Weekend Reading: I Quit My Job Edition
Well, that escalated quickly! Mere weeks after musing about quitting my day job to become a financially independent entrepreneur, I did just that – handing in my notice last week. I’m going to focus full-time on blogging, freelance writing, and growing my fee-only financial planning service.
My wife and I did a lot of soul searching these past few weeks. We decided that the opportunity to grow this business on my own schedule was just too enticing to pass up. Simply put, it’s a perfect time to bet on myself – especially in the wake of the deep cuts coming to Alberta’s public sector, which will effectively squash any opportunity for growth and advancement in my current career (there’s even talk of a 2 percent salary roll-back).
Couple that with the realization that I’m earning $50/hour working 40+ hours a week, while making close to $250/hour on the side working 12 hours a week, and the choice becomes much more clear.
Besides the obvious appeal of being in charge of my own financial destiny, I’m most excited to spend more time with my wife and kids. I’ve mapped out 4-hour work days, Monday-Friday, leaving afternoons, evenings, and weekends free to be more involved with my kids’ activities and to pursue new hobbies with my wife. We of course also want to continue travelling whenever and wherever possible (without being constrained by a limited number of vacation days at work).
I quit my job, but I still have another month or so at work before taking some much-deserved time off in December. I plan to come out of the gates swinging in January with a new business plan dedicated to providing more educational content on this blog, pursuing new writing opportunities, and taking on more financial planning clients. 2020 is going to be a great year!
In the meantime, I’ll be busy with this transition and answering questions such as:
- Whether we have enough life and disability insurance now that I’m not covered through my workplace plan
- Whether to take out a salary or withdraw dividends from our small business to meet our living expenses
- Whether to leave my pension in the employer plan or take a lump sum and invest it in a LIRA
- How to set up a health spending account to meet those ongoing needs
Thanks for all of your support – without it I wouldn’t be able to pursue this dream. As always, I’ll keep you posted on my decisions and progress along the way.
This Week’s Recap:
I managed one post here this week – your financial plan is a compass.
Over on Rewards Cards Canada I listed some scary good credit card deals.
From the archives: How a career change improved my life. 10 years ago I moved from the hospitality industry to the public sector to find more work-life balance. It’s hard to believe a decade later I’m making another bold transition to take back control of my time and financial destiny.
Weekend Reading:
Cash back or travel rewards? It’s an ongoing debate, but here’s why the Credit Card Genius team has a strong preference for travel rewards.
An important read from Erica Alini at Global News, who shares three ways the TFSA magic can work against you.
Rob Carrick’s latest article explains why Canada’s biggest bank teaches young clients a lesson on trusting big banks. This topic is extremely frustrating for me (my experience was with TD, not RBC – but still holds true).
Dale Roberts and I are on the same page when it comes to why robo-advisor Justwealth offers the best RESP account in the country.
Here’s a controversial subject that was deftly handled by Highview Financial’s Dan Hallett: Do dividend-paying stocks offer bear market protection?
I’ll also share this post from Dan, which was published last year in Investment Executive. It’s about offering a second opinion to his friends who are getting bad investment advice from their advisors:
“Each advisor was providing good overall service, as demonstrated by the client’s desire in both cases to continue their respective advisory relationships. But both advisors get two big “thumbs down” for not designing more client-friendly solutions.”
If you follow the stock market closely you’ll have undoubtedly heard of the cyclically adjusted price-to-earnings ratio, or CAPE ratio. Nick Magguilli calls it a sCAPEgoat and shares why these valuations get more attention than they deserve.
Million Dollar Journey blogger Frugal Trader explains how he plans to maximize RESP withdrawals for his kids.
Mark Seed shares an excellent interview with Millionaire Teacher Andrew Hallam on reaching financial independence on a teacher’s salary.
On the topic of financial independence, here’s a TED Talk from Lacey Filipich on why you should think about financial independence and mini-retirements:
Here’s part two of The Blunt Bean Counter’s excellent series on what to do when your spouse dies before you. This part deals with taxes.
Finally, here’s an interesting idea out of London’s Gatwick airport. It is testing out new technology to board passengers by individual seat, which could be faster and avoid long lines. That’s assuming everyone’s on-time.
Congratulations Robb. Exciting new chapter for you and family.
Thanks Joe! Excited for the new challenge!
Congratulations! A bold move, but well calculated, I know.
Looking forward to more of those helpful articles and weekend round-ups. This is a great move for you and your family.
Hi Kathryn, thanks! We think it’ll be great for our family. Bold, but well calculated – sure, let’s go with that!
Good for you Rob!! This time with your family will be priceless!
Thanks Anne! That’s the idea. Can’t wait to spend more time with my family during daylight hours.
Congratulations on a well thought out plan, Robb- thumbs up. Just one suggestion for you to consider – don’t wind up your pension plan with your employer; leave it there it will grow very reasonably for you to access it when you’re ready to retire. Right now you’re not retiring, just changing vocation !
Hi Joseph, my gut tells me to leave the pension alone, but I haven’t seen the final valuation and options yet. I’ll keep everyone posted!
Wow, congrats Robb!!!
Thanks Leigh!
Yay! Congratulations!! I’ll say I’m not too surprised especially after your recent musings. I’ll also go out on a limb and say you won’t regret it!:-)
I have to take the opportunity to give you my take on your pension dilemma. (lump sum conversion to LIRA). The common advice is to take the money and “take control of it”. I tend to disagree – here’s a few things to consider over and above the usual reasoning.
I did the retire early thing 8 years ago. I have non registered investments, maximized my RRSP contributions over my career and have saved the full TFSA funds available since 2009. I worked in a govt job for 10 years and was vested for a non life sustaining pension payment. Waiting until 65 didn’t make a huge difference and I wasn’t contributing anymore so no hope of increasing my payout. I decided to identify this amount of monies as my opportunity to get decent group medical/dental benefits for life. Plus, the health premiums I pay are tax deductible, which always takes me past the minimum deduction limit on my tax return.
Government pensions are pretty much a lock, and most have annual COLA increases which causes less mental stress. LIRA investments could be riskier in the markets and is very restrictive on how you can access the funds.
You undoubtedly will have enough income streams in your retirement years (CPP,OAP,RRSP) that will be 100% income. Adding yet another fully taxable pension may not be something you want to do. It’s a real adjustment to go from a regular pay cheque to trying to decide where to withdraw your investments and anticipating the resulting tax consequences. This is also why I am so hard over on maxing TFSA’s completely as a retirement tool. If I had access to TFSA’s when I was in my 20’s, retirement income taxation planning would be a breeze today!
I’m sure I’ll get landed on by some people on my choices, but I’m happy with my decision. Something to think about from a current FIRE participant 🙂
Thanks! Certainly not a surprise if you’ve been following along for the past year or so. I appreciate your thoughts on keeping the pension, that is where I’m leaning as well.
My plan is to double-up on TFSA contributions over the next few years until my wife’s and my TFSA are fully caught up and maxed out. That’s all in the income and spending plan going forward, as I wouldn’t be able to make this move if we couldn’t continue meeting our savings goals. Doubly important if I take dividends instead of salary, as I won’t be earning RRSP room or paying into CPP.
Congrats Rob, bold move. I bet you are scared, excited and exhilarated, all at the same. I made the move 15 years ago and have not regretted a moment of it and I very much doubt that you will either. All the best to you and your family.
PHSP info, Robb. See link.
We have one and have had it for years.
I sense you will wonder why you didn’t do it sooner .. best wishes.:
https://www.taxtips.ca/smallbusiness/phsp.htm
Many thanks for this, Darrell!
Congratulations, Rob!
Thank you!
Congratulations on this new endeavor!!
Thanks so much!
Congratulations Robb!!! This is huge! Looking forward to see what you have in store.
Thanks! YUGE!
Congratulations! Betting on yourself is the best bet you can make. Good luck!
Hi Joe, I agree – it’s time! Thanks!
Congratulations Robb, I know you will do well.
Big step and I’m sure it will most likely feel weird at first to not have to go to work.
But it seems to be the right time for you with the current outlook, and as you said; you thought it through and talked it over and have the support of your family.
You are a lucky man. So, good for you. You are good at what you do.
And as you explained it in your write-up, this is kind of a no-brainer.
You are no doubt the envy of a lot of young entrepreneurs.
Good luck in the future, although luck has very little to do with it, I know, but still…
Hi John, yes it will definitely be a weird feeling not going into work every morning. I’ll need a bit of structure to make this work, but I also like the flexibility of working on my own schedule.
Very lucky, indeed. Many thanks for the kind words.
Congratulations
Thanks Brad!
Really amazing news Robb. Kind of expected but still really surprised me as I thought you were going to ride your job and pension for a while longer yet.
The list of us longer term Canadian PF bloggers going full time for ourselves is starting to get quite long and now feels much more complete!
I think you’ll enjoy it and sounds like you have a much saner plan for your time and energy than yours truly.
Thanks for the shout out to our cash vs. travel article on creditcardGenius.
Hi Stephen, I thought I could ride it out, but the work demands are getting tougher and my kids are getting busier after school. I find I can’t sit down to work on my business until 9pm and I’m already mentally drained. Something had to give, and it shouldn’t be a surprise to anyone what that would be.
Thanks for your support, as always, and I look forward to more collaborations in the future.
Congrats Robb on making the leap and I wish you the best! Happy as always to support. Kudos my friend 🙂
Mark
Thanks so much, Mark! We’ve been following each other since the beginning and I always appreciate your support – happy to do the same. Cheers!
Congratulations and Bonne Chance in your new exciting world.
I am thinking I may want to start picking up the jobs that everyone keeps ditching to blog or such. Figure I could make a lot of money on the side. #JerkishComment
Don’t forget your little friends on the side. Also, wanna guest post on my site? 🙂
Thanks Alan! I very much doubt my job will be replaced given the current troubles facing our public sector. Too opportunistic not to leave it unfilled (no blood on anyone’s hands).
Congratulations Robb! I’m sure you will enjoy doing what you are so passionate about.
Hi Gary, thanks so much. No doubt I’ll enjoy the work and the challenge. Whether I’m successful or not is another story…
Congratulations, Robb. I haven’t regretted quitting full-time work a couple of years ago. I suspect your side gigs will keep you busier than I am now, but each of us has to find his own balance. Good luck.
Hi Michael, thanks so much! I’ve yet to meet a retiree who wishes he or she could’ve worked a bit longer. Not surprised that you have no regrets and are enjoying retired life. I’ll be busy, but no more 60+ work weeks juggling two jobs.
Congratulations, Robb. I’m sure you won’t regret the decision. All the very best. If you haven’t already seen this, on salary vs dividends, it’s worth a look.
https://www.pwlcapital.com/resources/a-taxing-decision-2017/
Congrats Robb! Glad to see that all your hard work is paying off for you. It may be worthwhile to do a blog post about your pension dilemma and the math behind it. I’d be interested in reading it, anyway. On a related note, I suspect that I may have use of your services in the future as I’ve been following your blog for some time and like what I’ve been reading. Talk with you soon.
Congrats Robb! It’s been a treat to watch you reach this milestone. All the best with your continued journey.
Congratulations Robb ! I wish you well in future. With your business solidly established you can concentrate on doing what you value most.
As far as your pension choices are concerned, I was faced with the same situation as you , decades ago , with two private sector pensions one (the larger) a defined benefits plan and the second a defined contribution plan. The DB plan I left with the company as a deferred pension rather than taking the commuted value and establishing an locked in rrsp. In my case it turned out to be a very wise decision to take a deferred pension , a pension which will be paid (full value) to my spouse, upon my death. Why did this work well ? I believe it was the very small commuted value which made it very difficult to match the investment returns of the deferred pension.
I hope this is helpful in making sound investment decisions.
John Wilson.
Lethbridge, Ab
Wow, huge congrats to you Robb! It’s definitely the right decision to make the leap. The reward to effort ratio is so clearly in favor of your side hustles!
I’m excited for you and your family, and look forward to even more content from you. 🙂
What was your decision regarding rolling the commuted value of your pension into a LIRA versus remaining in the pension which I am assuming was a defined benefit plan. My son is facing a similar decision and your reasoning on this would be most welcome.
Hi Norman, I wrote out my thought process and decision making in this post about taking the commuted value versus staying in the pension plan – it’s worth a read: https://boomerandecho.com/my-pension-decision-deferred-pension-or-commuted-value/
Robb thanks for your prompt response and the link. I’m going to have spend time tomorrow digesting all of it when I am a little wider awake.
In round numbers my son’s situation is this: he has as much as 30 to 35 years before he is likely to retire. He quit a life guarding job with the city to go back to university full time.
His numbers (rounded) are: a total of $50k broken down as follows: $35k to LIRA, $10k excess contribution that can be contributed to an RRSP or taken in cash and $5k that has to be taken in cash or contributed to an RRSP if he has room (he only has partial room).
I spoke to a financial planner who explained that this newly created contribution room of $10k is due to a reversal of some of the Pension Adjustment claimed on previous tax returns. What has me confused is that there seems to be no such reversal in your case (or perhaps I just didn’t read it carefully enough–which, by the way, I will do tomorrow.