Quitting the Rat Race?

[Chewbucca]

Just after some advice from the more experienced people.

I'm nearly 40 and my wife is early 40's. We have 3 children ages 8,10 and 12 and an international student from the local high school who is 17. We own our own home freehold and have 4 investment properties with a mortgage of $940,000 in total. Total value of all properties is just over 2mil. The gross rental income is just over 100k per annum.
I work full time 40hrs behind a desk in front of a computer and have done so for the past 16years for the same company and my wife is a stay at home mum and manages our properties.
In 2016 I got my electrical license and started my own business and side hustle doing small electrical electrical jobs around town. I really enjoyed going out and about meeting clients and funnily enough, climbing around roof spaces amongst the insulation. In mid 2019 I decided to take the leap and ask if I could do reduced hours 32hours a week (20% paycut) and spend fridays doing electrical work as I had enough work to supplement my loss of income for that day. On the Fridays, my wife and I would drop the kids off at school and then head off to work together, have lunch together and then pick up the kids at the end of the day. I found it was a great work life balance.
Since the beginning of 2021, I am now back full time 40hrs a week with a new manager (after a restructure) who is focused on output and targets. I approached him and asked if I could do reduced hours and he basically said no. In the meantime, I have a few electrical jobs on the go and in the pipeline.
I am now contemplating whether I should resign and build up my electrical business. To this point, all my electrical work has been word of mouth and I haven't done any advertising and I have enough work to cover 1 day a week, possibly 2.

Over the past year, I have been tabulating in a spreadsheet our income and expenditure and discovered that our household expenses/outgoings were approximately $60,000/yr. We live fairly fugally and are careful with our money. (well, I think anyway)

I'm just wondering what peoples thoughts are on whether I should quit my day job. I've been doing my day job long enough and I'm not really passionate about it anymore, especially with the new boss who is not really a people person. I'm just going through the motions and not very happy. My aim is not to replace my six figure salary with my electrical work, but rather, make enough to pay for our living expenses.

The investment properties are looking after themselves which is good. I'm just after some advice and wisdom.

Many thanks in advance

[Jeffa]

You have already answered your own question
Unless you are planning to live to 100 you're already past middle age and your best year's are behind you..stop making your employer wealthy and worry about yourself.

You must make the move now, time is not on your side.

[McDuck]

I'm just after some advice and wisdom.

Many thanks in advance

Only you will know what's best for you and your family.
One thought, and I'm not passing it off as wisdom, would be to talk to your HR department.
It's an often overlooked resource in these stations.

I do have some questions though.

1. How many employees at your firm?
2. What got you interested in your job in the first place?
3. What does your firm do? Is it a growing or declining industry?
5. How fit are you, and could your body take climbing in roofs for 20 more years?
6: Were you happy before your management structure changed?

[Perry]

I had a more tolerant work situation. I was allowed to 'work backwards,' dropping a day, every year or so, until I was down to two days. Eventually, I stopped, altogether. Perhaps I was appreciated more than you are, presently? If the boss was stretched, I would do extra days until the 'rush was over.' The tolerance cut both ways.

Given the inflexibility of who you're dealing with, perhaps an alternative might be an option? If part-time is not, how about casual, on-call-when-needed? Or does the work not lend itself to that? Can you by-pass the 'difficult one,' to see if someone further up the pecking order will be more understanding and accepting and over-rule the 'difficult one?'

How portable are the skills you have in your present employment? Perhaps another employer (or two) would be pleased to have you on some part-time or casual basis that you might seek?

Now for the hard bit. What are your leading lady's work skills and experience? And her aspirations? Could you - in a sense - trade places with your wife? You share the at-home parenting with her and she shares the employment-elsewhere option with you, in addition to you doing your electrical work? She may well jump at the chance - you won't know until you suggest such a notion. My lady did some part-time work on that basis, amidst our many life circumstances changes.

You do seem to have options and my understanding is that sparkies are in short supply. (Trying to get service around here indicates that, anyway.)

Confucius say: take a job you love and you'll never work a day in your life.

It's likely that Confucius never said that, but it has a nice ring to it.

[donna]

What’s the worst that could happen? And would you be ok? If yes then the only thing holding you back is you.

[McDuck]

Running your own business isn't as free and easy as people think.

You are still under time constraints.
If the customer wants something in the morning, and it means you have to work all night to get it ready, you end up doing that.
If you have to miss a social event , or work while feeling sick, you will end up doing that.

You see, you still have two bosses, the demands of the customer, and the need to keep an income coming in.

At the moment you have variety and the ability to choose to take on a particular side hustle customer.
You will loose both of those advantages, once you go fulltime.

On the up side, you do get to keep all the fruits of your hard work.
And no idiotic fool middle manager is going to make poor choices that stop you being smart and productive.
And you get to constantly fix things that aren't working.

(Often in a big company, the processes and self interests are so set in stone that it's impossible to get positive change happening).
And if we're honest, big companies aren't really about providing a service to the pubic,
Or effectively utilizing the skills of the employees .

Big companies are about keeping themselves running.
Using any tax loophole or finance scheme or import hole they can to swindle through.
And also about keeping the upper management in the comfort they have grow to think of as normal.

You on the other hand, will be able to pivot on a dime,
reduce overheads, and give the customer a tailor made solution.

If you do go down that road, i'll give you one piece of advice.
Communicate properly with your customer.
Be honest.
Be accurate about what you are going to do, and when, and any costs.
If you say it, deliver it.
If something comes up, inform the customer immediately.
Its all about good communication.
You really really need to be clear on your brief
Not all customers are clear on what they want, and change things half way through.
You need to catch that at the very start of each agreement.

Maybe another thing is knowing that you will get one customer in a hundred who is unreasonable and unfair.
Do anything you can to break those agreements and move on.
Give them free stuff if you have to.
1% of the customers, those trouble ones, will cost you 30% of your time.

Look for those cherries, pick them, and step round the rotten ones.

[PC]

Try a "mini-retirement".
Take 3/6/12 months off and give it a go.
Then have the option of return to work or partial return to work.
You still have quite a high debt ratio (50%). Income off $1M is what - $30k pa - a bit light.

[Sanya]

IMHO you can quit your day job when:

1. You have cash (or equivalent) savings to cover 1 year of household expenses.

2. You have confidence that within a reasonable period net income potential from self-employment as an electrician plus net rental income from your rental properties can cover your entire household expenses plus a desired savings buffer of say 20%.

[Stride]

Before you do anything. I suggest you sit down and decide on your plan for your business and test the waters for growth. For example, try doing a little marketing to see how many leads you are able to generate or referrals you are able to receive before diving in. How do you do this? Don't be afraid of asking your clients for referrals, look at the costs with digital marketing or other marketing strategies.

It is important to keep in mind that while you still have a 9-5 you have extra income coming in that you can utilise to build your business. One way of looking at it is the extra income allows you to invest capital into your business.

[donna]

Maybe another thing is knowing that you will get one customer in a hundred who is unreasonable and unfair.
Do anything you can to break those agreements and move on.
Give them free stuff if you have to.
1% of the customers, those trouble ones, will cost you 30% of your time.

Look for those cherries, pick them, and step around the rotten ones.

McDuck - very good post.


cheers,

Donna

[McDuck]

McDuck - very good post.


cheers,

Donna

Thanks.

One other interesting thing .
Customer complaints are a great source of ideas on how to improve your business.
If one customer is complaining about slow or complicated billing for example, suck up the feeling of insult, and see if you can get things more streamlined.
It usually not only pleases the complaining customer, but makes it easier for all your other customers.
That increased satisfaction will result in more business.
And more money.

[Kevman_Auckland]

If I were you I would want to ensure that I am financially safe first to consider quitting work. This means gaining more clarity on existing income and expenses, ensuring you have set goals for future while managing risk for the unexpected by identifying them (as best as you can).

Simply put plan for net cashflow (after tax) to pay for all living expenses.

To be more specific here are a list of ideas:
1. Income - calculate your NET income and check if you can improve this. Example: add a room, sell low yield and swap for higher yield property etc. Include all sources of income - assuming your goal to quit work and do electrical part time, use a conservative income like 1 day.
2. Expenses - You want to be sure your living expenses aren't too streamlined; have allowances and fat in it and cater for future planned and unplanned expenses. Great you clear on living costs while living frugally but I'd advise adding some contingency and plan for as many other costs you can think of e.g. property maintenance, child education etc. You also want to live a little too, life should not be a struggle all the way through
3. Mortgages
a. Split risk the mortgages.
b. Use a spreadsheet to figure out 'what if' scenarios on areas subject to change e.g. all mortgages on lowest mortgage rates +1%, P & I @20yrs with a small amount of IO. There are a lot of personal decisions here; I favour P&I 20yr (conservative) but you may need IO to get cashflow up and this is where personal risk management comes into play. Since IO can increase cashflow considerably its good to foresee the cashflow when it is not in place, before it happens. Calculate cashflows based on current IO today and make sure cashflows can afford living costs when / if you are forced to back to P&I.
4. Involve your partner in the plan and consider some of what others have posted e.g. would wife would like to work etc

With the above, you may come up with various scenarios that change what your net income will be.
Now you will be able ask yourself if net income (after tax) meets your living costs. Having already considered as many variables (and your risk tolerance to them) you will have more certainty on meeting needs or if not what the cashflow gap is.

Hope that helps.

[Chewbucca]

I've done it! I've handed in my resignation after 16 years of being a salaried worker. Thanks for all the replies above. Its been valuable information for me to go back and read all your comments (and my own comments). I got to a point where I had mild depression and wasn't happy in my job. I wasn't enjoying life anymore and my family were suffering. My GP gave me 2 weeks off work and I've had time to reflect what had been Life Draining and Life Giving over the past 3 months as a starting point. I feel like a burden has been lifted off my shoulders. I've had a few light bulb moments, with one being, my wife and I are 50/50 ownership of our electrical business, so in effect we are income splitting compared to before where I was the sole income earner being taxed at the higher tax rate. I own 100% shares in our rentals too, so the the profits won't all be taxed at the higher tax rate of 33% now. I have a few mixed emotions but overall excited about the next chapter in my life and Property has enabled me to do this. No Regerts!

[Perry]

Sounds just great!
The yeasayers prevail.

[Sanya]

Congratulations Chewbucca.

Electricians are in heavy demand for repairs, home improvements and new builds. Your timing for the market opportunity is perfect. All the best to you and your wife.