment approaches, I’m putting plans in place to replace that missing income:
For my KiwiSaver, I have set up a voluntary $21 weekly direct deposit into my account to ensure I contribute $1,042 a year, which is enough to get the annual government contribution of $521. Adding $21 weekly makes it easier to budget for.
I will now pay myself $100 more ($600 a week) from my blog. Given that I’ll be spending a bit more time creating content, I expect to be able to pay myself more over time.
On May 1st 2024, we paid ourselves passive income from our investments. We’ve not managed to spend it all, and about a quarter remains in a bank account I called “miscellaneous”! I’ve also continued to save $100 a week into this account, so I’ll just stop that transfer and move $160 a week BACK into our cheque account instead.
Given that I only worked two days a week, I never had to use much annual leave, so my final pay will amount to 2-3 months of income. I’ll be adding this to our miscellaneous account, too.
I have a category in PocketSmith that I call “Extra Income”. In 2024, we have earned $3,900 of unexpected income. It’s mostly from selling things we no longer need. I do not doubt that more will come our way.
I’m sure you can see that the more I dig into the math, the less risk I’m actually taking by giving up my part-time job.
Everything else stays the same.
All of our everyday budgeting stays the same. As usual, we will continue to invest in our US 500 ETF on the 20th of the month. We have sinking funds that receive weekly top-ups as we save towards known costs (health, holiday, car repairs, schooling, etc). Our emergency fund remains intact. The only change is how we receive income, and I’m sure there will be a settling-in period, but I’m 100% confident that it will work out OK.
Being the optimist I am, I’m sure our annual income will continue to increase before too long, and I will stop drawing money from the savings account. I’ll keep you posted on how that happens.
Resigning was tough!
I knew I would be sad when I resigned from the longest job I’ve ever held. And I was. I gave my employers two months' notice to give them plenty of time to find someone else, which they have. Plus, I’ve volunteered to return if they need me to fill in. But in my experience, despite all the promises we make each other of “call me if you need me”, they probably won’t. I will be sad to farewell my colleagues, particularly my employers, who have been fantastic to work with. I’ve had more laughs in this job than in all other jobs combined.
To cheer myself up, I began to tell my FI friends what we were up to. Their excitement was contagious, and while I’m not yet fully retired like many of them, I am certainly one step closer to that goal.
But Ruth, what will you do all day?
The most common question I get from those not in the FI space is the one I expected:
~ Ruth, what will you do with your time?
This is mainly followed up by their saying they would be bored if they stopped working. My answer to this is easy. I have already easily filled in five days a week for many years, and I’m adding two more. Filling in my days won’t be a problem. I think quitting a full-time job on Friday and starting a whole new life on Monday would be challenging, but this is my ongoing transition into early retirement.
Although I want to give The Happy Saver more of my time, I have yet to desire to do it full-time. As I have been doing up until now, I’ll put the time in my diary to focus on it a few hours a day, but outside of those times, I’ll be filling my days in other ways.
As I sit here in my living room writing this on a Monday morning, it's a gorgeous spring Central Otago day, and I have a clear view of the mountains. I’ll head out for a run later. I’ve already spent a few hours sending emails this morning. I’m off shortly to have a coffee with a friend I’ve made via the blog. Jonny does not work today, so he will come, too. This afternoon, I’ve got a Phone A Friend call booked, which is another chance to chat (and help), and this blog post to finish off. When our daughter gets home from school, I’ll annoy her by asking too many questions about her day. I consider this a good day. I’m part of groups that get me outside of the house and engaged in our community, and I’ve got a Central Otago summer to look forward to. So, as always, if you are in my neck of the woods, look me up.
Ask yourself what makes your life happy. And if something is off balance, as mine was, do what I do and adjust your course. It might feel like you are taking a risk, but take it from me: life has a habit of working itself out.
