Replacing a Crappy Job
There are really only two things you can do with a crappy job: tolerate it or replace it. Happily, it's a fact that the crappier the job is, the easier it is to replace.
When people think of replacing a crappy job, they automatically think of getting another (hopefully less crappy) job. I'd like to suggest a combination of three alternatives. Then I'll work through some numbers to show that my suggestions aren't as impractical as you're initially likely to suspect.
Freelance or Casual Work
Unless you're a natural hustler, it's pretty tough to put together enough income in freelance or casual work to replace a good job. Replacing a crappy job, though, is a lot easier because you're already facing low pay, unreliable work, and unreasonable demands.
Go ahead and look at all the usual suspects—temporary work, seasonal work, and so on—but the point is not to replace one crappy job with another. Give special consideration to freelance work doing something that you really enjoy, even if you won't earn as much. The fact is, you can replace the job even if your freelance work falls well short of replacing 100% of the income. That's because it's expensive to work at a job.
Having a job (whether crappy or not) means that you have higher living expenses.
- Transportation is the first large expense that most workers face. It's thousands of dollars a year if you own your own car, and hundreds even if you take public transit or just ride with a friend and kick in for gas.
- Childcare is another huge expense, unless you don't need it or can get it for free.
- Food often costs more. Even if you don't eat out for lunch, you're still likely to spend some extra for lunches (hardly anyone brings leftovers every single day) and you're likely to spend some extra for dinner as well—picking up a convenience item when you're especially late or especially tired.
- Clothing is another expense that's usually higher for people with crappy jobs. Some require that you dress nicely; others put additional wear and tear on your clothing. A worker probably ends up paying more for laundry as well, one way or another.
- The biggest (financial) cost of having a crappy job probably comes just from having to spend specific hours working. That increases all your expenses, because there's less time for shopping around and less time for doing things yourself.
- Somewhat arguable are all the expenses that aren't really directly related to having a job, but that somehow seem justified when you're spending too many hours a day at a crappy job: vacations, booze, cable TV, blood pressure medicine, etc.
Whether you allow that last category or not, I think it's inarguable that it costs money to keep a job. It may not cost more to keep a crappy job, but it doesn't usually cost a lot less.
Finally, it's possible to replace a job with capital. (This is what your retirement savings are intended to provide—an income stream that doesn't depend on your job.) But replacing a crappy job is much easier than saving for retirement:
- Retirement investments need to be secure for the rest of your life. "Crappy job replacement" investments can be pretty risky and still be more secure than a crappy job—after all, it might disappear at any time.
- Retirement investments need to keep up with inflation. Crappy-job-replacement investments can fall well short of that and still grow faster than the meager raises that you get at your typical crappy job.
Besides that, just because you've replaced your crappy job with capital doesn't mean that you can't keep looking for a good job. (You can do that during retirement too, but your retirement plans need to allow for the fact that at some point you may no longer be able to work at all.)
So that we'll have something specific to talk about, I'm going to imagine a particularly crappy job. I hope none of you have jobs that are actually this crappy, although lots of people have jobs that are almost this crappy.
In my example crappy job the poor working schlub only makes minimum wage ($7.25 an hour is the current US minimum wage). Further, the job isn't full time, the guy only gets 30 hours a week on average, and only has work 50 weeks a year. Of course the job provides no benefits. Somebody with an income that low isn't going to be paying much income tax, but FICA will take 7.65% off the top
Annual income: (30 x 50 x $7.25) – 7.65% = $10,043
That's our first cut at what you'd need to replace, but it's actually a lot less than that, because of the spending reductions that go along with replacing the crappy job.
Just $20 a week toward gas for your car pool comes to $1000 a year in work-related transportation costs. That brings us down to $9000.
Buying an occasional lunch out and an occasional convenience food item could easily come to $20 a week. That's another $1000 bringing us down to $8000.
Lump clothing, laundry, and all the other extra expenses that you're stuck with because you're at work and can't shop around or do stuff yourself and call that another $1000 a year, bringing us down to $7000.
Still, reduced expenses only go so far. You need some cash. That can come from freelance or casual work (as long as you're in control of your schedule, you can still seize these cost savings), but I'd like to put in a plug for replacing a crappy job with capital.
If we were trying to provide an equivalent retirement income we'd need to follow the 4% rule, which would mean that we'd need $175,000. Fortunately, as described above, we don't need nearly as much to replace a crappy job, because the crappy job is already a risky proposition.
I took a quick look at some risky investments. The top dividend-paying stock in the S&P 500 is yielding over 10%. That stock may be even more risky than a crappy job, but if you invest in ten or twelve other of the top dividend payers, you can get an average yield of 7% at a much more moderate level of risk. That would let you replace $7000 with just $100,000 in capital.
Now, $100,000 would seem completely out of reach if you were trying to save that much out of your earnings from a crappy job. But that's not what you're doing. What you're doing is replacing your crappy job with a combination of reduced expenses, whatever you can earn from doing work of the non-crappy variety—and income from capital.
The income from capital will be minimal at first. But think of it this way: $100 in capital will replace one hour per year of crappy work. Over time you can stash away a good number of those hours. And once you're no longer working a crappy job, you'll find there's really no need to hurry.
A good job offers reasonable compensation in exchange for a reasonable amount of time and effort. What makes a job crappy is usually the pay being unreasonably low or the time and effort required being unreasonably high. The result is that a crappy job is easy to replace. If you can't replace it with another (better) job, replace it in pieces. Replace some by doing for yourself things that you used to have to pay for. Replace some by doing freelance or casual work. Replace some by selling things that you make. Replace some by giving up any expenses that you used to justify on the grounds that someone who worked as hard as you deserved a few luxuries. And, of course, replace as much as you can with a little capital.
Best of Wise Bread