Here are some tips on how to make today’s popular life-style change: the downshift, from one who has already gone there.
Once I worked 50-60 hour weeks for an IT vendor. I spent weekends traveling; I spent 50 or even 100 nights per year away from home; and missed a fair chunk of my son’s first four years. My aspirations changed as I got older and had family, and the company changed too. It had ceased to be fun. At times it got downright Dilbertesque.
So I quit. Now I work for my own company (I figured it was the only way I was ever going to be a Managing Director). I still work long hours but I do so mostly at home, at times that suit me. I work on projects only if I think they are a good idea. I am away from home when I want. I took most of January off to go camping with my son, and most of February to play with my hobby (model railroading if you must know). See What Matters.
Changing to a lower paced, lower pressure, simpler lifestyle is known as “downshifting”. For many people in developed nations, especially professionals, we have sufficient surplus affluence to make it a viable option.
If that sounds like something you would like to do, there are two ways to achieve it. Either (a) make such a bucket-load of money that you need never work again or (b) follow these steps:
1) Freehold your home
Plenty of people go out on their own while still paying mortgage or rent, but if you want to relax a little, downshift, and not be a slave to the job, then you need the freedom of a freehold home. You could go live in a cardboard box, or you could make enough money to pay the mortgage off (see (a) above). It is amazing how quickly some people can clear a mortgage if they set their mind to it, especially childless couples. Alternatively, consider downshifting where you live. If you want the bright lights of the big city, it will be hard for you to escape debt. But if you go live somewhere less hectic you can also find lower property prices: moving from a major city to a smaller town or city can give you enough equity to buy for cash – we did. This does of course require you to…
2) Reduce expectations
People addicted to the high-spend lifestyle that many jobs can buy will remain job-slaves. It is a great help if you can shift to a less materialistic mindset where you value quality family time, peaceful environment, and simple pleasures over dining, travel, fine possessions and inner-city excitement. We can go camping for weeks for the price of one airfare to Bali. Besides, we already have lots of those possessions.
3) Build the right skills
Most professional people after a decade in their industry have plenty of bankable technical skills. It is the same for those in trades. The key skills that many lack are an understanding of business and of consulting. These can be learnt. Pursuing this line of personal growth will serve you well whether you stay with your employer or go out on your own, so your employer should be supportive of this direction and it does not commit you to a decision.
4) Realise your value
For most people, what you can make per hour as an independent consultant is several times what your boss is paying you per hour. So even with down-time and no paid holidays, you can work for less hours and still be in the same financial shape – or good enough (see Reduce Expectations).
If you don’t want to work by the hour at all, you can try your hand as an entrepreneur. That would of course require you to…
5) Consider taking a risk
The only difference between successful entrepreneurs and other folk is a comfort with risk. They may not thrive on it, or even like it, but they all can live with it. You can make a lot of money working for a salary or for contracts but the only way to get stinking rich is to derive income from something that scales, i.e. something that is not linked to the number of hours you have in a day. This could be selling a product or an idea, trading, or getting other people to work for you. These are all entrepreneurial activities, and they involve higher potential rewards and higher risks.
Paid by the hour you have a good idea how much you will be making in ten years time. One catalyst for my downshift was a report from a financial planner who said I only had another eleven years to go before I would have enough saved to downshift to a lower-income job and still have a secure retirement. Eleven years at that job was not an attractive option. About the same time my father dropped dead. So did a neighbour younger than me. That was it! If I was to get any lifestyle other than grinding away for a third decade as a salary-slave, I had to take a gamble.
The gamble is to become an entrepreneur. Never mind the details (get your own ideas), by chasing business ideas and opportunities my future income is less determinate but potentially much higher.
I can make enough money from occasional odd-jobbing contracts to keep us alive and still have many months a year to spare to work on various projects. So I give myself five years to make two million dollars. If I succeed I retire; if I fail, I start my eleven year grind five years late. Not attractive but hardly the end of the world.
To do this you must be ready to fail, or to make a loss. This is may not sound like downshifting, and for many it isn’t. If not, stop at step 4. For some of us, the ability to accommodate calculated risk gives us the flexibility, freedom and creative excitement that our previous lives lacked.
Downshifting is a leap of faith. It takes courage, preparation and a belief in yourself. The rewards are worth it.
After about seven years out on my own,
- I still work awful hard, but only sometimes, and mostly when I choose to (clients still dictate my life a bit)
- I have 2 or 3 times as much time off as I had as a salary slave
- I work mostly from home, at odd hours. I get up later, I see my wife and son more, I relax in the daytime
- My income is now in the upper decile, and back to two thirds of my previous enormous salary. Some years. In bad years we still make about the national average. One year, 2008, it got ugly. We lived.
- As a consequence of rising income our expectations are rising too. It is hard to keep them down when funds are available. We don't save enough.
- I make the decisions about my life
- I often think downshifting is the best thing I ever did.
Downside to downshift
Nothing is perfect. Any improvement comes at a cost. What can downshifting cost you?
As we said, you need to have lower expectations of income and wealth. You just might end up better off, but don’t plan on it. The corollary to reduced income is ironically reduced freedom in one respect; I miss the freedom to go anywhere in the world I want, and I miss the freedom to buy anything I see. I give up these freedoms in return for freedom of time and freedom from authority and freedom from b.s. emails from management and Marketing.
Consulting can be a nerve-wracking game when things are slow and you cannot see where the next job is coming from. Running a business is even more so. You need to have the confidence that you will always be able to turn a buck, even if it is a much-reduced income that just meets your much-reduced expectations.
Without a big organisational nanny, you must see to your own training and growth.
By not giving me continuance of service when I changed countries my employer made the decision easy for me by taking away any golden handcuffs. For others it is hard to walk away from potential redundancy payments. If you really want to be free, you have to see it as unreal money, and go after the real money you can make for yourself.
World’s toughest boss
Sometimes I wish I worked for anyone other than myself.