I’ve done it before, and I’m doing it again. I just quit my job to travel the world.
And it feels really good. Like school just let out for summer good. Like catching a sweet nugget of a wave good. Like high fiving your best friend good. It makes all the hard work over the last year and a half – the long hours at work, the injury rehab, the lonely nights with Netflix – it makes it all worth it.
I’m going to spend the next few months catching up with friends and family in the U.S. – Portland, Boulder, Chicago, Nashville, San Francisco, Santa Maria, Newport and San Diego then it’s off to Croatia in May. From there, who knows? That’s all I have planned so far. I look forward to many laughs with good friends, plenty of time out in Nature and a few cocktails from time to time.
It’s been a roller coaster of emotions getting to this point but the decision I’ve made is a calculated one. I put a lot of thought into the timing and logistics of the setup for this mini-retirement and I’d like to lay those thoughts out here for you all.
Timing the Mini-Retirement to Maximize Tax and Employer Benefits
I decided that the best time for me to stop earning money would be as early in the year as possible in order to avoid the higher taxes that come with increased income over the year. If I stop earning income in the first or second month of the year I can stay well below the second marginal Federal Income tax bracket for 2015. Another way to think about this is if you are working consistently throughout the year, the money you make at the end of the year is actually worth less than the money you make at the beginning of the year (depending on your income and your marginal tax rates). Also, a low income has a ripple effect of benefits including high subsidies through Obamacare as well as the potential opportunity to take advantage of a 401(k) to Roth IRA rollover for the year a.k.a. the Roth IRA Conversion Ladder.
Additionally, I noticed that my company offers an optional “Group Legal” plan as part of the benefits package for $15 per month. This plan could be used to, among other things, generate a Living Will and Trust. I know from speaking with other people that this document costs somewhere in the range of $800-$1000 to create. Since I quit within the first two months of the year I essentially got mine for $30. Cha-Ching!
Other timing factors include my apartment lease renewal date as well as the completion date of my current construction project. It is not a good idea to leave a construction project when things are going hot and heavy – it’s frowned upon within the industry. Luckily my lease is up in March and the project is finished so that all worked in my favor.
Once I had the timing worked out it was time to sit down with my boss and call it quits.
However, I was dreading the difficult conversation required to end my job. On the morning of the first day back after the Winter Holiday break I was lying in bed with feelings of overwhelming despair. In reality, and in retrospect, all I had to do was walk into the office and tell my boss that I was planning to leave the company. And I knew that once I had the conversation that all this pressure would be lifted from my shoulders and I would be strutting around like a free man. I should have been jumping out of bed in excited anticipation at the thought of quitting my job, however, all I felt was anxiety for the difficult conversation ahead. In my mind I ran through the spectrum of all the potential reactions that my boss would have. Knowing him to be an even-keeled human I could not imagine a burst of anger or resentment. On the positive end of the spectrum the best potential reaction would be one of happiness and envy for my life choice. On the negative end of the spectrum the worst I could imagine would be disappointment. But I hate to disappoint.
I do not like it when someone has expectations of me and I fail to live up to those expectations. If I’m on a team, I hate to let them down. Of all the memories I have of playing Soccer in High School the one that stands out the most is the moment when, while playing at a neighboring school, a teammate drew the goalie’s attention, crossed me the ball in front of the goal, and I booted it over the crossbar. I’ve spent a lot of time avoiding that sinking feeling of watching the ball sail into the darkness just beyond the stadium lights.
However, this conversation I was dreading having, the one where I terminate employment with my company of ten years, took about six minutes. We sat in a private conference room and I told my boss that I was leaving the company to pursue my travel writing/blogging passion and that my last day would be sometime in the next month. He asked if this was becoming a pattern for me – knowing that I made a similar move in 2012 only to come back to the company 10 months later. All I could do was shrug and say with honesty “probably”. We discussed my end date and some other logistical items and I walked out of the conference room feeling 20 pounds lighter.
Over the next week word slowly spread to other individuals within the organization and one by one people came by to ask about my upcoming trip. It turns out most people were very happy for me, a little bit jealous and excited to live vicariously through my blog and photos. And I think my friends in the organization are proud of me for making the decision to leave and pursue my travel dreams.
Financial Situation/ Funding the trip
I am not yet financially independent but I’d say I’m about 50% of the way there. To me, financial independence is having enough money saved/invested to cover your ideal lifestyle based on the 4% safe withdrawal rate. My current net worth covers about $1000 a month of living expenses and I anticipate making up the difference* through this blog and other online/automated cash generating pursuits. I’m not in a particular hurry and it would be fine if I didn’t make another penny through the rest of this year. It’s most important to me right now to put out good content that people enjoy, and to continue to grow the blog.
I view the fact that I am not yet financially independent as an advantage with respect to my blogging career. The fact that I still need to earn an income incentivizes me to be more productive – to write more and push myself further into the blogosphere. I’ll also be looking to develop mutually beneficial business relationships, as long as the projects are fun and fulfilling. I’m naturally prone to laziness (perhaps you can relate) and without the incentive to make money I may not produce my best work. Luckily I don’t need to make much money so rest assured this blog is not about to turn into another BuzzFeed. I may, however, from time to time, offer my own products or affiliate products for sale through the blog so be prepared!
Backup Plans and Reasons to End the Trip
I’ve determined that if my total net worth drops below a certain threshold that I will give up this whole travel blogging/writing thing and turn on the fire hose of cash by going back to my more traditional and stable career path. The last thing I want to be is a broke 50 year-old. However, even that wouldn’t be so bad if I had spent the previous 18 years traveling the world, meeting new people and experiencing other cultures. I guess I would rather be a broke 50 year old with friends around the world than a rich 50 year old who stayed put for safety’s sake in a career he was not passionate about.
I still battle with internal resistance regularly – the voice in my head is constantly telling me I need to save more money, or that I’m taking a huge career risk and losing valuable potential experience. These are absolutely valid concerns and I have to remind myself that I am an employable person and if I need to make consistent money I can fall back on my career in engineering. I’ve done my best to maintain relationships and not burn any bridges in the industry, and I have some unsolicited job offers from friends, so I’m confident that I could pull the rip cord and find another job rather quickly if the need arises. The conditions within which I’d reenter the workforce are as follows:
- If my total net worth drops below a certain threshold
- If I reach age 50 and I do not have enough savings and/or passive income to support myself in a traditional work-free retirement. There is no substitute for having the money in the bank.
- If I decide to start a family and find that I cannot support them with my current financial strategy
- If I decide I want to own a home in the U.S.
- If I forget the bad times and begin to miss all the excitement and camaraderie that comes with working as part of a big team of people helping manage a large construction project
That’s my plan! What do you think I’m missing and where are my blind spots? What is stopping you from doing something similar? Do you have logistical questions that I have not covered? Let me know in the comments.
Do you have any friends you think might be able to benefit from my message here? Please share using the buttons below and thank you very much for reading!
*I anticipate spending approx. $50 per day based on past travel experience as well as tips and tricks described in Nomadic Matt’s “How to Travel the World on $50 a Day: Revised: Travel Cheaper, Longer, Smarter.” $50 per day is $18,500 per year. Based on the 4% rule of retirement you’d need $462,500 saved/invested in order to live this lifestyle indefinitely.