Thursday, November 6, 2014

Don’t Succumb To OMYS

I’ve written about acronyms a couple times before:
Now we have OMYS: One More Year Syndrome.

What Is One More Year Syndrome?

I define one more year syndrome as an affliction where one continues to work past the point of it being necessary in the pursuit of more money.
Said another way, someone receiving $20,000 in annual passive income with, say, $19,000 in annual expenses would be financially independent. They don’t really have to march into a job and deal with office politics and wage slavery any longer. They’re free to enjoy their time, no longer needing to trade it away for money.
But this person might choose to stay at their job, continuing to build passive income well past the point of expenses so as to increase their buffer, or margin of safety.
Now, I’m not saying this is a bad idea. It’s definitely nice to have a healthy spread between your passive income and expenses, especially if your expenses vary substantially from month to month or you plan to increase expenditures for one reason or another once you retire early.
But if there’s a decent spread already, you have some liquid capital in case of emergencies, and you have hundreds of thousands of dollars or more in assets working for you, yet you continue to keep working, then you are suffering from OMYS.
If someone is financially independent, or close enough to it to take the leap into the great unknown of freedom, why would someone choose to continue working?
A great question, right? But there’s no real easy answer here.


I think fear is the biggest risk factor when we’re talking about OMYS. If you fear the unknown it’s easy to just stick to what you’re already doing.
“What if the stock market crashes?”
“What if I get sick?”
“What if one or more of the companies I’m invested in cut their dividends?”
“What if I wanna spend more money?”
“What if…”
The thing is this: Life is full of uncertainties. You can plan all day long and still end up with surprises. You can’t quantitatively analyze life. Which is what makes it fun, right?
Risk is everywhere. As an investor, I know this firsthand. And more money can certainly reduce risk. But at what point do you just start living?

Time Is All We Have

Look, time is it. Once you’re out of time, you’re out of life. Time is the most valuable commodity we have, and yet people trade it away so cheaply.
Remember that when you finally find yourself at the end of the yellow brick road, yet want to keep walking in circles. Money is great, but time is far, far more valuable.
If I were a doctor trying to prescribe a medication to alleviate OMYS, it would be this question:
If you were told you only had one month left to live, how much would you pay for another year? Two more years? What about five?
Would a year of life be worth $250,000? What about $500,000? Or all the money you have? After all, once you’re dead that’s it. If you fear the unknown of life without work, you will probably fear the afterlife even more.
I’ll tell you if I were able to extend my life by another year or longer when facing down the prospect of sure death it would be worth any amount of money in the world. Life is beautiful. Time is everything. And I certainly don’t want to die.
So when framed like that, why would you continue to slog off to work for another year or two or three for $50,000 per year or whatever you’re making? It doesn’t really matter what you’re making because those years once passed are gone forever.

Your Worst-Case Scenario

What’s the worst that can possibly happen if you decide to retire early and live off of passive income?
You might miscalculate your expenses, or maybe your passive income doesn’t grow as expected. Maybe the very same day as your last day at work you find out two companies you’re a shareholder in decide to cut or eliminate their dividends.
Oh, no. The world is ending!
Or is it?
I view financial events like this as unlikely. But even if there’s a miscalculation, it isn’t the end of the world.
  • You can always go back to full-time work. Jobs won’t magically disappear off the face of the planet if you need to make more money later.
  • It’s also possible to supplement your passive income with some type of active income. In fact, it’s extremely unlikely that someone possessing the ingenuity to retire extremely early in life will just loaf around and never make another dime for their entire life.
  • A full-time 9-5 (or 7:30-6, like I worked) isn’t the only way to make money. Be creative. Monetize a hobby. Sell stuff on craigslist. Rent a room in your home.
But I find the odds of someone who calculated their moves correctly enough to get to a situation where they’re so financially solvent that they can retire early to somehow end up in a position where they have to go back to work involuntarily very low. However, even if you do have to go back to work, how is that any worse than just staying at work?
Furthermore, proper diversification of a portfolio means one is somewhat insulated from experiencing dramatic income loss even in the face of a dividend cut or two.
I actually view the psychological effects of no longer working a full-time job as a bigger risk than any potential financial pitfalls. For instance, I quit my full-time (and then some) job in the auto industry back in May to pursue writing. I’m truly happier than I’ve ever been in my entire life. There isn’t a synonym for the word happy that truly describes how elated I’ve been with this decision; however, there are potential drawbacks to becoming financially independent (or no longer working at a conventional day job) early in life:
  • You lose that connection with society. I’m a pretty hardcore introvert, so this doesn’t really bother me. But I can see how extroverts might miss the camaraderie at their job. It’s tough to find others that are free during normal working hours, so this can be a bummer if you’re looking for daytime chats or someone to hang out with while you stroll downtown. It can be lonely. I think the biggest counter to this would be to get your significant other on board as early as possible so they can retire early with you. I’m currently working on this myself.
  • Your old routines are gone. I’m not real big on routines. I find them limiting and robotic. However, I can see the benefits of them. They keep you productive and on task. You have a sense of time passing and it keeps you from losing touch. I’ve not really found a regular “routine” per se since moving from full-time work to writing, but I do generally have certain times of day that I write, eat, work out, etc. I’m not strict with it, but having a rough sketch of my day in my head allows my time to flow pretty nicely. But I find old routines very easy to replace with new ones, if you crave routine. However, I also find unstructured free time to be extremely underrated and especially wonderful.
  • You may face resentment. I’ve already discussed my personal experience with this, but becoming a person of lesiure at 40 or 45 years old will almost certainly incite jealousy and/or resentment among those close to you. Be prepared for that.
And bigger setbacks can certainly occur that you might not foresee. But this is true whether you work or not. You could become extremely sick; but you could become sick whether you work or not. And who’s more prepared to deal with a massive sickness – someone who relies on their job to get by or someone who has hundreds of thousands of dollars in assets in liquid assets?
I always laugh at the “You could get hit by a bus!” argument. This was actually very close to being mentioned by an expert that was brought on to discuss my strategy/plan when I was featured on Today. As if someone who isn’t retired early is somehow immune from getting hit by a bus?
Furthermore, if it’s a matter of living more now vs. living more later, what is living? What is important to you? I’ve already decided I’m not delaying gratification, but have you? Moreover, if you get hit by a bus and die, does it really matter if you were saving 40% of your net income or 0%? Does it matter if other people thought you were “living” or not? All that really matters is that you’re happy.

The Time Value Of Time

We all know about the time value of money, right? It’s the concept where the same amount of money is thought to be worth more today than at a later date due to the earning power of that money.
But what about the time value of time? After all, a year of my life is worth more to me today than in 20 years from now for a number of reasons.
First and foremost, tomorrow isn’t promised. I have no idea if I’m going to be alive 20 years from now. I don’t even know if I’m going to wake up tomorrow (I’m keeping my fingers crossed). Therefore, time is worth much more now than in a future that may not occur.
Furthermore, I’m very healthy right now. I don’t know if I will be when I’m 60 or 70 years old. I might get hit by that mystical bus! Therefore, I want to enjoy my time while I’m at my physical peak. Many of the activities I enjoy are free, but have physical aspects to them. I enjoy exercising, taking a stroll down the beach, or exploring new areas. Even mundane daily tasks are much easier when you’re feeling physically great. So I want to make the most of my life while I’m able to.

No Regrets

I look at my own situation. I could have easily kept grinding away at the car dealership, collecting my $50,000+ annual income. Maybe I could have found another dealership willing to pay me even more. I may have given up hundreds of thousands of dollars in potential income by leaving that job behind to write.
But I have no regrets whatsoever.
I didn’t enjoy the work. I found it incredibly stressful. If you can work at something you truly enjoy and get paid for it, then that’s certainly a wonderful position to be in. And I have basically found myself there. I now concentrate fully on writing, and it’s a true blessing. Even if I don’t make as much money at it as I could have if I would have stayed in the auto business, it doesn’t really matter. And that’s because not only am I much happier, but I now have much more time. Or perhaps I’m happier because I have more time?
When deciding whether or not to take this opportunity on, I asked myself just one question: Will I regret not trying it out?
And the answer was yes. So I quit and haven’t looked back since.
Similarly so, I think that’s the big question you’ll want to ask yourself when passive income exceeds expenses, and you’re facing down early retirement. Will you regret not spending your time elsewhere? Will you regret not knowing what could have been? If today were your last day on Earth, are you spending it how you want to?
I often remind myself of the great quote by Paul Tsongas, who retired from the Senate after learning he had cancer:
Nobody on his deathbed ever said, “I wish I had spent more time at the office.”


I’ve already faced my own quasi version of OMYS. I could have kept on working at the car dealership, making my comfy salary, in a routine that was very much the status quo. Or I could have entered the unknown and taken on the opportunity of a lifetime, writing for a living and pursuing my passions. I chose the latter, even though I may have left some money on the table. And that’s simply because time is worth far more than money.
Equally so, once I have enough passive income to cover my expenses I’ll be using that dividend income to pay for my lifestyle rather than needlessly continuing to accumulate assets. I believe my dividend income, once it gets to that point where I can claim financial independence, will increase faster than my spending habits anyway, building a larger buffer/margin of safety as I grow older.
After all, money can always be made. Time cannot. 
If you find yourself in a job that you absolutely love and would probably do for free, then that’s a different scenario altogether. If you get paid to have fun and pursue a passion, then more power to you. However, I find that situation quite rare. Most jobs are a drag, and One More Year Syndrome is extremely dangerous if you let it overcome you with fear.
I challenge you to conquer OMYS by simply letting go of fear. Say goodbye to that job that you’ve been saving so aggressively to escape and embrace your new life of freedom. You worked hard. Enjoy it.
There’s no point in being the richest guy in the cemetery. Once you have enough money to live your life without having to go out and work for more, then you have enough. After all, enough is enough.
Life life with no regrets. You’ll never regret the time you didn’t spend down at the office, but you may very well regret the time you didn’t spend with those you love the most or doing the things you most enjoy.
How about you? Are you dealing with OMYS? Think you will in the future? Have tips to overcome it? 
Thanks for reading.

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  1. I guess I find it sad that it seems like work is such a "bad" thing. I enjoy my job, it is challenging and rewarding. I don't feel like you have retired... you are obviously working to be successful. Great! Good for you! I don't intend to retire...just to change jobs. I do agree that if you are working just to make money that is a problem. Find a job you like and keep working at it.. even if that "job" is traveling around to see the world for example.

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