“Opportunity is missed by most people because it is dressed in overalls and looks like work.” – Thomas Edison
If the previous chapter scared you out of engineering your layoff, let me give you some reasons why engineering your layoff is a brilliant plan.
- You’re Financially Secure. If you’ve saved up at least six months of living expenses, have a regular stream of side income to hold you over, and a good business idea, then you’re probably ready to make the jump. Of course it doesn’t hurt if you’ve got rich parents. By saving 50-75% of my after tax income for 13 years, I was able to save 15-18 years worth of living expenses if I did nothing to change my living standard. If I sold my primary residence and moved back to Hawaii, I could probably live off my savings and investments for the rest of my life and do nothing.
- You Have A Tested Business Model. You’ve introduced your business model to the world and have shown a profit after 12 consecutive months. You’ve carefully surveyed the competition and strongly believe your business has staying power. I “tested” my business model for three years and didn’t take the leap until it started generating at least $100,000 in revenue and $75,000 in operating profits across all my income streams. I figured if I could dedicate 100% of my time on my side businesses instead of just 20% of my time, because of my day job, I could increase profits. So far, so good as I’ve introduced a consulting service and financial products such as this book.
- You’ve Got No Dependents. If your financial safety net is in order and you have no dependents, now is the best time to take some risks--before the little ones arrive. I’ve interview about a hundred parents who’ve all said either, 1) Take risks before you have kids because once they come your mindset changes completely, or 2) I wish I took more risks before parenthood. I don’t have kids at the moment, and therefore don’t have anybody depending on me to survive. I would like to have kids someday soon, but only if I know with absolute certainty that I can take care of them. With over 140 million orphans in the world today, it would be irresponsible for me not to have the time and financial means to take care of them before going forward. Don’t have kids if you can’t take care of yourself dear readers!
- You Believe You Can Always Come Back. If you are able to keep in touch with your colleagues, competitors, and clients, you should be able to go back to the industry you left within two years of departure. Every year beyond two years gets harder given managers will have a choice of selecting those with the most up-to-date skills. One of the best ways to keep in touch is through LinkedIn and Facebook. Connect with everybody you can and send them regular updates once a quarter. An even better way to keep touch is to start your own personal blog where your industry friends can subscribe. It’s now easier than ever to stay in touch, but you still have to make the effort. At age 35, I strongly believe that if I want to go back to the financial services industry at 37, I can.
- You Don’t Want To Have Any Regrets. Time whizzed by for me from ages 21 to 35, and I know that time will continue to accelerate. In a moving post by a palliative nurse who took care of the dying in their last moments, I learned that the number one regret her patients gave was the following: "I wish I'd had the courage to live a life true to myself, not the life others expected of me.” To live a life true to oneself means different things to different people. For many, a truer life doesn’t mean working harder at a job just for the paycheck. If you happen to be so fortunate as to live in a developed country such as the United States, Canada, Australia, and many countries in Europe, life is a comparative cakewalk to the lives of those in India, Somalia, or Ethiopia. In the developed world, it doesn’t take much to survive and be happy. Most of our fears are blown out of proportion. Look at my example of having 15-18 years worth of living expenses saved and a rent-free home in Hawaii, yet I still have fears. But I am gradually overcoming my fears through doing.
- The Ability To Double Dip or Triple Dip Your Income. If you engineer your layoff, you may have the ability to double dip your income by finding a job soon after your negotiated severance runs out as long as you don’t violate the terms of your gardening leave. For example, let’s say you negotiate a six month severance package. If you are focused on finding another job, there is a good chance you will be able to find one by month three, thereby double dipping your income for three months! Meanwhile, if you were able to negotiate deferred compensation, a common form of compensation for higher ranking employees to prevent them from leaving, you can triple dip your income by collecting severance, collecting a new day job income, and collecting your unemployment income! That’s right. If your separation package includes receiving your deferred income over a number of years, you are still allowed to collect unemployment benefits because 1) The deferred income is part of your severance, and 2) You are unemployed!
Harness Your Fears
Everything always seems scarier than it really is. Remember when you turned 20, 30, 40, or 50? I had a serious case of depression for a few days before my 30th birthday. I couldn’t believe I would no longer frolic in my 20s! I feared I would get gray hair, no longer be able to move as nimbly on the tennis courts, and be perceived as an old man to friends and family. When my birthday came, it wasn’t so bad at all. My mind was just playing tricks on me. In fact, I’ve lost 10 pounds and am the same weight I was in high school.
For all the reasons I stated above, I decided to take a leap of faith and go out on my own. My biggest fear was looking back and regretting not making the jump.
Regret is one of the worst feelings and learning how to harness your fears will help you avoid disappointments in life.
Here are some of my regrets and optimisms:
- “Why didn’t I ask that girl out?” – Thank goodness I didn’t ask her out or else I might never have met the love of my life.
- “Why didn’t I just study harder and get better grades and SAT scores so I could go to a better school?” - I’m proud of my alma mater and happy I didn’t pay a small fortune to attend.
- “Why didn’t I invest all my money in Google during its IPO?” – At least I invested in my career.
- “Why didn’t I start Financial Samurai in 2003 when my father first suggested the idea?” – Better late than never.
- “Why didn’t I negotiate my separation package and dedicate all my effort to my online business in my 30s?” – I’m going for it now!
There are always ways to make money. However, there won’t always be time when we’ll have the energy to execute on our dreams. I know that if things don’t work out for me as an entrepreneur, at the very worst, I can sell my house in San Francisco and move to Hawaii and live off my passive income.
There are plenty of legitimate and oftentimes lucrative reasons why you should engineer your own layoff. One of the greatest misconceptions is that working for someone is more stable. Don’t get lulled into complacency!
The biggest regrets will be the things you don’t do rather than the things you do.
Reasons why you should engineer your layoff
- You’re financially secure.
- You have a tested business model.
- You don’t have any dependents.
- You believe you can always go back.
- You don’t want to have any regrets.
- The ability to double dip or triple dip your income.