Master Plan to Quitting My Job

Traveled to Thailand After Quitting My First Job - Beautiful View of Koh Phi Phi Don

One of my major goals for 2015 is to quit my corporate accounting job and pursue a career in financial planning. Ideally, I would have liked to get my financial planning career in place before I left my job but I'm ok with doing that without a job. This will be my third time walking away from a job without another one lined up, and I actually prefer it that way. Ever since working my first full-time job I have a history of quitting without another job lined up:

• 2010: Quit my job of 3.5 years, to travel to Thailand and change industries from corporate accounting to public accounting
• 2011: Quit my job of exactly 1 year to start a business that didn't quite pan out and international travel plans that fell through

I'm looking at taking a "mini-retirement" as inspired by the concept when I read Tim Ferriss's The 4 Hour Workweek. I don't have a clue exactly how long I will take off from working or have every last detail planned after I quit but I know one thing is for certain and that is I will be financially prepared when I leave. Here are the things I'm doing with less than 3 months left before I quit my job:

Financial Considerations

Unfortunately, I'm not financially independent...yet. My goal is to be financially independent by 40 or so but sure as hell before 65. I know that taking time off from working and earning an income will impact my project financial independence date  but I don't feel that being finically independent will impact the type of lifestyle I'm after. With a net worth of $156K as of January, I'm 25% on the way to being financially independent at $625K (25 times annual expenses of $25K), still far away but I've made significant progress while I've worked at my current job of just over 3 years. Not being FI just means that I need to come up with a financial plan before quitting my job in the meantime.

Quit at the Beginning of the Month

Here's why it's best to quit at the beginning of the month: You get the full month's worth of medical/dental insurance paid by your employer. For me, this is worth at least a few hundred dollars. Not a huge amount, but still, it gives me time to travel, and do other activities, while covered with insurance before I have to buy my own. 

Right now, I'm projecting Friday May 8th as my last day at work. The other good thing is that because it's a non quarter end at my company. If it was a quarter end, then I would be leaving a ton of extra work for my co-workers.  This gives them time to train my replacement before the quarter is over and make for a smooth transition. 

Make sure I have at least 6 months of expenses in liquid cash in my bank

I don't plan on not having a job for longer than 6 months (maybe around 3 months) but I at least want to have enough cash to get me through half a year. 6 months of expenses at $2,500/month would be $15,000. I'm confident I'll be able to achieve this figure even given the fact that my cash balance is currently under $1K. 

Estimate other sources of income

From now through May, I have the following major cash inflows besides my regular salary:

• Federal & State Tax Refunds: I'm estimating that I will get around $2K in federal and state tax refunds when I file my taxes. 
• Bonus: Within the next couple months, I expect to receive a bonus of around $8K. My company had a great 2014 year financially, and the bonus structure had a significant portion of the bonus atributed to if my company outperformed our goal. 
• Property Tax Refund: When I refinanced my mortgage in November of last year, not only did my escrow company collect and pay the April 2015 payment, but my old mortgage company paid that as well. I will be getting $1K back from my old mortgage company once the County returns the funds back to them. 

Total Cash inflows: ~$11K

Save up my travel rewards from credit cards

By my estimates, I have approximately $9K in travel rewards among my points programs that I've accumulated over the last several years of playing the credit card game. If not all, then a significant portion of my travel can be funded with points that I already have. That way I don't have to dip into my liquid cash that I'm saving up.

In order to ramp up my travel funds, I need to get aggressive with applying for credit cards and manufacturing spend to get even more credit card rewards. Since I may be going without a regular income for a few months, I want to make sure that my travel needs are easily met with points/miles obtained through credit card sign up bonuses. If each credit card sign up bonus is work anywhere from $300 to $500 in travel, and I plan on applying for 3 credit cards by May, then I can expect add an additional $900 to $1500 to my travel rewards. 

Save up my vacation hours

Saving up my vacation through May shouldn't be too difficult considering my current 75% full time work schedule. With a week off in February, March, and April remaining, I am able to get a lot done in that time. By the beginning of May I should have ~120 hours of vacation saved up. At my hourly rate of $33/hr, it is worth ~$4K. Can't forget about taxes, so that would take out about 40% and leave me with about $2,300 left. 

Reduce 401K, HSA, and IRA contributions

This is what I have the biggest internal debate with doing. One of my goals for 2015 was to max out all my available retirement accounts such as my 401K, HSA, and IRA for the second year in a row. However, since I need to conserve liquid cash I will be reducing my contributions to all of my retirement accounts in the meantime.

For my 401k, I will reduce my contributions to just 5% of my salary, as I want contribute at least to get the max employer contribution of 4% of my salary. There's no way I'm going to leave free money on the table by not getting the maximum employer match. 

For my HSA account, I've already amassed a balance of $8K ($2K cash, $6K investments). This is the kind of buffer I would want since I plan on getting a High Deductible Health Plan during the time I'm not covered by an employer. Although, I have my HSA Investment account earmarked for retirement, this certainly can be used for medical emergences if need be.

I still may be able to meet my retirement contribution goals by the end of the year depending on my job opportunities when I re-enter the workforce later this year. But for now, it's not a priority to funnel money into accounts I can't touch until retirement. 

Have backup sources of money I can access

Ideally I want to have enough cash on hand so that I don't have to worry about money but in the event of an emergency I have several sources of funds that I can access as a backup plan:

• Cash out some of my credit card rewards. I currently hold 120K points with Chase Ultimate Rewards. In a perfect world, I would redeem this for travel related activities, but it also represents a source of funds I can access in an emergency. I wouln't quite get the value out of rewards by redeeming for cash but at $1,200 is not a bad source of potential income. 
• Liquidate Taxable Investments: It pains me to think I would have to liquidate my my Loyal3 dividend portfolio but it also presents an easy way to turn it into about $4K in cash.  In April, I will have some stock compensation shares vesting that will be worth about $10K at current market price, net of taxes. Once the shares vest, I can choose to hold onto or liquidate in May when the next trading window opens. I'm at odds of whether or not to liquidate right away, due to the fact that the stock is so volatile and right now is not great for the industry I'm in. Just for reference, the stock would have been with upwards of $36K at it's peak 52 week price. At the time, that was one of the major reasons for me staying through May 2015. 
• Rent out a room in my house. I've done this before but I swore to myself I would never do it again. My previous expereince with renting a room out to a stranger was not ideal. It may be interesting to rent it out to short term travelers or AirBnB guests. I love having privacy in the comfort of my own home and really can't imagine having to share my space again. 
• Sell my car for a cheaper one: I love the used car I'm currently driving. It was my dream car back in college and last year I was able to afford it by paying cash. At it's current value around $8K, it still feels like more car than I actually need. I could always sell if worse comes to worse and get a car that's only a few thousand dollars and pocket the difference. Sure, my girlfriend probably won't want to ride around with me in a cheap car but really, I just need a car to get from point A to point B. I don't spend a lot of time driving as it is so it wouldn't be such a huge sacrifice. 
• Sell my house. This could be an option to raise cash in an extreme case. I am currently enjoying living in my house I don't plan on selling like I have considered in the past. But with approximately $66K in home equity, after real estate commissions, I could walk away with around $52K in tax free income. 

Non-Financial Considerations:

Aside from getting my money situation squared away before I quit my job, I really need to make sure that I have some non-financial items buttoned up before I leave. To set myself up for success when I re-enter the workforce I am considering the following: 

Not burning bridges

One of the most important factors in leaving my current job is to not burn bridges. As much as I dislike the role I'm in, I deeply care about my coworkers and boss and I don't want to leave them feeling overwhelmed with picking up my work. I've let my boss in on my plans to leave and that I am willing to stay onboard to train a new person. 

Get a Letter of Recommendation from my boss

At my first full time corporate accounting job, I had a close realtionship with my boss. He was more than happy to write a glowing Letter of Recommendation for me. That letter had been a great resource to provide when I've sent out my resume and was one of the deciding factors in me getting my current job. My current boss has already offered to write a Letter of Recommendation for me as we also have a great relationship.

Reach out to Finance & Accounting recruiters

One of the benefits of being a CPA, is that there is no shortage of accounting jobs I could work at. The reason I got this job was due to working with a recruiter. It's hard to imagine trying to apply to other jobs without the assistance of a recruiter. I don't think it will help me much in the financial planning career track I have in mind, but as a fallback, I could do part-time contract accounting and recruiters could help get me into some interviews. 

Reach out to Financial Planners

This will be one of the more important things that I do to secure my success in the financial planning industry. I have to target firms that I really want to work at. I envision starting out as a support staff at a public accounting firm with a financial planning arm, wealth management firm, or even a solo practitioner who needs some assistance. Even with all of the accounting experience that I've gained over the years, it still means that I'll have to start at the bottom at a financial planning practice. That's ok! I'm thinking long-term and creating a job that I don't want to retire from. To do meaningful work and enjoy my lifestyle. 

Make a plan to maximize my time off

During my time off, I HAVE to be productive. Yes, initially after quitting a job there is the really wonderfull feeling of complete FREEDOM. This does, however, end up fading away and then the feeling of needing to make money sets in. Here's some activities I have planned for my time off from working:

• Travel at least 30 days outside the US
• Read more books, not just blogs
• Enjoy the outdoors. This includes camping trips, hikes, running/walking outside, and playing a sport. Staying active is key.
• Get in shape. I live less than half a mile from my gym. I want to get back into the habit of working out and toning my body. 
• Connect with other accountants, financial planners, bloggers in person and online.
• Spending more time with friends and family. I've been a bad friend lately, hardly initiating get-togethers. 
• Learn everything I can about financial planning.
• Blog. Since I've started this blog, I've reached out to other bloggers and I'm really enjoying the encouragement and community. This is a fun project for me and allows me to get what's going on in my head and type it out on the computer. 

Creating both a financial and non-financial plan has prepared me before I leave my job and I don't really fear the uncertainty around quitting without another job lines up. I don't like the idea of not receiving regular income every month but I need to experience a challenge again. I need to struggle a little bit. I got way too comfortable at my job and sort of lost myself. I need to prioritize the important things and force myself to survive and work towards maximizing my ideal lifestyle. 

Readers: What preparations have you made before quitting a job to ensure you were financailly ready?