San Francisco, CA

My Plan After Leaving My 9–5

Dessy John

The calculated risks behind taking the leap

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September 10th, 2021. That was my last day at my stable and lucrative job in tech. It was 3 years to the day since joining the company and 13 years since starting my career in the modern-day gold rush of San Francisco’s Financial District. I had just completed my paternity leave after the birth of my second child and decided that this chapter of work, which had become my identity for so long, had run its course.

The very next day, my first day to be truly introspective and reflect on my ups and downs, happened to be the 20 year anniversary of the September 11th attacks. I tried to mostly disconnect from my devices that day, but every notification and social media post was a reminder of that horrible day, transporting me right back to being 17 years old and watching the world unravel. It was a timely reminder that life is short, and the time was now to live with intention — to have control and ownership of each and every one of my remaining days.

My plan to step away from my career was at least 5 years in the making after the birth of my first child made it crystal clear that I was not going to be buried in my digital advertising career for another 20 or 30 years. It sparked a constant habit of living below my means, diverting excess funds to a diversified portfolio, maxing out all tax-advantaged accounts, and making additional payments to the principal on my mortgage. I timed my paternity leave so that my final mortgage payment would be paid precisely as I would leave my job, providing the monthly cash flow flexibility to sustain my lifestyle while buying me time to figure out additional details and create something new for myself that I truly enjoyed.

Balancing safety with risk

Over the past few years, I have been converting a portion of my portfolio to income generating assets, namely through a collection of Real Estate Investment Trusts (REITs), dividend stocks, and even a small portion via crypto lending and real estate crowdfunding.

The income from these assets in total cover roughly 15% of my monthly expenses. The vast majority of my assets, however, currently sit in growth vehicles, primarily including a diversified stock portfolio but also some that is concentrated in company equity I accumulated while still at my job. Over the remainder of this year I plan to convert enough of these assets into my income-focused holdings so that it covers 30% of my monthly expenses (double what it is now). This will give me a baseline of expense coverage that I am comfortable with, while keeping the majority of my assets in growth oriented funds so that I’m not overly constraining my upside.

So if reliable income funds will cover 30% of my expenses, how am I covering the remaining 70%? This is where I plan to take some calculated risk…

Passion projects buoyed by a 2 year emergency fund

Writing is the creative outlet that I am most inclined to pursue on a regular basis. I genuinely enjoy writing about personal finance, sharing my path to “making the numbers work” so that others can take various pieces and apply them to their own plans wherever appropriate. I’m early in this journey so I’m not going to make up the remaining 70% of my monthly expenses overnight. However, I’ve set aside roughly 2 years of funds in safe assets such as inflation protected bonds, providing me a safety net as I get my writing (and potentially other entrepreneurial endeavors) off the ground.

The ideal scenario will be that my work will make up at least that remaining 70% before exhausting my safety net. The reality is that even if I only close a portion of that gap, let’s say 50%, the remainder can be covered by making withdrawals from my growth assets at a rate under what is widely considered a safe withdrawal rate of 4%. At the same time, this does not include my wife’s and my 401ks and IRAs, which will continue to grow over time.

In the worst case scenario, where market returns are neutral or negative for a few years AND my writing experiment crashes and burns, we really just need this strategy to hold us until we can pull from our retirement accounts, which is in roughly 20 years. More realistically, I expect this strategy to further unlock my life to be free from doing work I don’t enjoy while also creating something of real value to others.

Putting purpose behind the wheel

Setting a goal of covering the gap in my monthly expenses solely from the creative work I produce is simply a way of holding myself accountable. If I don’t get there, I will continue to work at it even if my expected investment returns have me covered. Doing what you enjoy and getting compensated for it is a gift. I was powerfully reminded on my first day of freedom that it’s a gift I cannot take for granted.

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.

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I am a personal finance writer, covering advice and strategy around building wealth and living a more abundant life. I have 13 years of marketing experience in the tech industry, have built my own wealth, and now aim to do my part in spreading financial literacy to help others.

San Francisco, CA
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