I really appreciate how clearly you broke this down, Paul. Your way of analysing and framing ideas always sticks with me.
Here’s how I think about my own leap capital:
I first told myself I’d quit for a year to slow down and spend time with my aging parents after twenty years abroad.
But deep down, I probably knew I wasn’t going back.
Health issues, colleagues passing away, and my parents getting older all reminded me that “more money” wasn’t making life freer.
I’d spent four years studying to become an engineer and building that version of life, so it felt fair to spend the next four building something new and more aligned.
My takeaway from your essay is that the story we tell ourselves gives us emotional permission. It’s how we can hack the system, turning “not ready” into “ready enough.”
If we’re already making up stories to feel safe, then the fastest lever isn’t changing the numbers. It’s changing the beliefs behind them.🥳
I leaped in 2021, but after 20+ years in corporate life. My three rules of thumb were: 1) No leap before being debt free 2) Passion project replaces >40% of my annual salary while I am employed full time 3) Corpus which is 25-30x of my annual expenditure (based on FIRE principle).
When I took the leap, the first two conditions were fulfilled - which was a sufficient safety net to never go back to a full time job. The third condition was fulfilled 2-3 years AFTER I went solo, but it all worked well.
P.S: Already had life and medical insurance to protect the fort.
It's interesting to see other perspectives on this one!
I quit my job in 2016 without a real plan. I was pretty much debt-free other than the payment on my truck at the time. I had already paid off student loans and was making a great salary for my age (which was hard to leave). I was able to sell my truck and pay off that loan, so I think debt-free was where I felt safe enough to jump. I also started my journey abroad in Australia on a working holiday visa, so there was the safety net of being able to get a job where I was going that made me feel more comfortable too. I had a bit of savings—I'm not sure how much exactly, but it was definitely less than 10K CAD.
Your reference points are super helpful and interesting! My experience is that the discomfort around taking the leap is mostly the uncertainty about the exact runway and the lack of awareness of options in case of worst-case scenarios after it runs out. I would also add that being aware of my skills (and past earnings from them), as well as my social capital (distribution network, friends, family), has dramatically decreased my worries and created a clearer focus on the main quest
I had about $300k in 2013 when I happily "cut ties" from corporate and veered off into the unknown.
"Ability to afford patience" is the way I looked (and still look) at it. You familiar with the Discover-Defend Axis? Gotta operate in "discover" mode versus "defend" mode to pursue your own path creatively.
So leap capital entails not just financial capital but also:
- career capital (e.g. skills, professional network)
- social capital (e.g., to what extent do your close ones support your unconventional path, or not? dependents?)
- psychological capital (e.g., how long can you tolerate the uncertainty and perceived status hit of searching, trying and failing?)
- anything else? Maybe self-awareness capital? I've seen people cut ties who were rich in the other capitals, but fanciful dreams that they weren't designed to fulfill and ultimately lose patience.
I love that you have included "and an accompanying story" to your definition of what leap capital is. The story might be the most important part of the capital equation. If you know why you're pursuing a new way of making money and its a compelling enough narrative for you then the rest of the details seem to take a backseat in importance, or at least carry less discouraging weight. For me the attraction to the story of entrepreneurship was always the activating and permission-driving force. Somehow the money has always worked out in its wake. I never had to leap from traditional work, however, so I might not be in the category of folks you are addressing here.
I think an interesting thing I've seen is that more people are getting in their head that they "should" do their own thing. But don't have the positive story surrounding it.
Didn't see any mention of access to health care insurance as part of the analysis. Husband is a financial planner and has found that health insurance tied to employment is a big barrier to making a leap. Helps if your partner has health care insurance.
True yeah this does seem to be an important one though I’m always shocked at how few people realize there are massive subsides if you have lower income and how many alternatives exist. I’ve been uninsured for two years and also on five different state plans. Some state plans do suck. But it’s not as scary as people make it out to be. It’s just basically a tax, which is a % of income based on federal law. This is speaking as someone with chronic health issues too.
No we finished buying our home March 2020 and then got married in July 2020, so I didn’t have to worry about proof of income for buying our house. That was a very odd time to move and get married for the obvious reason.
^^ Totally agree with this one. Especially for those living in the US where Healthcare is .... well. It was a major consideration for a while and now I've come to place where I just factor it in as another expense and count myself lucky for not needing special medical care that would cost a lot. It also helped that I did all my check-ups and specialist visits while I still had my FT job :)
Loved this one - I think the different forms of Leap Capital is a great idea.
For me it was finding 2 people who were working as freelance consultants in my area of work. I worked under them, they brought me in as a subcontractor on projects and they mentored me.
Seeing up close how their lives worked (and how much free time it opened up) but how they were still earning "good enough" money and were "well respected" made keeping my regular job seem silly.
I really appreciate how clearly you broke this down, Paul. Your way of analysing and framing ideas always sticks with me.
Here’s how I think about my own leap capital:
I first told myself I’d quit for a year to slow down and spend time with my aging parents after twenty years abroad.
But deep down, I probably knew I wasn’t going back.
Health issues, colleagues passing away, and my parents getting older all reminded me that “more money” wasn’t making life freer.
I’d spent four years studying to become an engineer and building that version of life, so it felt fair to spend the next four building something new and more aligned.
My takeaway from your essay is that the story we tell ourselves gives us emotional permission. It’s how we can hack the system, turning “not ready” into “ready enough.”
If we’re already making up stories to feel safe, then the fastest lever isn’t changing the numbers. It’s changing the beliefs behind them.🥳
I leaped in 2021, but after 20+ years in corporate life. My three rules of thumb were: 1) No leap before being debt free 2) Passion project replaces >40% of my annual salary while I am employed full time 3) Corpus which is 25-30x of my annual expenditure (based on FIRE principle).
When I took the leap, the first two conditions were fulfilled - which was a sufficient safety net to never go back to a full time job. The third condition was fulfilled 2-3 years AFTER I went solo, but it all worked well.
P.S: Already had life and medical insurance to protect the fort.
Inspiring to see real life examples of leap money. Where can I find the recorded talk with Ali?
will post eventually!
Love the term! I totally know what you mean about the power of story when making a transition!
It's interesting to see other perspectives on this one!
I quit my job in 2016 without a real plan. I was pretty much debt-free other than the payment on my truck at the time. I had already paid off student loans and was making a great salary for my age (which was hard to leave). I was able to sell my truck and pay off that loan, so I think debt-free was where I felt safe enough to jump. I also started my journey abroad in Australia on a working holiday visa, so there was the safety net of being able to get a job where I was going that made me feel more comfortable too. I had a bit of savings—I'm not sure how much exactly, but it was definitely less than 10K CAD.
Yeah if I had debt I dont think I could have mentally done it either
looking to connect with more founders out there..hi!
Paul, excellent and inspiring. Gunter
Your reference points are super helpful and interesting! My experience is that the discomfort around taking the leap is mostly the uncertainty about the exact runway and the lack of awareness of options in case of worst-case scenarios after it runs out. I would also add that being aware of my skills (and past earnings from them), as well as my social capital (distribution network, friends, family), has dramatically decreased my worries and created a clearer focus on the main quest
I've found a lot of people time-bound the leap and then write down the steps theyd take to get back to where they are now
Ohh hell yeah, that's a really good one! Sounds like reverse engineering the future
I had about $300k in 2013 when I happily "cut ties" from corporate and veered off into the unknown.
"Ability to afford patience" is the way I looked (and still look) at it. You familiar with the Discover-Defend Axis? Gotta operate in "discover" mode versus "defend" mode to pursue your own path creatively.
So leap capital entails not just financial capital but also:
- career capital (e.g. skills, professional network)
- social capital (e.g., to what extent do your close ones support your unconventional path, or not? dependents?)
- psychological capital (e.g., how long can you tolerate the uncertainty and perceived status hit of searching, trying and failing?)
- anything else? Maybe self-awareness capital? I've seen people cut ties who were rich in the other capitals, but fanciful dreams that they weren't designed to fulfill and ultimately lose patience.
Yeah I love that framing. It took me about a year after quitting to move away from defend, realizing i need d wandering time.
I love that you have included "and an accompanying story" to your definition of what leap capital is. The story might be the most important part of the capital equation. If you know why you're pursuing a new way of making money and its a compelling enough narrative for you then the rest of the details seem to take a backseat in importance, or at least carry less discouraging weight. For me the attraction to the story of entrepreneurship was always the activating and permission-driving force. Somehow the money has always worked out in its wake. I never had to leap from traditional work, however, so I might not be in the category of folks you are addressing here.
I think an interesting thing I've seen is that more people are getting in their head that they "should" do their own thing. But don't have the positive story surrounding it.
Agree that the story is the most important thing!
That's the irony of ironies that anyone would consider doing their own thing because it's becoming so many other people's thing.
Didn't see any mention of access to health care insurance as part of the analysis. Husband is a financial planner and has found that health insurance tied to employment is a big barrier to making a leap. Helps if your partner has health care insurance.
True yeah this does seem to be an important one though I’m always shocked at how few people realize there are massive subsides if you have lower income and how many alternatives exist. I’ve been uninsured for two years and also on five different state plans. Some state plans do suck. But it’s not as scary as people make it out to be. It’s just basically a tax, which is a % of income based on federal law. This is speaking as someone with chronic health issues too.
I had healthcare through my husband. We’d also closed on a home 9 months before I leapt, so I didn’t have that to worry about.
meaning you sold it?
No we finished buying our home March 2020 and then got married in July 2020, so I didn’t have to worry about proof of income for buying our house. That was a very odd time to move and get married for the obvious reason.
glad you got locked in at a nice interest rate haha
And before house prices went up 37% in my area
^^ Totally agree with this one. Especially for those living in the US where Healthcare is .... well. It was a major consideration for a while and now I've come to place where I just factor it in as another expense and count myself lucky for not needing special medical care that would cost a lot. It also helped that I did all my check-ups and specialist visits while I still had my FT job :)
Yeah. I think mentally people just hate paying it out of pocket. Europeans pay much more for healthcare. Just taxes not directly.
Loved this one - I think the different forms of Leap Capital is a great idea.
For me it was finding 2 people who were working as freelance consultants in my area of work. I worked under them, they brought me in as a subcontractor on projects and they mentored me.
Seeing up close how their lives worked (and how much free time it opened up) but how they were still earning "good enough" money and were "well respected" made keeping my regular job seem silly.
thats a great example: will add this one as "smooth off-ramp" or something!