Don't repeat my mistake, keep accumulating!

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coreyszmaida
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Don't repeat my mistake, keep accumulating!

Post by coreyszmaida » Thu Nov 16, 2017 11:47 pm

Hey everyone. 28 year-old guy from the US here. Lurking for a while, and it’s time to say hello! Particularly want to reach out to folks still in the accumulation phase. In short: keep going! Don’t get impatient like me!

My path to FI has been weird one. One that Jacob would disagree with. It’s been a while since I read his book, but one line that stayed with me suggested if you already have a job, you should keep it. It stuck because my plan was to ignore that advice – to quit before hitting 4% expenses to assets because my finance job was too draining.

Why quit early? Like many of you, I was interested in starting a business after retiring. My hypothesis was that I would end up goofing around too much if I were fully FI. By leaving my salary behind when only at about half of my FI number, I would force myself to make the business work out instead of just putting a small effort into it.

Don’t do what I did! Now it’s clear that the effect of leaving earlier than FI would be different than what I imagined. Instead of causing me to want to work harder to make my entrepreneurial pursuits pay off, having not reached FI is instead causing me to want to throw in the towel and go back to my old profession to earn enough to last forever. It now seems that I should have had more patience with my job.

I’m going to keep working on building my business through at least August of next year. I have a history of jumping from thing to thing too often, and I can’t allow myself to keep up that pattern. My plan now is that regardless of my attitude, I will put in the time to give my current projects a chance to pay off. I also need to be more thoughtful about my next move.

Now that I’m done lurking, I’ll provide updates on the forum about how it all unfolds. I still have hope that leaving the salary behind will end up paying off, and there are some days when I feel like I will be able to make this work without going crawling back for a few more years in the world of “Disciplined Minds”. We’ll see!

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BRUTE
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Re: Don't repeat my mistake, keep accumulating!

Post by BRUTE » Fri Nov 17, 2017 12:21 am

hi

Farm_or
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Re: Don't repeat my mistake, keep accumulating!

Post by Farm_or » Fri Nov 17, 2017 8:25 am

Good advice. Most small business fails in short time. However, if you have "the right stuff", and get the right business at the right time, you can benefit a lot faster than working for the man.

Maybe start something small, diversify, get your feet wet while you still have a steady and dependable income. I know a lot of people that have done it that way. Their failures are learning experiences, and when they finally take a leap, they are better prepared for success.

SustainableHappiness
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Re: Don't repeat my mistake, keep accumulating!

Post by SustainableHappiness » Fri Nov 17, 2017 10:14 am

Edit: Welcome to the forums! Sorry for being a douche and slagging on the first post, didn't realize this was an intro!
Last edited by SustainableHappiness on Fri Nov 17, 2017 4:25 pm, edited 1 time in total.

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Gilberto de Piento
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Re: Don't repeat my mistake, keep accumulating!

Post by Gilberto de Piento » Fri Nov 17, 2017 11:22 am

Thanks for providing this warning. I've often thought about leaving my job without actually having enough money to retire, assuming that I will find something else I like to do that makes money. Your post is a good wakeup call.

liberty
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Re: Don't repeat my mistake, keep accumulating!

Post by liberty » Fri Nov 17, 2017 12:32 pm

Hey coreyszmaida,

What is your business?
How much have you saved so far?

thrifty++
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Re: Don't repeat my mistake, keep accumulating!

Post by thrifty++ » Fri Nov 17, 2017 2:19 pm

Thanks for sharing this. Brave of you to share some failings.

Do you mind sharing what your NW was when you left and what it is now? And your annual spend? To give some context.

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TopHatFox
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Re: Don't repeat my mistake, keep accumulating!

Post by TopHatFox » Fri Nov 17, 2017 2:24 pm

Eh, you worked in finance. Wanting to leave is totally normal :P

I agree though, it sucks to not have enough to travel full-time and not wanting to get another job.

Have you considered reducing expenses to meet your current asset returns?

wolf
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Re: Don't repeat my mistake, keep accumulating!

Post by wolf » Fri Nov 17, 2017 4:09 pm

Thank you for sharing. It reasures me that leaving to early the workforce could be wrong in terms of "sustainability and survival". Would you decide differently if you had the chance to choose again? Or is this another life experience you will be maybe thankful for, because you try it with courage?

coreyszmaida
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Re: Don't repeat my mistake, keep accumulating!

Post by coreyszmaida » Fri Nov 17, 2017 6:46 pm

Thanks for the responses everyone! That feeling of a warm welcome is quite nice.

@Farm_or:
Starting a side hustle before pulling the plug is something I wanted to do. My excuse for not doing it is that I had little energy left at the end of my days, especially considering that my line of work required studying for (barely relevant) certification exams after hours.

You might consider me to be following the “intermittent work” strategy suggested in the ERE book, but that assumes that I go get the old job back. That’s a possibility, but I’d prefer not to do it.

@SustainableHappiness:
Jokes on me; I didn’t see your original post!

@Gilberto:
Another thing that Jacob said that stuck with me is “don’t keep changing the goal”. I should have stuck with the ERE plan for another two or three years. This is something that I need to get better at, and it’s why I’m committed to trying to make my business work at least through August of next year instead of just going back to the old cube now… assuming that world would want me back. When we move the goalposts so often, it becomes much harder to ever achieve the goal.

Leaving early was probably the wrong “solution” for me, but that’s not necessarily the case for all. If your profession is something that allows for more consulting or freelancing than mine, then you might be in a better position to pull out early than I was.

@liberty and @thrifty++:
My NW was $150k when I quit in April, which was between 7 and 12 years of expenses. It’s actually gone up a little bit since then due to investment performance, but I’m not confident this will continue. I’m not skilled at investing, and I have had a good year mainly due to luck.

Regarding my business: I’m building https://habitest.com, a way to nearly guarantee success sticking with new habits. I’ve always been enamored with building programs and websites, and I am having a lot of fun building it from scratch and learning about programming along the way. It’s really cool to see a handful of my friends making positive changes thanks in part to what I built. It feels like I’m actually contributing something to society – something that can’t be said about my last few jobs.

@TopHatFox:
Reducing my expenses from ~$15k down to ~$6k per year (about 4% of my networth) is not something that I’m ready to do. Given that (weakness) fact, I have no choice but to push forward and make more money.

I’m enjoying what I’m doing with my new business now, and I think that I would have enjoyed it more if I knew that it didn’t need to be successful to keep pursuing it. Sure, I have years right now, but it’s still a finite amount of time limited by money as opposed to lifespan. That’s unsettling.

@MDFIRE2024:
On half the days, I feel good about my decision to give up my paycheck, and on half the days I feel like it was a silly and impatient decision. I could have changed my life in other ways to make the job more bearable. My assumption that my business would be more successful if I wasn’t FI was ill-founded too.

I’m going to make the most of my decision and continue to do the best I can with what I have. In that sense, I am thankful for the opportunity and experience that I have right now.

thrifty++
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Re: Don't repeat my mistake, keep accumulating!

Post by thrifty++ » Fri Nov 17, 2017 8:52 pm

@coreyszmaida - thanks for the details. Your business sounds very interesting.

You have more guts than me pulling the plug at that NW. Have you thought about maybe a small income supplement by doing some part time ten hours a week work to give a bit of a buffer while focusing most energy on your business?

classical_Liberal
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Re: Don't repeat my mistake, keep accumulating!

Post by classical_Liberal » Fri Nov 17, 2017 9:16 pm

@coreyszmaida

I will a dd a +1 to the thanks you's for the straight forwardness of your post. Particularly since you currently view your choice as a mistake. Not easy to admit such things to an audience, when purpose of the admission is to help that audience, even more so.

I will freely admit I'm planning to do exactly what you warn against, but with scalable PT income in place at the time of leaving my FT job. Essentially planing to earn-as-I-go, with my financial assets as backup. I do have it in my head I will likely find additional income sources beyond the salable PT work with my freedom; maybe I should reconsider that thought process.

I'm curious though, how much has the time off helped from a "burn out" standpoint? To rephrase; do you think going back to your old job is more palatable now that you have had time away, whereas, before you were so burned out the thought of several more years was intolerable? Also, what is your natural stature from a risk-taking standpoint? Having 7-12 year of expenses at a young age provides a long time to find more enjoyable actives with which to earn. I understand giving a time frame for current endeavor, but why are you only focused on one?

i look forward to reading your updates!

liberty
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Re: Don't repeat my mistake, keep accumulating!

Post by liberty » Sat Nov 18, 2017 5:23 am

@coreyszmaida nice site you have created. How will you monetize it? I think it's hard to get people to pay for this kind of service. You can earn from advertisements bu will then need a lot of users.

150k is not much for living in US, but in many other countries you are already FI. A possibility is to live at a cheaper location while building the business.

coreyszmaida
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Re: Don't repeat my mistake, keep accumulating!

Post by coreyszmaida » Sun Nov 19, 2017 7:59 pm

thrifty++ wrote:
Fri Nov 17, 2017 8:52 pm
@coreyszmaida - thanks for the details. Your business sounds very interesting.

You have more guts than me pulling the plug at that NW. Have you thought about maybe a small income supplement by doing some part time ten hours a week work to give a bit of a buffer while focusing most energy on your business?
My intuition was that since I am changing careers, I wouldn't have enough skill in the beginning to earn more than something like $20 per hour working in such a capacity. For that reason, I decided to pour everything into my own projects with the assumption that by doing so I could bring my potential hourly rate up higher than that later. It might be time to reevaluate that assumption. Making enough to cover my expenses could be the difference between quitting out of fear of not making it and continuing the pursuit of my own business indefinitely. Thanks for bringing it up.

BTW, I don't think guts are as valuable as patience in this context.
classical_Liberal wrote:
Fri Nov 17, 2017 9:16 pm
@coreyszmaida

I'm curious though, how much has the time off helped from a "burn out" standpoint? To rephrase; do you think going back to your old job is more palatable now that you have had time away, whereas, before you were so burned out the thought of several more years was intolerable? Also, what is your natural stature from a risk-taking standpoint? Having 7-12 year of expenses at a young age provides a long time to find more enjoyable actives with which to earn. I understand giving a time frame for current endeavor, but why are you only focused on one?

i look forward to reading your updates!
I attributed a significant portion of my malaise to my job. I thought that I was some heroic genius who could do it all himself, and that I didn't need a job to make money. Now that I'm living the dream of running my own operation and still feeling similar feelings (in addition to some measure of pride), I have to question whether my occupation is the source of this discontented feeling. That's why the thought of going back to my old job isn't totally reprehensible to me. It still isn't attractive, but it seems like a better alternative to what I have gotten myself into with the entrepreneurial project.

Then again, maybe this is just me being impatient, and if I were to truly direct my efforts at this for seven years it's likely that eventually something would come of it. I don't think that I can do that in the face of nearly everybody around me thinking that I am insane for behaving this way. They chip away at my armor and I start to think that perhaps I am insane.

Only focusing on one project is my strategy for a few reasons. Switching cost: if I scatter myself around too much, I have to pay the cost of mentally commuting from thing to thing. If I direct my effort at one project, I don't have to pay that cost. Eggs in one basket: if I pour my energy into the project that I have deemed to be the one that is most likely to pay off, I increase the expected value of my effort. Yes, the variance is higher as well. That's not a problem though because I am (hopefully) well above the threshold of... panhandling after ruining myself.
liberty wrote:
Sat Nov 18, 2017 5:23 am
@coreyszmaida nice site you have created. How will you monetize it? I think it's hard to get people to pay for this kind of service. You can earn from advertisements bu will then need a lot of users.

150k is not much for living in US, but in many other countries you are already FI. A possibility is to live at a cheaper location while building the business.
Income is not something that I have prioritized. Dangerous? Maybe. Instead, my idea was to learn a bunch while building something that I wanted to exist, and to let the money come second.

SavingWithBabies
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Re: Don't repeat my mistake, keep accumulating!

Post by SavingWithBabies » Wed Nov 22, 2017 1:59 pm

Welcome! I recently reduced my goal and now I'm wondering if I made a mistake. I need to reread the ERE book -- I don't recall the warnings about reducing the goal (or maybe that was on the forum?). My only caveat is my aim is to step into working for myself at the goal and I aim to be having the same income as my day job at that point in time. But I would like the option to never have to go back to being a regular employee so now I have to think about this more.

coreyszmaida
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Re: Don't repeat my mistake, keep accumulating!

Post by coreyszmaida » Fri Nov 24, 2017 11:02 pm

I wasn't clear when using the phrase "changing the goal". I wasn't speaking about the one-dimension goal of how much money to have. I had in mind the section of EREBook called "Contingency goal-setting".

Paraphrasing, and going along with the example... Two axes, "work" on one, "life" on the other. The trick is to get to the point on the plane that optimizes "work-life balance." This is labeled "Goal" in the figure. When I was talking about "changing the goal", I meant changing the location of that point. There are costs that go along with changing that point's location. Only do it with careful consideration.

Did
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Re: Don't repeat my mistake, keep accumulating!

Post by Did » Sun Nov 26, 2017 12:39 pm

Like many I guess I could have done with more cash. I quit just as my earnings tipped into the big time. Another year or so would have made things much easier. But then mentally I had to get out. So I did. Four years later, while I could tweak things globally to live on less, we want to live where we are and have some left over for travel back home and so need to top up the kitty (with a job). I've been out 4 years, so hopefully I can suck it up for another year say to recharge the financial batteries for a while.

classical_Liberal
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Re: Don't repeat my mistake, keep accumulating!

Post by classical_Liberal » Sun Nov 26, 2017 6:37 pm

coreyszmaida wrote:
Sun Nov 19, 2017 7:59 pm
Then again, maybe this is just me being impatient, and if I were to truly direct my efforts at this for seven years it's likely that eventually something would come of it. I don't think that I can do that in the face of nearly everybody around me thinking that I am insane for behaving this way. They chip away at my armor and I start to think that perhaps I am insane.

Only focusing on one project is my strategy for a few reasons. Switching cost: if I scatter myself around too much, I have to pay the cost of mentally commuting from thing to thing. If I direct my effort at one project, I don't have to pay that cost. Eggs in one basket: if I pour my energy into the project that I have deemed to be the one that is most likely to pay off, I increase the expected value of my effort. Yes, the variance is higher as well. That's not a problem though because I am (hopefully) well above the threshold of... panhandling after ruining myself.
Agreed, you are above the threshold of panhandling after ruin :lol:

Try to think of your current situation in a more web of goals context vs a false dichotomy of making this one project work or return to work full time.

I get the impression your previous employment was not enjoyable and extremely time consuming. Feel free to correct me if I am wrong.

You were previously spending >50 hours a week to earn, doing something you didn't really like. Now you are spending (?) hours per week working on a project you enjoy. However, this is not yielding any income; for now this is just an enjoyable hobby. I would encourage you to continue spending time on this hobby, as you feel it is doing good and has the potential for future income. Another year doesn't seem unreasonable. Since this hobby isn't yielding enough cashflow for you to live on; why not do something else that is enjoyable with some of your time, but has the potential to yield cashflow now? The idea was suggested getting a part time wage job. Is there something that would pay you $10-15/hr which would help you reach others goals you have (satisfy social needs, improve health, learn a new skill, travel, etc) for 10 hours per week? This would go a long way towards evening out cashflow, suddenly 7-12 years turns to 15-25 years! Are there other hobby-projects you have interest in that have the potential to produce income or reduce expenses in the nearer-term?

I absolutely understand your concern that impatience has caused you problems. I feel I have made many of the same mistakes in life due to impatience and burnout. Remember though, ERE isn't about focusing like a laser on one project, then burning out on it (hoping it will provide just rewards before that point). It's about diffusing your energy like a prism. Break your time into many things, each providing you with differing progress in a variety of ways towards your web-of goals. That's why ERE is so robust and much more rewarding for those of use who prefer variety.

If anything, maybe not practicing renaissance ideals before leaving full-time work was your big, impatient mistake. You remain in salary-man/specialty mindset, but you do not have enough assets to fund a life in that mindset.

coreyszmaida
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Re: Don't repeat my mistake, keep accumulating!

Post by coreyszmaida » Sun Nov 26, 2017 11:58 pm

@Did

If you go back to work for another 12 months, spread out your income over two calendar years to minimize taxes! Shameless plug for an article detailing exactly that situation (near the end): https://coreyszmaida.com/2017/10/12/spr ... ting-time/

@Classical-Liberal
Try to think of your current situation in a more web of goals context vs a false dichotomy of making this one project work or return to work full time.
You caught me: I am guilty of this simplified all or nothing thinking. Part of the problem is that I start believing the story that I tell people that aren't familiar with ERE -- that if http://habitest.com doesn't end up working out, I can then use the skills I learn from building it to just go get myself another job. Thank you for reminding me that this is just one of the many options!

I'm actually about to spend a few months traveling abroad to take advantage of this freedom, so a standard part-time job is unlikely to work in the short term. That said though, I will take your advice and focus on other things in addition to building out the webapp. I used to like making videos. Maybe I could do some more of that!

halfmoon
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Re: Don't repeat my mistake, keep accumulating!

Post by halfmoon » Sun Dec 03, 2017 9:15 pm

Excellent analysis and advice from classical_Liberal. Don't let its price camouflage the value.

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