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Ask HN: How much savings did you have before quitting your industry job?
- patio11 13y agoOn the order of $4,000, though in my circumstances it was less risky than that number would suggest, since I already had covered-the-day-job cash flow from Bingo Card Creator and strong odds of successfully filling a consulting pipeline by that point. (I'm not counting my retirement account, which was in the low five figures, since I wasn't planning on touching it for any reason short of "I'm dying in the snow.")
- deleted 13y ago[deleted]
- deleted 13y ago[deleted]
- TaffeyLewis 13y ago"I'm dying in the snow" hahaha.... Good enough reason, had to comment because it made me laugh right out loud..
- robertnealan 13y agoI only had about $2000 (half a month's paycheck at the time), but the change in work was prompted by a multi-month consulting gig that was paying in the low five figures over the course of a few months. My advice is to start looking for work before you leave your industry job - think if it as though you're doing lean testing on your product, except your product is yourself. If you can't find clients while at your day job, then iterate on yourself (website, services offered, your client pitch, how you're looking for clients, etc) and try again.
- bwangsta 13y agoI have a similar story. I only saved up about $2000 too, but I also had a 1-month consulting gig that would pay me about 5 months' salary. That was enough to spur me to quit my job and start working on my own. I earned over a year's salary in the past 3 months since I quit and haven't looked back since.
- bwangsta 13y agoAlso, I'm 35 years old, so not just some kid who could afford to take risks. Just was never able to save up $ on a salary, went through a few periods of unemployment, and a few of my other startups failed. I'm finally on course to make some real dough and it never would've happened if I didn't quit.
- alanbyrne 13y agoI had 3 months worth of pay in savings. My plan was to start looking for work if there wasn't enough income to keep me going after month 2. 1 year later and still going strong!
- doppenhe 13y ago1 year of expenses including rent,healthcare, food ,etc. When doing financial planning you should always try to save up to 6 months of all expenses. This is hard to achieve but the recommended number even if you are staying at your industry job. You never know what can happen.
- Spooky23 13y agoSeriously, how do you do this? My family makes a good income, own a modest home, drive 10 year old cars, have $0 debt ex-mortgage and don't do exotic trips. We put 20% away for retirement. Our baseline cost to live including mortgage, property tax, food & minimal extras is probably around $45k. Our area has a tight rental market, so owning the house is a net money saver. Other than cannibalizing retirement, building up that much is tough.
- shazow 13y agoWhen I scored my first job out of school, I moved out into a tiny apartment in downtown Toronto—walking distance from the office. I managed to save about half of my after-tax income for a year and a half which came out to $26k. No car, no family to support, no travel, no expensive purchases (I remember deliberating for weeks about buying an iPod Nano). Doubt I could have done it with a family to support and multiple cars. I did have immediately family as a safety net but I covered my own expenses for whatever I needed after moving out, with the exception of a few meals here and there.
- jdc0589 13y agoMy situation was extremely similar, though I had a car and half my salary for the year came out to more like 20k. Two years and a lot of raises later I am maintaining the same lifestyle, still have a roommate + a fairly cheap apartment, and putting away around 70% of my salary each month. Not having any dependents helps...a lot.
- kenrikm 13y agoMost financial planners usually say to build the 6 months before anything else - since if shit hits the fan you're likely to dip into your retirement which has penalties if you're pulling some out early.
- gw 13y agoI quit my job two months ago with close to $10k saved up. It's too early to claim success, though. I think location is really relevant. In Pittsburgh, rent is quite cheap, but I'm sure the situation is different elsewhere in the country.
- dutchbrit 13y agoIf you plan on quitting your job, don't just follow what people comment here. The actual amount you need should be calculated yourself, based on your plans. 1) How much money do you need to get round per month. 2) Add a chunk ontop of that for unforseen expenses, broken fridge for example... 3) How long do you estimate you'll be working on your project? 4) Add a large percentage to that estimate for unexpected issues 5) Will you need to make investments? Hardware? Designers? Calculate these figures. 6) Add a month (or 2) to the above, if your project fails to start making revenue, you'll need to find yourself a job - well, depending on how easy it is for you to find a good job... It's an amount you need to calculate. Don't underestimate. Then you're ready to roll.
- basicallydan 13y agoThis! Everyone's situation is different :)
- jsvaughan 13y agoYou should also factor in time to get paid. If in your new venture you are going to be invoicing people directly then you should allow at least a couple of months to be paid. i.e. you say 30 day payment terms on your invoice, but nobody will pay until that 30 days has elapsed, some people will pay you in the 4 weeks after that, and sometimes even with aggressively chasing you will have invoices which are 2 months overdue (i.e. no money for 3 months after they received the invoice)
- dutchbrit 13y agoAlso - good one!
- guerrilla 13y agoInclude potential health issues in your unexpected issues if that's possibly calculable for you.
- dutchbrit 13y agoGood one!
- eliasdelatorre 13y agoI had about $11,000 USD after working for 20 months at IBM, lasted for about year and a half. Best decision ever. =)
- basicallydan 13y agoWhat did you do after that?
- grimtrigger 13y agoPlanning on quitting with 6-9 months of burn (assuming I don't make another dollar). But I'm also planning on putting a startup before freelance/consulting so it might be a while before I start breaking even.
- bluedino 13y agoNumber is pretty irrelevant if you're not relating it to expenses. Living with 4 roommates or something for $200 a month is going to take a lot less cushion than if you have a family of 3 and a mortgage.
- sejje 13y agoNumbers can be described, as they are throughout the thread, in multiples of monthly expenses or other types of scales.
- benhebert 13y ago$10,000 savings I could survive on $2,000 per month.
- jheriko 13y agosavings? i should make some of those before i quit my industry job... although i was hoping i would get up and running on the side, and not needing any other peoples money... i might quit after something takes off enough to need full time attention. :)
- PaulHoule 13y ago$10k liquid + $15k in withheld taxes the government owes me. At least 5-8x that in an HSA, 401k, SEP, IRAs, Roth IRAs and tax-advantaged government bonds paying 7.5% that I bought a few months after I cashed out of the Janus fund in Dec 1999. (My broker fired me for that) I'm going to hold on to those bonds as long as I can, and I'd much rather borrow against the equity of the "home" I own at a lower rate. (I bought the home in cash, so this is my "first" mortgage -- I opened the account when I wanted some capital to take a chance at buying an adjoining property at a tax auction.) One of the first things I did when I quit was write a check from the heloc to the HSA so I wouldn't have to think about making contributions for it. It's a little more complex than that because I have two houses on one large lot and my wife's riding academy and the rental income creates a financial situation that's so sweet it's almost a scam. I think last year I got $16k of rent, experienced a positive cashflow of around $14k from it, but the IRS says we made $4.5k of income because of depreciation on our property. (I have no idea why anybody buys a single family house; as much as muggles make a big deal of the mortgage interest deduction, owning a duplex means you can write off half the principal plus you get a cash flow to help w/ the mortgage and property taxes. Maybe you even get a cool neighbor.) One key to making this work is that I can get a high deductible health insurance plan through COBRA for $500 a month and that will tide me through until Obamacare comes unless the Republicans defund it. That's important because there really isn't any such thing as individual health insurance in NY. (I'd better write that letter to my Republican congressman before I forget.) Anyhow, it isn't all roses. I pay $4k a year in taxes for a "persistently dangerous" school that my son goes to where probably 1/2 of the parents w/ college educations don't send their kids to because they homeschool. They haven't had a principal last more than two years so long as I know. The internet sucks out here too. Github works OK, but it took 30 seconds to create a trouble ticket with the off-brand project management software at my last job, which was one of the reasons I quit. Netflix and Amazon instant video work, but I can't really watch Youtube. I used to use Flickr a lot, but with the latest update it is so slow I can't even use my own photographs when I make a presentation because it takes 1 minute+ to load.
- jahbreeze 13y agothis is the only realistic post i saw on here. the people who say they saved 2k before starting their venture are probably 18-22 years old and crashing at their parents' pad. if you're a grown up, i don't see anyway you can start a venture without a year of savings built up or some sort of income (investments, part-time work, etc). let's say you give your venture 6 months and you fail. you'll need a few months to get yourself a paying job again before you're evicted/foreclosed.
- 6thSigma 13y agoI had about my annual salary minus taxes in savings. I also had 2 or 3 contracting gigs lined up. In addition to all of that, I had zero debt.
- hashtree 13y agoSame boat here.
- benmorris 13y agoI had almost a year worth of normal income stashed away. Plus my wife's income was also coming in. To be honest that was a really conservative move and not really required. I made a pretty comfortable amount plus had some pretty large side web jobs I helped build up my savings. It was a lot of after hours working though. Pretty ironic to be talking about this today, because this is a year to the day I left my day job. I still can say it was the best thing I ever did.
- devin 13y agoNothing. I was forced to figure it out quickly or go back to school.
- esw 13y agoFirst time: about two months salary. I'd just been laid off for the second time in two years, and rather than find another job in the same industry, I decided to try doing my own thing for a while. It was a great learning experience and I eventually came out ahead, but I basically lived month to month for several years. Second time: about a year's salary in savings, and I had enough revenue to live on by the time I quit my day job. I was probably overly cautious, but my wife was pregnant and I didn't want to blow it.
- callmeed 13y agoNone. I don't know if it matters but this was in 2000 (and not in SV/SF). I was doing IT/help desk for a UPS call center with a few servers and 75 workstations (on a token ring network!). We had been doing educational software in our spare time. We landed a couple decent contracts and I decided to quit and go for it (I was also a senior at Cal Poly and quit). At the time, my rent was $400/month and I wasn't married. We found an office for $250/month. Of course 18 months later things got real tight. After the .com crash, a lot of california colleges got their budgets cut. But we survived long enough to sell the company at the same time a new one started and took off. I'm sure there's lots of sound advice here and my story shouldn't be a model. I haven't had a real job since and I'm still a senior ;)
- danmaz74 13y agoI quit my day job this September, with €14,000 ($19,000) in savings. But I already have cybranding.com making some money - and very good reasons to think things will move fast now. Otherwise, having a family to support, I would never have done so before raising some money!
- onion2k 13y agoAbout $100k. It lasted me 4 years. Frankly, I sort of wish I'd had a lot less. I never felt any sort of urgency like "This must succeed." No regrets though. The last 4 years have been a lot of fun. :)
- vitd 13y agoI had either 3 or 6 months of salary saved up - whatever it is that experts always say. And I'll tell you this, I was super freaked out about money the entire time. I felt like I was just about to go broke almost every step of the way until I landed my first good client. (That took 4-5 months, if I recall correctly.) And I'm a pretty mellow person able to deal with some amount of risk. If I had to do it again, I'd make sure I had at least one year's salary. Several people have asked, "How is that possible to do?" I wouldn't have been able to do it at the time. Well, all I can say is that it gets much easier as you get older and get better jobs with stock options that are worth something, and if you've been saving for a decade or more. If you're just starting out, it's a lot harder if you aren't incredibly lucky. (Although you also have fewer repercussions if you mess it up.)
- segmondy 13y agoWhy do you want to quit your industry job?
- JoeAltmaier 13y agoI never had an industry job. Except when my startups got bought. Straight to a startup out of college, never looked back.
- lumens 13y agoAbout $26k, though a good chunk of it was commissions that were still incoming (with no guarantee of receipt). That said, I think there is a similar concept to the Minimum Viable Product that I'll call "Minimum Acceptable Savings". If you're going out on your own, your job is to Figure it Out. You need enough to be able to start figuring it out, but any more than that and you're stalling the move and ultimately falling behind. Don't be scared to sell your couch, y'know?
- splendidfailure 13y agoI had about $9k and the expectation that I would do some consulting on the side to help out with expenses. I don't think I'd do the same thing again, because consulting ate up a lot of time that I could've been iterating on my project and that became a large source of frustration for me over time.
- jsonmez 13y agoWrong question. How much passive income from a side business do you need before quitting your industry job?
- newppc 13y ago$5,000 is a good place to start
- AznHisoka 13y agoI made around $60K/month for a good 2 years from a side project, while still keeping my day job. Nowadays I make close to $8k/month passive income, and I regret not quitting back then. I could've easily made double the amount if I had focused strictly on that.
- wallawe 13y agoWhat's your side project if you don't mind me asking?
- qeorge 13y agoAbout $20k, in a mutual fund. Didn't plan to spend it all but I did, quickly. I was working at a grocery store though, so little "risk". :) As others have said - you need to learn to live cheaply. Savings dwindles amazingly fast when you have no income. Personally, I dropped my cell phone & cable TV, and got rid of my car. It took about 3 years to get back to "normal" - would never have made it without slashing expenses.
- watmough 13y agoI budgeted about $30k for 3 years off (my wife continued to work), made between $10k and $20k/year from my FemCal app, then went back to work when the $30k ran out. No regrets.
- notwedtm 13y ago$0. I was stupid, but through sheer dumb luck I made it.
- benched 13y ago$95K. It wasn't enough. My time building my product was cut short by unexpected health problems, which not only accelerated my cash burn, but also made it more difficult than usual to find my next job when I needed it. I landed hard, on my ass, though I eventually got to my feet again.
- moubarak 13y agomy balance was negative 2k. i had to pay a monthly payment to cover that loan and i still quit my industry job because i realised that time was money too. the pressure helped me find ways to survive and i did.
- wyattsthrowaway 13y ago$20k in the bank $500/mo recurring negotiating a $15k consulting project several other potential projects in early talks Remember that runway = cash/burn_rate. Lowering burn rate was a key enabler: I was able to find a rent-free living situation for a few months and that put me over the edge to quit. I also have a nice safety valve in that at the end of the runway, I don't crash and burn, I walk right back into an industry job. Because my burn rate is much lower than my former 6.5k/mo industry pay rate, I expect this to go much further than the 3 months pay I have in savings. That said, I'm being conservative and would only commit myself to 3mo terms at the longest for office/rent. I don't claim to know anything about the sufficiency here, it was just my best guess. Comments welcome :-) * There are no guarantees, but I received 3 offers @80k+ in 1mo of searching, so I like my odds. On a related note, always prefer data like this to a gut feel of your employability. (throwaway -- don't need prospective clients seeing my financials)
- br0ke 13y agoI think it's better to count in time rather than dollars... I just quit last week with approx 14mo, but I'm just starting so who knows if it was a good move :)
- deleted 13y ago[deleted]
- tr0ss 13y ago$15,000 in savings $1,600 a month in costs Just quit my job so don't know exactly how long it will last
- harpb 13y agoWanted to wish ur success in ur adventure - go slay some dragons.
- anandabits 13y ago2-3 years worth of living expenses. Should give me plenty of runway to get my business off the ground...
- TaffeyLewis 13y agoIn my case, I had something like 2,500 saved up before quitting my construction industry related job, moving to Mexico and giving myself 2 months to become a freelance writer. Worked out after all, though it was nerve wracking
- lgieron 13y agoSounds like a material for a story in itself ;)
- TaffeyLewis 13y agoHah.. not too much, it was not as dramatic as seemed with my initial post. Mainly full of lots of stress and working fast to keep from starving... and to learn the language quickly.
- yildirim 13y agoI was making around $3000 before leaving my job (it's very good money for Turkey) and I had $3000 when I left my company. It's been almost 3 months now and I have $1000 more. My project is ready to sell. And we will start selling next week. I hope I can survive.
- cprncus 13y agoI wish I knew more about these stories. How OLD were you? That's key to me. It's one thing to quit your job when you are 23; another entirely if you are 51. I'm assuming the average age of the commenters below is 28. There should be a formula that includes terms for age, likely earning potential on re-entry to job market, savings, debt, assets (like a paid-off house), % completion of the start-up project you're leaving for, monthly influx from startup project when you quit, etc., etc. The formula would pop out a single number, the Gutsy Factor.