Last year, I quit my job at a TV network to focus on my own writing and comedy career. I had enough savings from 10 years of full-time writing jobs to last me about seven months. After that, I’d be cashing out my 401K to support myself.
“DON’T DO IT,” said almost every breathing body who heard my plan.
“Oh really? Why not?,” I’d ask, and promptly tune them out to fantasize about melty cheese. I’d made up my mind about quitting, and no accountant, broke comedian, or corporate climber could talk me out of it.
These people weren’t wrong, of course. Taking a hit on your 401K is a poor friggin’ decision if you’re looking at life from a strictly-numbers perspective. But people aren’t numbers, and I was burnt out.
Years of working full-time during the day, running to comedy shows at night, writing scripts on weekends, and scrapping for free moments to promote my work had taken its toll, and I needed sleep. I also needed to find out what caliber of content I could create without having a full-time job occupying so much of my mental and physical energy.
In mid October, seven months after I quit my job, my savings were low. The first seven months had felt like a vacation—I traveled all summer doing standup, staying at decent AirBnBs, eating great meals, and spending money that had been sitting in my checking account.
But in October, I had to decide whether I was really ready to cash out my 401K, incur a huge penalty, and fritter away the only “rainy day” money I’d ever had.
As if my Last Chance Guardian Angel was watching over my bank account, in October I got an out-of-the-blue job offer to create online videos for a media company. The pay wasn’t great, but it’d be enough to survive very frugally.
I turned it down.
I felt I was only getting started on my work, and that I must march boldly into my future without a job holding me back. Still, hitting that final WITHDRAW button on the 401K website was utterly terrifying.
But here I am, alive and well-ish enough to tell you what I’ve learned from taking this financial plunge:
Timing is everything. I’d originally tried to quit at the end of 2016. But it was a hectic time at the office, so I agreed to stay on until March of the next year. This was not smart for tax reasons. My 401K will be taxed based on the entirety of my 2017 income. The money I made from January through March bumps me up to a higher tax bracket. Also, had I stayed on staff much longer, my annual income would have made me ineligible for Medicaid, which has been a huge financial relief.
Point is, it’s in your best interest to keep your total income as low as possible during the year or years you plan to cash out your 401K.
People aren’t kidding about negotiating. Because of the circumstances under which I left my job (i.e. “Living my truth”), I felt more open, excited, and relaxed than I ever had in an exit interview. I told the human resources woman that I’d kicked myself for not negotiating my salary. She checked my paperwork.
“You could have gotten a lot more,” she said.
Also, when I turned down the job creating videos for that media company, I was offered a sizeable salary bump. (Still nothing to write home about, but a lot more than the original offer.)
I’ve never been good at negotiating, especially because writing jobs are so hard to come by. But after these experiences, I will always, always tell my potential employer what I want and where I’m coming from.
Full-time jobs pay for your down time. I miss promoting my comedy shows on social media at work. I miss taking a long lunch and thinking “I’m getting paid for this.” I miss blowing up an air mattress, sliding it under my desk, applying an aloe eye mask and taking a Manhattan siesta.
Okay, I never did the last one, but I have to admit that full-time jobs cover a lot of random “me time,” which is something to consider if you’re considering transitioning to the gig economy.
Now, every minute is a my minute, and I feel an added stress to take advantage of every hour in every day. I try to counterbalance this stress by making accomplishment charts for myself. If I hit a certain number of accomplishments in a week, I won’t let myself feel bad, even if I didn’t do everything I wanted.
It’s easier to spend less when you’ve got more time. I’m no beacon of frugality. I just don’t have the constitution to eat cold beans and sew my own clothes. But, I have been able to stay within the budget I set for myself by doing things that take more time but cost less money—walking to destinations, cooking my own food, and selling my clothes on apps like Poshmark before I buy new ones. All of this has been good for my overall mental, physical and emotional health, too.
I wouldn’t trade it for the world. Has this been scary? YES TIMES A MILLION. It was hard to decide whether the time was right to leave the workforce. And as I prepared to do it, I felt a lot of guilt. Who did I think I was, some bratty princess? Some spoiled, rotten Lady Moneybags?
But once the deed was done, these feelings went away. After all, I’m spending my money to buy myself much-needed time to grow. And as a result, I’m performing with more energy than ever before. I’m writing—not as quickly as I’d hoped—but it’s happening. At yoga (yes YOGA—who AM I?), the teacher used me as an example of a person doing something right for the very first time in my life.
It all feels so, so, so much better than money in the bank.