Over a year ago, I quit my steady well-paying law firm job. Despite not having a full-time job for almost 14 months, I haven’t worried about money. Here’s how I afforded my year off from legal work.
Though I had been happy in my job for five years, over the last two years, I had learned to despise it. After a year of diligent job-hunting, I still didn’t have a better job lined up. The plan was to keep looking until I had an exit plan but one random Monday in February, I decided I had had enough. I walked into my managing partner’s office, and gave my two weeks notice.
Though my decision to quit was spontaneous, I wasn’t completely unprepared. In seven years at my job, I had been strategic with my money so that I could have options. These are the four steps I took so that I didn’t have to worry about money while taking one year off from work.
1. I Got Debt-Free
I had major imposter syndrome from my earliest days as an attorney. I was always terrified I would get fired. Worse than the embarrassment from being fired was the terror that I would still have six figures in loans hanging over me.
Thus, when my grace period ended, all my money went to paying off my loans. I put off paying for furniture. I didn’t eat out. I bought the bare minimum in terms of professional clothing. I eventually loosened up (and bought a couch), but I still managed to pay off $112,000 in 18 months.
As the balance on my loans decreased, and my net worth went from negative to positive, I felt like I could breathe easier. I knew that even if I was fired, I could at least start on even ground. Being debt-free lifted a huge weight off my shoulders.
2. I Saved
After my student loans were paid off, it was easy to save money. I continued with the same lifestyle, but instead of thousands going to my loans every month, it went directly into my savings account.
I told myself I would feel comfortable after 3 months of savings. Then 6 months. Then 9 months. Soon enough, I finally felt comfortable with my savings amount, but worried that this big chunk of change was earning next to nothing. It was important psychologically for me to have savings but I knew that I had to set a limit on how much I needed in order to feel secure. After reaching that amount, I needed my money to work for me.
3. I Invested
I maxed out my 401k while I was paying off debt, but otherwise I didn’t make any other investments. Images of the 2008 stock market crash floated around in my head so I hesitated. Still, I knew investing was the right thing to do so I took baby steps. I set up automatic transfers to make it less painful.
I bought into exchange-traded funds that tracked the S&P 500. After a year, without even noticing it, I had moved over quite a lot of money from savings into investments. And my investments were making money! With the dividends and earnings, even with a dip in the market, I could sell while still being way up over savings. I moved more and more money over to my brokerage account.
You may have heard of the Gender Investing Gap. I felt like I was closing the gap and it paid off, particularly because I started investing during a historically long bull run.
Though I haven’t earned more than side hustle money for a year, and though my spending increased (due to vacations), my net worth increased 10% during my year off (well, it was up 10% before the pandemic – now it’s about even). That means, all the money I spent last year was replaced by gains in the stock market. This couldn’t have happened without the miracle of compound interest.
4. I Believed in My Planning
I’ve done a lot during my year off. It’s not much of a year off, if you spend the whole time staying in for lack of money, right? I’m extremely happy that I was able to travel last year, particularly knowing what I know about travel limitations this year. I haven’t worried about money – which I think is key, because money can only provide a feeling of security if you don’t let yourself get caught up in worry. And it’s very easy to think about worst case scenarios – but I didn’t want to ruin my time off by being worried to spend money.
Still, I haven’t gone out of my way to splurge except on the trips I wanted to take. I have the money to live a good life, but I don’t have the money to waste. All the tips and tricks I’ve used in my life to save money, I’ve kept up. When you’ve lived a certain way for over a decade, you don’t really change, particularly when you’ve stopped working.
Conclusion – How I Afforded a Year Off from Law
I was fond of my job for quite some time, but a new boss and a new assignment made it miserable. Paying down debt, saving, and investing were critical so that I could change my career trajectory if I needed to. My salary was extremely high as a lawyer and I realize it seems easy for me to do in retrospect. Still, many people get very comfortable in their high salary jobs and put golden handcuffs on themselves. Then if their jobs take a turn for the worse, or if they just want to do something else, they find themselves trapped.
I know someone who was recently laid off from a very high-paying job after decades at the same company (a company which, by the way, is thriving during the pandemic). Another friend finished all the testing required to start her medical career but has lost all passion for her practice. And I met another woman who had planned to quit her job to travel the world – in March of 2020.
If we have learned anything at all from this pandemic, we have learned that we have to prepare for the unexpected. You might not have the choice of when to leave your job or when to pivot. You might want to take a gap year from college or from your life. Paying off debt and saving gives you some security.
I encourage everyone to do what they can to plan for the worst case scenario of losing or leaving your job/career and/or the best case scenario of taking some time off for yourself. You won’t regret giving yourself some options.