How I Achieved Financial Freedom by Quitting My Job
By: Thomas Groenvold
Tags: Financial Freedom, Self Development, Freelance, Investing, Diversification

How I Achieved Financial Freedom by Quitting My Job

Photo by Travis Essinger on Unsplash

Quitting my job was never something I considered while trying to crawl my way toward financial freedom. Why would I give up the only secure income I had?

I have always considered myself efficient with my personal economy. I made sure to cover all fixed expenses, put something aside for a rainy day, and build my investment portfolio.

But as I look back at years of taking microscopically small steps toward financial freedom, I realized how much my comfortable situation actually held me back from achieving financial freedom.

Diagnosed me crazy yet? — Let me elaborate on my thoughts.

Comfort resulted in boundaries

One of the first things I saw when starting to pick my work-life apart is; I always stayed within my budget. Don’t get me wrong, that was the intention of operating on a budget, but I saw no real progress. Every month I saved the same amount, spent the same amount, and I invested the same amount.

I operated on a zero margin budget, and that was where I located my first set of problems;

I knew I had the money coming in every month, so I was loose handed with subscriptions and expenses, knowing they would be covered.

I saved the same amount of money every month, which fooled myself into feeling like I accomplished progress but looking in the rearview mirror, I could have put aside much more.

I saw progress toward my financial freedom goal, but I was catch up in a race with no finish line in sight. I kept tracking my progress in Excel, but I settled for marginal progress every month, feeling like I did a great job as long as the numbers crawled forward. (Would take me somewhere around 50 years to achieve a liveable passive income, great plan genius…)

The conclusion drawn from this comfortable routine? I didn’t really challenge myself in reaching my final goals.

Hit the reset button

I’ve changed my job a couple of times throughout my career, but I’ve never given my resignation without having a new place to call home. It was terrifying, exhilarating, and fun at the same time. Easily summed up to one of the strangest but yet most enjoyable moments in my career.

So I did the unthinkable, I cut the only safe income source I had. Now, this is where I really started to push toward my financial targets and see results. But, how can you start saving more if you quit your job, you might wonder?

By pushing the most primal and developed instinct we have (Thank you mammoth chasing Thomas from the past) into action; The survival instinct.

Quitting my job really forced me to start evaluating every single dime going in and out of my accounts. I started from scratch and created a new budget, new money targets, and cut all fixed costs that had previously been covered by my salary.

How I took control of my expenses

Cutting my expenses all the way to the bone was necessary for my new life to have any chance of success. I didn’t know how much money would come in every month. Hence I needed to keep my fixed expenses as low as possible. How I did it? — With a few brutal but efficient steps;

First, I went through my bank statements and listed up every single reoccurring expense.

After listing them all up in a massive excel sheet, I started categorizing them into 3 groups. Vital (housing, power, gas, and so on) Comfort (services, subscriptions, gym, and so on), and the last one was Cut (everything I cut right away)

This took quite a few attempts before I had cut away enough expenses to be satisfied, but in the end, I managed to press down my expenses per month from roughly $1800 to less than $600. (I’m married, so the mortgage is split between us)

The ultimate secret to achieving complete happiness and financial freedom? — Be cheap. By that, I don’t mean you should go for the cheapest alternative, worst quality, or so on, but be picky about what you spend your money on. It sounds easy, but it takes a lot of discipline.

The importance of diversifying your income sources

Now things were starting to get real. I had cut my expenses, but I had also cut away my only reliable income source by quitting my job. Without trying to sound silly pointing out the obvious, living on a budget is rather hard without any money coming in.

But to avoid falling back into my old habits, I set myself a goal for 5 different income sources, preferably scalable long-term. This way I could continue to increase my income, but as long as I stayed strict on my expenses, I could plow more money into the financial machine toward financial freedom.

The way I did that? By running my finances like a conglomerate with 5 different subsidiaries. Each one had to cover its own expenses and contribute profit to the main unit (my income). This way, ended up with the flowchart below.

Picture by Author.

Now we’re really starting to get momentum here, but due to poor drawing skills, let me explain the model. First, I set out to create 5 different income sources; Freelance work, income from platforms such as Medium, Youtube, and my blog, the dividend portfolio, affiliate links spread across the various platforms, and lastly, royalties from eBooks and other digital products I sell on my site.

Most months, my billable hours from freelance is enough to cover my fixed expenses. This means I can plow any other income from the remaining 4 sources back into my dividend portfolio, allowing it to grow faster.

As I mentioned previously, by keeping my expenses to the bare minimum, I can let my other income sources accelerate the growth of my passive income source (Dividends) again, resulting in higher income, and we have take-off!

The bottom line

I was able to quit my job and live from the proceeds of freelance work. By smart and strict spending routines, I created passive income sources to sustain my budget and focus on putting my money to work efficiently. I set out to prove that anyone can create their own path, and it’s never too late to get started.

The current COVID-19 pandemic has forced many to think alternatively after being laid off due to lockdown. By taking a step back from traditional employment and seeking alternative options, many more might be able to achieve financial freedom through diversified income sources.

While I always applaud people for seeking out their own path, make sure not to make any rash decisions that might impact your ability to sustain yourself. Plan smart, utilize budgets, and think ahead. Financial freedom might be closer than you think.