EE Day – Your Earliest Exit Date

This is more relevant to those who are 2-3 years from taking early retirement or some time off.

For reasons that I don't fully comprehend, even as I started my first job, I was thinking of leaving it and only doing things that I loved full time. (I think the autonomy I enjoyed in my grad school life was part of the reason.)

And after starting work, once I noticed that my savings were starting to accumulate, I became wildly optimistic about how soon I could leave and "be done with the earning phase of life." This was in the mid-to-late 1990's. Y2K was around the corner, and it sounded like a neat thing to be around for, and I thought I could soon leave after that.

But, as I found out, there is a tendency for these kinds of vague plans to keep floating forward. New projects and interesting opportunities kept coming my way. With each passing year, I was planning to get out in 2-3 more years.

Finally, it dawned on me that I had to commit to a date. So that's what I did. I chose a date in the future, printed it on a miniature PowerPoint slide and stuck it to the side of my PC monitor where only I could see it.

As it eventually turned out, I was off by several years. But that tiny printout served an important purpose. It changed my thinking, it brought a finitude to how I viewed my corporate career.

Tip: So if someone asked me today, here's what I will tell them. Go ahead and come up with the earliest date that you can quit, your EE Date. Take a deep, objective look at your finances, consider the health options for you and your family members, and also give lots of thought to why you are leaving your job. And then you arrive at a date. You mark it on your calendar, and you share the date with your spouse and maybe tell a few trusted friends. (You are not yet ready to start mentioning this in your workplace, because it is still all very preliminary.)

Now it is very possible that your EE date will not be when you really get out. It might take a lot longer than your initial estimate. But that is okay.

Coming up with a date changes your thinking in small and big ways. You start seeing an end to your current state, instead of it stretching forever. And that new bit of thinking is worth something.

First, Become very good. Amass Career Capital

Just one last post about Cal Newport's article.

Until I started thinking about Newport's post, I really believed that anyone could opt for early retirement. That everyone could do it if they chose to make a few sacrifices.

Sure, they would have to give up some luxuries and lower their standard of living, but they could do it. (I still feel that those who give up ancillary creature comforts, in order to buy themselves time get the better end of the bargain.)

But Cal Newport's post made me change my mind about everyone qualifying. He says that the prerequisite is that "you become so good at something that [the hiring market] can't ignore you." Newport calls it amassing 'career capital.'

"Mastering something rare and valuable remains the necessary first step."

So why did I not see this before? I think there are two reasons for my blind spot. One, I happen to have educational degrees and a technical background that I feel I can fall back on. Two, all the people I interact with have MBA's or graduate degrees in technical fields and are highly marketable. This safety net is so pervasive in my circles that I was simply taking it for granted.

Lesson: So here's the lesson for those who are planning on taking a break, a sabbatical, or wishing to try other things. Be sure that you are trained in something that will be valued 3 to 5 years from the time you quit. Get some hard skill or vocational certification. Typically, most employers will agree to pay for training classes if it will help your immediate work, make you more productive. Don't skip going to these training sessions, and don’t opt for soft and easy courses. Good planners think about the safety net even as they are preparing for the jump.

One thing is very clear. The marketplace doesn’t seem to value generalists much. Those who claim that they can do everything are viewed as those who excel at nothing.

Related posts:

• The Competence Trap
• Traits of a Rich Life

Stay Current

I now think it was a mistake. For all the years when I worked a full-time job, I never updated my resume. As I have mentioned many times here before, I absolutely loved the job, and never looked for another. For me, not having an updated resume was a matter of pride, a kind of loyalty. I now feel that I was mistaken in my thinking.

And as I now know, it is very important for those who are thinking of taking a break or a sabbatical to maintain an updated resume. (Some people might imagine never ever having to deal with the annoyance of resumes once they are 'retired,' but it doesn’t work that way.)

For those who are on a long sabbatical, there are a number of reasons for doing short assignments in your line of work, and not all of them are financial. Taking on short-term consulting assignments serves many other purposes. You refresh your skills; there is continuity in your resume (in case you ever need to come back to regular employment); an opportunity to interact with people in your industry; and some intellectual stimulation.

I was talking to someone who used to work at GE, and he told me that as part of their annual performance review, everyone in his group was required to provide an updated resume. He said that thinking about the year's accomplishments in terms of 2-3 sentences suitable for the resume was a valuable exercise.

That, to me, sounds like a very good practice. (I know, because I have tried to summarize what I accomplished years ago, and that was not easy.)

So here's the lesson for those of you planning about leaving work and taking a break. Once every six months, be sure to update your resume. And we've just finished the first half of 2010, so now might be a good time to start.

Are you ready for Early Retirement?

I picked up the term organizational ambition from Taleb in his book Fooled By Randomness. He uses it in a different context, but I think it has definite significance to those thinking of early retirement.

Let's assume that every now and then, you compute your net worth and idly contemplate taking early retirement and living a life of leisure. Here's one question you have to ask yourself: Do you have any organizational ambitions? In other words, are you excited by the idea of your next promotion, a new title, more responsibilities and the accompanying pay raise?

Answer this Yes/No question honestly. There are many valid reasons to want that success. You will be making your parents, your spouse, and your children proud by getting promoted. You may also want to prove yourself to your colleagues, or even to yourself with future professional successes in your field.

If the answer is Yes (i.e. you do have org. ambitions) then there is no point in getting frustrated about the lack of a life of leisure, because the time for you to quit is not imminent. Give yourself time, say 2 years or 5 years to re-evaluate things.

If the answer is No, and you indeed have no organizational ambition left, then that is one more thing out of the way. A lack of organization ambition is a necessary but by no means sufficient condition for early retirement.

Apply before you leave your job

Rupal wanted me to pass this along to anyone considering early retirement or a hiatus from employment:
Make a list of the places where you will be applying for anything financial (Credit cards, loans, leases and the like) and apply before you leave your job.

We learned this the hard way. It didn’t occur to either of us until we had already left our jobs. Here are a couple of real examples.

After years of not having time to spend on my portfolio, I decided that I would look into selling covered calls. I own a few ETF’s (SPY, QQQQ). I understand the theory and the risks and rewards of selling covered calls well. But I found out that my brokerage account wasn’t approved for Options trading. So I logged on to my brokerage and applied for it online. But in the application, I had to state that I was unemployed and had no income to speak of. Sure enough, I got rejected. (No complaints, I would have done the same thing if I had been the one reviewing my application.)

Second example: My wife and I are now applying for a new credit card because it has no foreign fees for transactions abroad. (That would save us 2-3% on each transaction in India.) But I won’t be too surprised if we get rejected.

Maybe I should try claiming that I am self-employed. I know if I had applied when I had my corporate job, I’d have gotten the approvals fairly easily.

Lesson: Before leaving your job, take the time to think about (and make a list of) the various places that you would be applying for anything financial. If you are planning to move to a different town after quitting your job, you should seriously consider getting your leases, loans etc. done while you are still employed.