I plan to quit my job in the next 12 months, and I have set July 30, 2010 as my unofficial last day. I use the word “unofficial” because my employer doesn’t know it yet. So, in essense, I have only given myself notice.
While I plan to give a lengthy notice to my employer (probably about a month), I don’t want to tip them off too soon. However, it is important when planning to quit a job to give yourself plenty of notice to arrange things such as insurance (both car insurance and health insurance), emergency savings, etc. Here is a little more about how I arrived at July 30 as my final working date.
How To Put Yourself on Notice
Emergency Savings
I figure it will take me about a year to accumulate enough savings to feel completely comfortable in my decision. My wife and I are nearly debt free, and once that is behind us we should be able to sock away a good deal of money each month into savings. Ideally, I’d like to have a full year of expenses in savings before quitting my job.
Insurance and Other Benefits
By giving myself a notice I have established an end game. Now I know what we must do between now and July 30, 2010 to make early retirement a reality. There will be plenty of things to consider before trading in my employee badge for a pass to work from home! Near the top of the list of things to worry about is health insurance, since it is now provided by my employer. When I walk away from employment I will also have to compensate for a loss of a 401(k) match, employer-sponsored life insurance, disability insurance, and a number of other fringe benefits. I’ll need plenty of time to research and acquire these policies before I leave the office to work on my own.
Equipment Upgrades
Before venturing out on my own I will need to upgrade some computer equipment. I manage to scrape by doing freelance writing now using an old desktop computer, and my PC at work (on lunch breaks). When I become self-employed I’ll need more reliable equipment, and better to recognize that now and cashflow these purchases while I still have a regular paycheck.
Employer’s Needs
I am part of a team working on a special project that will likely take most of the next year to complete. Before I walk away, I want to help see the project to a successful implementation. My company, and the people there, have been good to me, and I certainly don’t want to leave them in the lurch. That said, finding the right time to ease out of the building is a balancing act between my own needs and the needs of the company. While I tend to look out for myself and my family first, I also recognize loyalty is a two-way street, and I feel an obligation to follow through on my part of the project.
After taking all of these various factors into consideration I decided a year was a conservative estimate for the amount of time necessary to meet my savings goals, obtain insurance, upgrade technology equipment, and finalize projects with current employer. My last day at work will be July 30, 2010. I’m now officially on notice.
Photo by Attempts at Photography
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Pardon me for asking this, how do you gather enough courage to leave the stability and benefit of your current job to pursue your own venture when you are not sure if it will be a successful or not? One bird at hand worth two in the bush, right? I imagine it would be hard since you have a family to support. If I am in your situation, I may not have enough courage to quit, not unless my own business is so stable that it can provide full-time income for my family. Nevertheless, you know what’s best for you, so good luck on your venture.
@frugalgrad: The ideal way to do it is to build up a portfolio of passive income, and part-time active income, to the point it nearly compensates for your current full-time income. Easier said than done, I know.
I’m trying to get a couple of ventures going now with the idea that by the time I reach my deadline I should be able to quit my job without noticing too big a hit in income, or taking on much additional risk. Besides, with layoffs always looming, there is just as much risk associated with having a full-time job and no backup plan.
Giving yourself a deadline is a good idea, and a decent way to keep yourself motivated. Still, I think that a one year deadline is probably a bit short, unless you already have substantial savings and investments for this purpose. If you are starting from essentially nothing saved or invested, I’d say giving yourself at least five to ten years to meet your goal is a more reasonable estimate.
That said, I don’t know your finances, and perhaps you are within a year of retiring, after all. In either event, good luck, and keep us posted on your progress.