I Quit My Corporate Job for My Side Hustle — But Not Until I Hit These 4 Money Milestones

An image to accompany a story about leaving your day job Courtesy of Daniella Flores
Daniella Flores did their due diligence on financial projections, benefits, taxes, and mindset work before taking their side hustle of five years full-time.
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“That’s not a real job,” they said to me. 

I wanted to go to art school in my teens. But to my family, creating art wasn’t a “real job”. So instead I studied computer science.

Fast forward 10 years. I’m working as a software engineer after back-to-back layoffs, and feeling completely burnt out from my career in tech. This was when I started my financial literacy business as a curious, creative outlet.

Fast forward another 5 years. That same business, I Like To Dabble, is now an award-winning and globally recognized work and money platform for LGBTQ+ and neurodivergent folks. It’s been featured in The New York Times, Investopedia, MSN, Yahoo! Finance, and more.

My business earnings had caught up to my corporate tech salary, and allowed me to hire a virtual assistant who could help me with day-to-day tasks. Sounds like a real-enough job to me.

When it finally came time to walk away from my day job for my business, though, the negative thoughts came up again. 

“That’s not a real job.” 

“Do you think it’s smart to leave your 6-figure job in tech for something so risky?” 

“What about the pandemic, inflation, and a looming recession?” 

The voice circled in my head, demanding I stay in a safer work situation.

Except… the voice wasn’t mine. It was the voice of doubt that manifests when we catastrophize a decision. Something that I often struggle with in my mental health.

Of course it’s a real job. It makes money in a way that allows me to be 100% myself, from anywhere in the world, while helping thousands of other LGBTQ+ and neurodivergent folks take charge of their own money and working lives every month. It fulfills me in a way that no other job has been able to do. But it’s much more than another job, it’s a business that I built out of nothing.

So, when I reached the savings goals I needed to hit to finally leave my day job, I knew it was time. Time for me to bet on me, despite the list of risks flashing in my head.

Here’s what I did to prepare – and why I’m not worried.

‘From Side Hustle To Second Salary’

This is the fourth and final article in “From Side Hustle to Second Salary”, a four-article series from featured contributor Daniella Flores. Read the first three articles here, here, and here.

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I Paid Off Debt, Set Clear Savings Goals, and Created a Business Emergency Fund.

I started saving towards a $40k emergency fund at the end of last year. I wanted to make sure I had at least six months of living expenses covered, with a buffer. Then, I opened another emergency fund as a business bank account, and was able to save $15k in that account before my quit date. Both are in high-yield savings accounts.

This would provide me with more than enough money to give me some peace of mind. That way, I didn’t have to feel like I needed to hustle month-to-month after leaving corporate. That peace of mind for me is everything. I can’t work creatively when I have financial anxiety.

As I was saving, my wife and I also paid off our car. I wanted to make sure I didn’t have any debt going into this career pivot besides our mortgage.

I Prepared For the Benefits I’d Have to Cover on My Own After Quitting. 

When I got closer to my savings goals, I realized how much more real this decision was becoming. If I wanted to be all-in, I needed to start planning for the benefits I would have to cover on my own.

Most W-2 employees get their benefits and insurance covered through their employer. This includes benefits like health insurance, dental insurance, vision insurance, employer-sponsored retirement plans, and paid time off (PTO).

There’s another benefit most W-2 employees don’t notice they’re receiving, and that is the tax their employer pays for social security and Medicare taxes. W-2 employees pay 50% of this tax burden, and their employers cover the other half. Since I was going to be self-employed, I would be responsible for all of it in the form of self-employment tax, which came out to 15.3%. This is in addition to federal and state taxes.

I took this information, dove into research, and talked to others in my freelancer network. For the health insurance part, I was lucky to get on my wife’s health insurance through her employer. If you don’t have a spouse’s health insurance plan as an option, you can use the Healthcare Marketplace to find affordable insurance options in your local area.

Then, I hired an accounting service that would take care of all the tax stuff for me and got on my wife’s health insurance. They also recommended I move my tax status to S Corp. This was so I could pay myself a paycheck every month while lowering my taxes.

For my retirement, I reached what is called CoastFI — having enough money saved that compound interest can take me the rest of the way to my target number — but I still wanted to continue contributing. I decided how much I could still keep investing and what options were available to me. Even though I would no longer have access to an employer-sponsored 401(k) plan, I still had options. I had my own Roth IRA and traditional IRA that I could continue to contribute to. Self-employed folks have extra options for retirement plans, such as a SEP IRA or Solo 401(k). 

All these changes led to higher expenses for both my wife and I, and my anxiety did not like that at all. It costs more money to have an accountant maintain my taxes for me, more money to get on expensive health insurance, and more money to offset no longer having the 10% 401(k) match I had at my job. 

I was also not going to have five weeks of paid time off a year. I would have to cover my days off when I wanted them. This is where my business emergency fund would come into play, but I also was working on planning out my days to build in time off along the way.

These are things a lot of business owners don’t talk about when they make the switch. The expenses for your benefits will be higher, but they’re still manageable.

I Followed My Own “Leaving Corporate” To-Do List

Once I knew it was time to leave, I made sure I followed up on some to-do items that would make the transition easier. I made my own “Leaving Corporate” to-do list that consisted of the following actions:

  • I gathered my 401(k) login and account details to prepare to roll it over after leaving.
  • My job had extra Health Savings Account (HSA) benefits, like free money put into your HSA for completing online tasks. I made sure I completed all outstanding actions to get my free HSA money for the year before leaving. Then I made sure I had login and account details. I can still use this same HSA, even after leaving my job.
  • I drafted a two weeks’ notice that I sent to my manager, copying my human resources representative. 
  • I asked human resources how many saved-up PTO days I would get paid out for after my end date. Any that they weren’t going to pay me for, I took.

I Shifted My Mindset to Align With What I Wanted Out of Life and Work.

I could do all the things possible to prepare for the switch to being a full-time business owner. But the effort would be pointless without shifting my mindset along with it.

Imagine if I allowed my mindset to stay in that same place of my business not being a “real job”. I would end up right back where I started. Back in another job, where I was burnt out, trying to please everyone else but myself.

Pro Tip

When you’re preparing to quit your 9 to 5, whether it is to run a business full-time or because you’ve reached financial independence, nurture your mindset.

I had to do a lot of inner work on myself, and I continue that work. It’s a daily effort to keep my mindset on track. I love therapy, and think it is an essential tool everyone can use in their life and business. But not everyone can afford therapy. If that’s you, I recommend looking up mindset shift prompts online and reading about ways you can start shifting your mindset. 

That voice in my head that used to whisper “this isn’t a real job” doesn’t have power over me anymore. I refuse to give it power.

There’s a new voice now – my own. My voice bites back every time with “I’m not concerned with jobs. I run a business that fulfills me while it creates jobs for others.”

And with that, I take my power back.