When Can You Quit Your Job?
When can you quit your job?
We all talk about quitting our jobs, and as someone who did quit my job, I can tell you that it really is as fantastic as it sounds.Unless you are mentally ill, you should be attempting to escape your job.I know there are a rare few who actually love their jobs, let’s ignore them for a moment.
We all know that real estate is the gateway to wealth.Real estate investing has made more millionaires than anything else in American history.So we also know that we are on the right track to creating financial independence.We also know that Pittsburgh has one of the strongest real estate markets in the country.So things look pretty good for Pittsburgh area real estate investors.
Our individual goals may differ a bit but they all gravitate around that wonderful moment where a job is optional.How can you properly identify that moment?
I have read real estate gurus who say that you can quit when you rental income matches your W-2 income.I say that this is too early.I would rather you wait until you are 100% out of debt and you have replaced your job income.When I talk about being out of debt, I don’t mean just credit card and student loan debt, but also car payments and mortgage payments.
Just replacing your job income is not enough.You need to be completely out of debt and have a stash of cash that you can draw upon in case of emergency.
This is just my opinion.I want you all to retire and from your own opinion!
To your success
Josh
Comments (7)
Personally, I view 3 thresholds, maybe 4:
1) Enough cash per month to cover very modest living expenses: ~$5k pre-tax for me and my family of 4. I call this the "can survive without a job", requires about $1.5M of financial assets or ~$500k or rental property or so.
2) Enough cash per month to cover semi-extravagant (current salary). I call this the "work because I want to, not because I need to", requires about $4M of assets.
3) Enough cash to have an upper class consumption lifestyle (think $5M house and some $100k cars) either with or without working: ~$35k per month for me/~$10M investible assets. I call this "My hard work paid off and I made it".
4) Enough cash to own a yacht/jet or both: ~$150k or so per month I'd guess, or about $50M in assets. Seeing as how I plan to check out of the game before I get even half that, I call this "not gonna happen"
Brett S., almost 9 years ago
@Brett S. I like the categories that you have created. @Josh Caldwell what a great idea to create separate account to make certain that you all could afford to transition. I will adopt this strategy when we get closer to making that decision. Nice posts.
Rhondalette W., almost 9 years ago
When we were getting out of the rat race, my wife made a lovely graph with all of the debts and income that we needed to cover. each time we paid off a debt or created more passive income, we colored in a bit of the graph. When the graph was filled, it was time!
We kept our graph on the rfridge so we had to see it everytime we wanted a snack.
To your success
Josh
Josh Caldwell, almost 9 years ago
with the cost of daycare, self insurance and god knows what, i'd feel comfortable only if i double what i make now. i just have hard time figuring out doible NOI compared to what i make now or double gross rents compared to what i make now.
George P., almost 9 years ago
George
it isnt likely to be a single property that frees you. If it is then good for you. Rather, you are far more likely to chip away at your freedom. Maybe the first property only makes you $200 positive cash flow per month. then you need to replicate that property X number of times until you are free for the rest of your life. Once you get to the magic land of freedom it really is worth eveything that you need to do to get there.
If you cant find decent ROI where you live the consider looking outside of your area. My city of Pittsburgh is the best cash flow city in America, so its easy for my herd to find decent deals. People in CA and other over heated markets have to work harder or they need to employ strategies that generate big chunks of cash to get to where they want to be.
Either way, you and anyone else can do it in America today.
To your success
Josh
Josh Caldwell, almost 9 years ago
@Michael Zuber that is a great and creative idea of how to go about it and know you can succeed, not just hope.
Jen Shrock, almost 9 years ago
Josh
An example my wife and I used at one point with in the last two years was we opened a new bank account. We then had our day job employers auto deposit our weekly checks into that new account. The goal being if we could live 6 months in a row without once dipping into this W2 funds we were good to go. It took a total of 12 months before we made it 6 months in a row but it was fun and she retired, As for me I am one of those self described idiots that just loves his day job but it is really nice to know I can stop any time which actually makes me like it more (really weird I know)
Good Investing
Z
Michael Zuber, almost 9 years ago