The Money Secret Behind Quitting Our Jobs

My husband quit his job. Most people meet that idea with "Wow! Wish I could do that..." Then, if they really know our current financial situation (which involves me offering financial coaching as a side hustle that currently generates a small fraction of the income I made when in corporate) they ask: "Wait… how can you guys afford that?" 

Let's rewind a bit, shall we? Years ago, I stumbled upon Mr. Money Moustache (MMM), a pioneer in the F.I.R.E. (Financial Independence Retire Early) movement. This man is the patron saint of asking "Do I actually need this or do I want my future time back?" Not sure about you, but this was a radical thought to me. You start to view everyday spending through a completely different lens when you begin to quantify how much life (current and future) you are exchanging for things. 

Real-Life Example: My co-worker bought a $3,600 designer handbag - which, of course, made me feel like I needed one too. Let’s say she earns $125,000 per year and takes home about $75,000 after taxes. Assuming a standard 40-hour workweek, that is about $36 per hour after taxes.

At that rate, she exchanged roughly 100 hours of take-home pay - or 2.5 weeks of full-time work - for that handbag.

But she also gave up some “future time,” as MMM puts it. If she had invested that $3,600 instead and it earned a hypothetical average annual return of 10% for 20 years, with dividends reinvested, it could grow to about $24,200. At her current take-home hourly rate, that amount represents roughly 672 hours of work - or almost 17 forty-hour workweeks.

In other words, the real cost is not only the 2.5 weeks she worked to buy the bag today; it is also the future financial flexibility that $3,600 could have created.

This doesn't mean nobody should buy a designer handbag. Sometimes we just want the handbag and that's also part of enjoying life now versus waiting until we're some arbitrary age (*cough* 65) we're commonly told is the appropriate time to finally live our lives the way we desire to. I'm simply encouraging mindful spending by calling out the importance of recognizing the full tradeoff of everyday purchases. 

At this point, MMM had me hooked. I read everything of his - and everything relating to F.I.R.E. that I could get my hands on. Listened to every podcast. Became obsessed as a means to stay motivated. 

Turns out when you immerse yourself in an idea and you take concentrated actions toward a vision; that's some powerful manifestation right there. We stayed focused on the goal until we'd created a situation where we both could step back from jobs that weren't aligned to enjoy life more, now. 

The vast majority of people I come into contact with every day do not think like this. They don't take time to consider the true cost of purchases made. They certainly don't believe that it's actually possible to pay themselves a salary for an extended period of time. 

Now that you know it's possible, has it altered your perspective of what you could do simply by getting your financial house in order?