First Person: I Cashed in My Pension to Start My Own Business

Yahoo Contributor Network

After working a government job for 10 years I recently decided to walk away. On December 31st 2011, I waved good bye to people I'd known throughout my years on the job. To many my decision seems irrational and unstable. I received a lot of surprised and dumbfounded stares.

Some people might find it crazy but I decided to withdraw my pension at the age of 34 in order to start my own business. I received $30,000 in pension funds after a 10% penalty. I calculated that if I quit my job and let the money sit until I became eligible I would only receive $386 per month.

Therefore the cash out option appeared to be more logical. After all the $30,000 was an investment in my future. It was also more money than I could make in 6 to 9 months on the job I walked away from. I was bringing in $41,600 after taxes.

After receiving my pension I paid three months of car payments, car insurance, paid my utility bills, and stocked up on necessities for my home. Since I have a mortgage payment of $1,812, I calculated that in order to maintain it I would have to make at least $62 per day in my new business.

I calculated that as long I was ahead on bills maintaining them would not be very hard to do.

In addition to my business I also have a part-time job that I have worked for 6 years on the weekends. I calculated that this job would continue to supplement my business income. Therefore, this would allow me to not drain my savings account to pay my mortgage.

It has been almost 4 months and so far things are going well. I am maintaining my lifestyle modestly and building my business in the process. I am enjoying having control over my daily schedule and not having to work the 9-5 in a job that I hate.

If worse comes to worse I can fall back on my education and search for the familiar stability most people become complacent over. As for now I would rather take the risk and strive to be a well-paid entrepreneur then to drag myself into a job that just pays my bills.

I don't regret walking away from my job. I am happy that I was brave enough to take the risk that many are afraid to take.

*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.

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