In my mid-30s, I reached financial independence retire early (FIRE) by creating multiple income streams from investments and side hustles.
Investing in index funds was my main strategy to FIRE. I was finally able to leave a career that was no longer a fit. More importantly, it was time to get away from East Coast winters!
I gave everything away and left all my furniture. It was the third time quitting a career without a Plan B.
While I'm not recommending resigning without a Plan B, I do suggest having a “fluid” roadmap. I had a rough plan in the back of my mind so that I had some sort of direction.
Not too long ago, I quit Corporate America, sold my condo, and moved across the country. In that order. No job lined up. Not a single client on the horizon.
I tried leaving the 9-5 grind 3 times. The first time was ugly and messy. Second time was little better. Then, third time was the charm.
Financial Independence Retire Early (FIRE)
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Before you resign, get your financial ducks in a row.
Whether you're quitting tomorrow or years from today, it's always a good time to get your finances in order. Establish a solid financial runway and time your career pivot according to what makes most sense for you.
Understand your financial position in order to prepare yourself for the months (or years) following your resignation. This includes having a plan for debt management to planning ways to create positive cash flow.
Video: How to Create Passive Income with Index Fund Investing
Get clear on your short-term financial goals.
What are your short-term goals (5-10 years)? Specifically, what’s your planned timeline to re-enter the workforce? Do you plan to buy a home in which you would need more liquidity in assets for that down payment?
Have a rough idea of your long-term financial goals.
It’s hard to plan so far out in advance. Anything can happen in the next few months. But it’s still important to have a rough idea of your long-term financial goals in order to have a foundation for your future.
What are your long-term goals (10 plus years)? Do you see yourself staying in the same industry? Same city? Starting a family?
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Build beyond an emergency fund.
Remember, it’s not just about having all kinds of (sometimes unnecessary) insurance in case the worse case scenario happens.
At the very least, have a 6-9 month emergency fund to cover basic living expenses.
Next, see if you can take it a step further.
Get creative with ideas in this gig economy.
There are many ways to build passive and active income streams. The gig economy centers around the concept of creating an income from short-term tasks.
This encompasses those who are full-time independent contractors to those who moonlight by driving for Uber or Lyft several hours a week.
Are there any part-time opportunities that you may consider taking on in order to explore a different industry? Any fun side hustles you’ve been thinking about trying?
Let's get your financial ducks in a row....