The Numbers Behind Not Needing My Day Job

Well after this post I suspected I would have to provide some follow up.  One comment from Jordan summed it up well with:

I’d be really interested in reading an update on your household balance sheet, how you’ve managed to swing this so soon. Maybe give me some tips to get closer to the same goal.

So I’ll try to answer that question.  First off my year end net worth post is coming up next week so I won’t jump into specific numbers on each account, but I’ll provide a brief overview of the items that make up what happened.

First off it’s important to recall I have a low cost lifestyle, so if you added up everything I typically need about $3100 a month to cover my costs, but that includes a larger mortgage payment than required.  My normal mortgage payment would be around $750/month, but I’m currently paying about $1100/month.

Then you need to add up my non-day job income which includes:

  • Distribution and dividend income  from TFSA and taxable accounts which is about $2200/year
  • I assumed a return off my RRSP’s and other retirement accounts of 4%, so that’s another $2200/year (based on my last Net Worth post)
  • My wife’s daycare clears approximately $6000/year in profit
  • My school board job pays about $23,400/year
  • Total $33,800/year or $2816/month

So from here it is simple math.  If I lowered the mortgage payment to the $750 my income from other sources is greater than my expenses.  Or if my wife takes another kid in the daycare and clears another $350 a month in profit we also get to the same place.

Obviously there are a few holes in this crude analysis.  Income taxes have not been considered on that income so that will lower the monthly amount a bit and it isn’t sustainable since it doesn’t include cash for retirement savings or expenses that are currently covered by my dental/health coverage at my day job.  Yet once the mortgage is paid off in the next three years I’ll firmly be fine without the day job regardless of taxes and other expenses.

So by looking at the numbers you can see the major driver for this is my school board trustee job, which ironically I took without caring about the pay at all.  So it brings for an interesting conclusion: following your passion will sometimes lead you to where you want to go sooner than you thought possible.

For many years I’ve been focusing on the expenses and savings part of the early retirement, but the other side, income, is ultimately what go me to this milestone.  So this leads the path of semi-retirement which I intend to investigate in the New Year a bit more.  Perhaps the issue isn’t that I want to retire early, but rather leave my day job and work on other things instead.

8 thoughts on “The Numbers Behind Not Needing My Day Job”

  1. Hi Tim,
    I thought you liked your day job?
    You might find that now that you’ve proven by running the numbers that you don’t NEED the day job, one of two things happen – you stay and are happier because you have a greater sense of security. At some level there’s always that sense of fear when you’re dependent on a job.
    Or once you realize you’re a free agent apart from the formality of giving notice, opportunities and interests come out of the woodwork everywhere and you realize you just need to ditch that daytime job to explore them more.

    Any chance of moving to part-time at your current job? Working 2 jobs simultaneously while having a family wears on you after a while, even if you enjoy both.

  2. Congrats on this new development!!

    We reached ‘semi-retirement/financial independence’ status about 2 years ago(we are 39 now) and have been struggling with it ever since, so I am very interested to read along as you enter into this ‘next stage’ of personal finance~Enjoy the journey!

  3. Well now I like what I hear. My significant other would keep working. 😉 I could technically retire as well if she was ok with this little arrangement 😉 I am sure the real response would be ‘no way sparky, then you’d be a bum’ or some variation of that.

  4. Way to go!

    Or if my wife takes another kid in the daycare and clears another $350 a month in profit we also get to the same place.

    One kid in daycare brings in $350/mo in profit? Amazing!

  5. jacqjolie,

    Actually I generally like my job. I’m a bit concerned with some management changes going on towards the top. I like to have a back up plan in case things go south at this job.

    Idk,

    I’ll let you know how I do with the idea.

    Adam,

    Ah yes the other reason I’m keeping my day job for now. My wife wants to leave the workforce the same time I do.

    Caitlin,

    Actually that is some what misleading of a statement. In the world of daycare the first few kids have almost no profit after expenses. The last few cost almost nothing beyond a bit of food so are basically almost pure profit. So the profit per kid depends mostly on what number in the order they are and if they are part time or full time care. Overall the pay isn’t great, but it works when you consider we aren’t paying for daycare and my wife enjoys her job. Actually she is working on a guest post about the pro/cons of working at home, so you can look forward to that.

    Tim

  6. now 35 looking at retirement 55
    no company pension
    simple cost of living here in sask
    hey cdn dream ever heard of future now energy saving us 10-20% on my nat gas bill
    sure like the tfsa
    any one here of ally.ca?

  7. Our household expenses are also about $3000 per month – no small feat in Vancouver… thank goodness we bought our condo in 2002, before RE became INSANE… when rates rise there will be blood in the streets here. We should thankfully be mortgage free by then.

  8. @Jon Snow,

    $3000/month in Vancouver…OMG! I’m deeply impressed.

    @Chad,

    Yep, natural gas rates went down, so a bit of saving there. I’ve hear of ally.ca but have never used them. I’m thinking about opening an account after I pay off the mortgage for putting a few GIC’s in my TFSA.

    Tim

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