If you spend any time reading blogs that help you change your lifestyle, career, or circumstances, you quickly discover that everyone is in a huge rush. We write things like “Just start something. Get moving. Do it NOW.” You deserve cool things, and you deserve them right now. When we realize what we want out of life, then we want the rest of our life to start as soon as possible. ((Thank you, Harry))
All of that is well and good. Personally, I’m a big fan of action and forward motion. I am convinced that the world has changed, and delaying your quest to find meaning in your life until after you have “paid your dues” is a scam. The delayed gratification of retirement should not be our ultimate goal in life. Finding meaning and doing meaningful work should be things that we strive for at every stage of life.
Now, here comes the “but.”
We want change and we want it now, but I wonder if we pay adequate attention to the timing and costs of acting, particularly when it comes to financial obligations. We are all responsible for our own choices. If you have debts, you have an obligation to pay them back. If you have a child, you have an obligation to provide for them, and so on. There is a tension between the rush to “follow your dreams” and the things that tie us down. How do you know when it’s time to do something new, especially if it means leaving a regular paycheck? How much do you need to prepare before you start? How much should you work to get your financial act together before you venture off to do something entrepreneurial? Should you be debt free first? Should you have X months of salary set aside first?
I have a personal stake in these questions. They haunt me, because I’m still carrying a significant amount of business debt from another entrepreneurial experiment. I’m anxious to get moving with my plans for the future, but I’m not necessarily prepared to take another huge financial risk at the expense of my family. We weathered the last financial storm, and I’m not sure we’re ready for another.
These are some tough questions, and I don’t have the answers. So, I decided to ask others with some experience in these matters. I posed them to writers I respect, especially in the areas of finances and entrepreneurship. I received several great responses, and here are some of the best.
Corbett Barr is one of the brains behind ThinkTraffic and Expert Enough. He works with people trying to get really good at what they love to do and expand their online presence.
How much should you work to get your financial act together before you venture off to do something entrepreneurial?
This is really hard to answer for everyone because there are way too many variables and specific circumstances.
Personally, I waited until I had multiple years of living expenses saved up before I jumped into entrepreneurship full-time. My tolerance for risk isn’t very high, and I wanted to have a cushion in place that would buy me some time and comfort.
Even with the financial cushion, not earning a salary for many months took it’s toll on me emotionally as I watched my savings dwindle. If I had been living on credit, it would have been even harder to make rational decisions.
Should I work to be debt free before I take a big risk?
Again, personally I would have a hard time trying to build a company while in debt.
Should I have X months of salary set aside first?
Not necessarily, but if you don’t have a financial cushion, it might be better to work part-time on your business while still earning enough from a job or freelancing to get by.
How do you balance the need to move forward with the need to meet obligations?
I’m fairly conservative when it comes to finances. To me, obligations and commitments need to be dealt with, then minimized before moving forward. If you have trouble managing your personal finances, it’s not likely you’ll have the skills to manage business finances either (which can be more demanding and complex).
I know it’s not the most exciting answer, but spending the time to dig yourself out of debt first might be worth the lessons, self discipline and peace of mind in the longer term. Starting a business can easily lead to an even deeper debt burden, and you need to be honest with yourself about that.
Another option to consider might be to join a startup as an early employee, where you can earn a salary plus some equity. That way you could enjoy the excitement and learning opportunity of a startup while also getting your financial house in order for future ventures.
James Clear helps people grow their income at Passive Panda and improve their lives at JamesClear.com
Should I work to be debt free before I take a big risk?
Personally, I think you should be debt free before you start your own business. I don’t think I would have started had I not been in that position. There are plenty of success stories about people who started in a mountain of debt (the CEO of Under Armour, for example), but they are only sexy after the fact. The truth is that debt is a big burden mentally. There is enough stress with starting a business, finding customers, and finding your way through the darkness of entrepreneurship already. No need to make it worse.
In the end, you only have one life to live, so for some people it might be better to go for it while still in debt rather than die a slow death working 9 to 5. Luckily, I didn’t have to make that call and I would encourage anyone who has the ability to get their financial situation in order to do so before starting.
Should I have X months of salary set aside first?
There is no magic number for how much to set aside, but I think you should have enough to at least scrape by for 6 months.
Strange caveat: if you have a sizable fund built up before starting, then it’s possible to not feel the same urgency to get customers off the bat. That’s a bad thing. Urgent, but prepared should be the approach.
How do you balance the need to move forward with the need to meet obligations?
I’ll be a little coy with this one. I think moving forward is an obligation. It’s your responsibility to live a life that excites you. Just because the rest of the world settles for average doesn’t mean you have to. Showing your family what it means to follow your dreams is meeting an obligation that many people never achieve. It’s easy for any parent to tell their kids to follow their dreams, it’s tough to show them how to do it. I won’t pretend to have the answers to parenting, but I think there is value in being able to say, “Go after your dreams. I proud that I did.”
After all, what kind of hypocrites are we if we tell the people we love most to never quit on a dream when we keep finding excuses to not follow our own?
There are several others that deserve to be mentioned when talking through these difficult questions.
Chris Guillebeau is one of my favorites when it comes to reminding me that I don’t need to live my life according to conventional expectations. His book, The $100 Startup, is a great resource for making radical changes in your life without huge amounts of risk. I exchanged a few e-mails with him and he was very gracious in his responses. He reminded me that you don’t have to drop everything in order to become an entrepreneur and, in many ways, entrepreneurship is a great way to get your act together financially.
Adam Baker is the core of Man vs. Debt, a site devoted to getting rid of the financial barriers that hold us back and getting on with living our lives. His site is well worth your time, and I wanted to be certain to include it here. Baker wasn’t able to respond to these questions because he’s busy promoting a film project entitled I’m Fine, Thanks, an exploration of people struggling against the expectations of others and their journeys to find their authentic selves. It may stray a bit from the topic of this entry, but it’s also worth your time.
So, where does that leave us? I still believe that there is no real excuse to keep us from moving forward right now. You can get started today on whatever your dreams may be. Do it NOW. The real wisdom in all of this is that there is almost never a true all-or-nothing scenario. We all want our lives to change today – right now, and we can’t stand the commitments and road blocks that stand in our way. We want to make headlines with our miraculous transformation. The problem is that it’s like winning the lottery. It happens, but not to everyone. You can still have the life you really want, but you may have to make progress one step at a time. It’s not sexy, but it still gets there.
Don’t wallow in self pity and do nothing. That’s the path to failure. Get started today on making the changes you need to live your life, even if they are small changes. Sometimes, we have to get our act together and do the hard things in order to accomplish the great things. It may take time and a lot of work, but it’s still in your power to get there. So, what is it that you need to do in order to getting started? Let us know in the comments.
Now, I need to take my own advice and get back to getting my act together.
Here are some rambling thoughts:
I needed to hear this today. I am struggling with the tension of following my dream (seminary) and saving that money for my children’s college funds. Do I do it now or later? The pros and cons can keep me ties up for hours. I am not sure if I am wallowing in self pity by not taking action or being prudent by putting family first.
Love the quote “Sexy after the fact” So true about so much in life. Just seeing the end result is not the same as being along for the whole journey.
Finally, why does life have to be “exciting”? What if your dream is to live a quiet, beautiful life? Seems to me this goes against the “normal” of wanting a life that is exciting, showy, etc. I don’t want to set the world on fire, I just want to be the best version of me there can be.
Thanks, Jill. It’s a tough place to be, to be sure. When I did the seminary thing, my wife worked full-time, we lived in a tiny little apartment with no kids, and my tuition was deferred. When she went back for another degree, I worked full-time. As your commitments get broader, those types of things get more complicated.
Maybe you would feel better about doing a single class or seminar at a time as your schedule allows. It won’t be like full-time, but it would feel like progress.
As for dreams, I find the idea of a quiet, beautiful life to be quite exciting!