Another year, another birthday. I turned 42 less than a week ago, and I feel great! My life couldn’t be any better, even if I tried.
I started writing this series in 2021 (part 1, part 2). I had just turned 40 and realized that the American society wanted me to work until age 65.
I remembered thinking, no freaking way; I am not working for another 25 years. Alas, this is my final year in the workforce.
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How to leave the workforce. After 24 years, I am walking away from the Marine Corps. It’s been fun; it’s been real, but it hasn’t been real fun (joke).
However, I couldn’t walk away without taking certain steps first. Becoming a personal finance writer helped me flesh out these ideas and stay on course.
Budgeting below your means. The most critical step to leaving the workforce is living below your means.
Living below your means accomplishes two missions: it helps you create cash flow and shows you exactly how much you need to live.
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Cash flow is the heart of your operation. Wealth is having excess income versus expenses. If you make $8,000/month, try to spend less than $5,000. The extra $3,000 is cash flow.
With the remaining $3,000, you must save and invest religiously. I love income investing to supercharge my savings rate and increase my revenue.
How much do you need to live? The key to leaving the workforce is going as soon as possible.
At first, my goal was to create $15,000 to $20,000 in passive income before leaving the workforce. However, something strange happened.
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The more money we made, the more money we spent. We call this phenomenon “lifestyle inflation.”
Although we never went crazy, our comfort level started to creep up slowly. Going to work has a way of making you do stupid things.
Work slowly destroys your creativity, thus forcing you to buy things to get that ping of excitement and enjoyment.
The longer you stay in the workforce, the harder it will be to keep your savings rate above 50%. You’ll have to take drastic measures instead.
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Get out on bare minimums. Instead, you will want to escape the workforce on a bare minimum passive income budget.
My wife and I lived comfortably on $5,000/month for over four years. I wanted to get up to $15,000 in passive income so we would be super comfortable in retirement.
However, it would have taken us another six years to achieve this level of passive income. The workforce was draining our souls much quicker toward the end.
Once you have the information to free yourself, work becomes much more difficult to tolerate. I don’t need someone to tell me what to do and how to do it. Do you?
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So my wife and I escaped on $11,000/month of passive income. Knowing what we know now, we could have walked away a year earlier, but that’s okay.
Retirement is just the start. Retirement is just the start of living your passive income dreams. You still have much more to accomplish and achieve in life.
While we will start with $11,000/month in passive income, we will increase that every year. Now, it is time to do what we love and add value to the world.
I will continue to pursue my writing and book business. I am genuinely passionate about getting the information to anyone who wants it.
I’m Two Serious
My wife is considering going to cosmetology school using the GI BILL. The GI BILL will pay her $1,700/month (tax-free) to attend, adding to our passive income totals.
Choose your own adventure. Most people remain in the workforce because of their lifestyle choices. If your household makes over $75,000 to $80,000 annually, you have the discipline to free yourself.
When you work for someone else, you have minimal upside potential. No matter how much I worked for the US government, I could never reach E-10 because it didn’t exist.
If you make $6,500/month and spend $6,500/month, you’ll work until you die. You may work longer because your kids will continue to pay your debts.
Another option is to earn $6,500, spend $4,000, save $2,500, and make another $3,000. You can make supplemental income by renting rooms, starting a business, or creating content.
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My wife and I will leave the workforce with $300,000 in savings and investments, generating over $1,800 in dividends. We used room rentals to build this nest egg.
Being extreme is the key. My wife and I changed our entire generation’s outlook by being extreme for four years.
We found the information in June 2019 and will walk away from the workforce in September 2023. That is four years of 120% focus on finances.
What are you willing to sacrifice to walk away from the workforce? Can you downgrade your car or living situation?
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Conclusion. Most people want a bigger house and a nicer car. They choose to live in cities where they will never get ahead.
With remote work, almost anyone can afford to get ahead in a low-cost-of-living area. But social media prevents these people from making this vital decision.
It’s easier to post about going on a Disney cruise, or traveling to Bali, than trading in your Tesla for a Ford Focus.
Do you remember high school? Do you remember all the peer pressure and “pretending?” The same thing happens to people in their 30s and 40s.
To escape the rat race, you have to go against the grain. Honestly, escaping isn’t complicated with the right mindset. I’ll let you know how it feels to be free in next year’s article. Good Luck!
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