Cerebro Power

The Sad Truth About What Quitting Your Day Job Will Actually Cost You

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cost quitting day job

 

Introduction

OK the whole point of this blog is to inspire others to do what I just did. That is to quit your full time day job to start an online lifestyle business.

Why?

So you have more control over your time and income. And you have the freedom to live the lifestyle you really want to live.

But I want to keep it as real as possible. I am not going to just focus on all the positives (though there are many) and ignore some of the tough things you will have to deal with in quitting your day job.

Its not ALL good news starting your own business and like anything else there will be some challenges.

One of the biggest difficulties starting on your own after all those years of having an employer is giving up all those extra benefits you may have overlooked or taken for granted.

The reality is typically your employer pays and contributes much more than just your salary.

 

Biggest Losses From Employer

401K Match

Lets take a look at a big loss you will take after you quit your job. That is contributions to your 401k. If you have an employer sponsored 401k that is a big chunk of free money you will be missing out on when you quit.

In my situation the employer matched my 3% contribution with 3% of their own. That might not sound like that much but it quickly adds up. For example in my case I worked at my last company less than 5 years but amassed close to $100 thousand dollars for my retirement from just this one employer.

That was with my contribution and their match combined for almost 5 years.

I have over$300,000 in employer related retirement funds in my 15 years total of working in IT.

Now some of that came directly from my earnings but a lot of it came from employer contributions which is essentially “free” money you get as an employee benefit.

That means I am going to need to figure out my best options for continuing to socking away in retirement funds as I go out on my own. Of course I will never be able to replace the “free” money put in by my employer.

 

Healthcare Cost (big one)

OK this is a huge one. As everybody knows Healthcare in this country is a total confusing and expensive mess. But if you work on your own its even more so!

Again this is another area where employers typically take a large burden off of employees with the expense and hassle.

With my former company they withdrew just under $200 dollars every paycheck (under $400 total a month) to cover my portion of the healthcare coverage costs.

Now this was very good insurance that covered myself and my wife and son. The copay’s were ridiculously low and even with quite a few doctor and specialist visits for my son I do not recall having to pay very much at all out of pocket.

I also do not recall us ever having anything denied to us or being able to see anyone we want (but my wife handles all the doctor stuff).

Now on my own, I am paying about $850 dollars a month just to have insurance. But paying twice as much out of pocket every month than I did with my employer is not even the worst part.

My copays all seem to be much higher and some professionals we were able to see before are no longer available to us.

In other words I am paying more but with less options.

The insurance I had at my company was not even available to us as individuals.

We had to stop seeing at least one specialist as we are no longer covered and I know my regular co pays went from $30 dollars a visit to $70.

The juries still out on the quality we will get but its clear to me that even if you pay a ton of money you can better insurance by being part of a big employer group plan. I am not sure on the details but its likely they get better quality by buying into these big plans that cover all their employees.

 

15% Self Employment Tax

This is something that took me by surprise and I did not even know about. Apparently when we are employees we have taxes automatically withheld called FICA which is Social Security and Medicare taxes.

To make up for that we have to pay the equivalent which is the Self Employment Tax (SEP).

Here is the rub though. If you are an employee your employer is paying 1/2 that tax for you. If you are self employed you have to pay the whole thing yourself!

When your an employee your employer takes out approximately 5%-7% from your paycheck and they pay the other 1/2.

But now being self employed you are on the hook for the whole thing.

Off the top of your gross income you will need to set aside 15% for these self employment taxes.

 

Making it Up in Taxes

As you can see there is a ton of financial incentives you miss out on by quitting your day job.

But do not worry. I still think its the right thing to do and happy myself (so far) for my choice. I just wanted to point all this out because everything I’ve read about online business and entrepreneurship they do not talk about this at all!

I think its better to know everything! The good, the bad and the ugly.

But despite all the negatives there are some huge advantages to being on your own.

I am sure you have heard this before but one of the biggest financial incentives to being self employed is taxes!

We can save a ton of money on our taxes compared to employees.

Now let me get this straight. I am just learning all this myself so I am in no way giving advice here.  I am currently looking for a good accountant myself. (hit me up if you have any suggestions).

I am going to keep this general and only talk about some things I’ve learned so far. In the future I will have a post more in dept as this is one of those things its hard to find good information on for people like us.

Also here is a post from Turbo Tax for the top Write offs for the Self Employed.

 

Here is what I plan on claiming or using as a business expense right now.

  • My cell Phone
  • Car (standard mileage reimbursement)
  • Internet
  • Healthcare Costs
  • Business meals
  • Educational Expenses (books, conferences, courses etc)
  • Some Travel (this is a tricky one but you can write off some of your travel expenses if business is being done)

 

Why Its Still Worth Quitting Your Day Job

OK I pointed out some of the big things you will miss by no longer working for a big employer. And its not just salary.

But I want to make this clear. At least for me, so far it has been completely worth it.

It all comes down to One Word: FREEDOM!!

This makes it worth giving up all those extra financial incentives.

Why?

Opportunity cost.

Your job is stealing the time you could be working on your own business which has no salary ceiling. There is only so much money you can make in your day job no matter how hard you work.

In your own business there is no limit.

But for all those hours you put into your day job (typically at least 40) you are costing your business the time it needs for you to dedicate to its growth.

 

What is your true goal?

If you know what your true goals are and what you want out of life it makes this decision easier.

I made a hell of a salary. But this was the path I was on. The next logical step was to get to my bosses level, then there is his bosses level and then there was the head of our department.

Now it would be very difficult to become the head of my department at a company the size that I worked. But lets say I 100% focused on my job and everything fell into place and I worked my way up to the head of my department in 7 years.

Here is the problem with this plan starting on step 1.

To move up I would first set my sights on my direct bosses job.

He has the title of Director. I would have had to work really hard just to get to this next level.

But guess what I realized?

I did not want his JOB!

He works even more hours and has more stress than I do. My goal is to get MORE free time not LESS! By knowing that my goal was not just to make more money but also have more freedom I already knew that this was not going to work for me.

 

And lets take a closer look at the money situation.  I do not know exactly how much my boss made but my guess is its not that much more than I was making.

Lets stretch and say he makes a $50 Grand more then me. My guess is its really more like $25-$30 Grand more.

Well I would just need to make that much more in my own business. If my clients pay me $2,000 grand a month that is $24,000 a year. So with only 2 new clients that’s an extra $48,000 a year!

I can make up the difference of our gap in pay with only 2 new clients. Trust me 2 new clients in my Internet business is a lot less work than what my poor boss goes through. And its also a lot less time and effort than it would take for me to work my way to his position.

And here is a big one. No matter how hard my boss works (and his boss and his boss for that matter) and how many promotions he gets, he is extremely limited in how much more he can make. He will hit his ceiling very soon.

I wanted to get off of that path. I want to remove that ceiling.

 

The Paper Prison

Most people in professional careers, including me for many years, think a certain way. They think if I just work harder and put in more time I will get promoted and make more money.

But that is a dead end way of thinking.

What is the purpose of making more money if you do not have any personal time?

You eventually get trapped into working more and more hours, not living the lifestyle you want or having the time to do things you want to do.

I realized that once I made enough to pay my bills, take care of my family and live pretty comfortably money was no longer my main motivation factor. Now it has become time freedom. The ability to make money on my own terms so I have the time to lead the life I want.

Its not just a blind chase to make more money. My priorities now go in this order.

  1. Make just enough money to cover the comfortable cost of living for myself and my family.
  2. Create the lifestyle I want. After I make enough to cover my costs I want to make sure I am spending my time the way I want to. Doing the activities I want to do.
  3. After the first 2 are met then I focus on making as much money as possible. But I do not want to sacrifice number 2 to just blindly chase more money with no purpose.

#3 ‘making as much money as possible’ really mostly serves #2. The more money you make the more options you have. The more options you have the more ability you have to create the lifestyle you want.

It also makes sense to make more money to invest and grow and provide more security for you family. After reaching a certain level of wealth the option to donate to charities important to you becomes a possibility.

You just have to make sure that as your business grows you put systems in place so that it does not suck all of your time.

If #3 starts to interfere with #2 its time to reevaluate.

One of my first posts was about the importance of defining your ideal lifestyle before even getting started.

 

Conclusion

I hope you found this article helpful. I want to be straight up and share some of the negatives about quitting your job.

Its not all rainbows, butterflies and unicorn farts.

 

But also let you know (that so far) it has been totally worth it for me. As I write this I am sitting in a comfortable coffee shop just a few minutes from my house.

Its a rare rainy (shitty) day in Los Angeles. A couple of weeks ago it was another crappy, rainy day but I still had a day job. So I had to climb out of bed and go out in that rainy weather,. I had to drive almost 2 hours on those horrific LA freeways just because we are supposed to physically be at work. It was annoying as hell!

Today I woke up to the sound of rain. And I thought to myself “you know, another 1/2 hour of sleep sounds really good!”

Then when the time was right I got up and drove 15 minutes to work from a local coffee shop.

That is freedom. That is lifestyle control. And that is what makes all this worth it.

 

D-Day is Coming; Countdown To Quitting My 6 Figure Job For Internet Lifestyle

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Introduction:

Well the moment of reckoning is almost here! On January 23rd 2017 I will be giving my 2 weeks notice to my company, ending a 15 year career in high level IT.

 

I originally wanted to do this in the first week of January 2017 but things were delayed a bit because of some family issues that came up and I did not want to complicate my health insurance.

 

That health situation will be resolved this week so that will no longer be a hindrance (excuse).

 

It was actually a good thing because it motivated me to go out and buy personal health insurance for my family now.

 

Since I already paid the $850 dollars for the first month of February 2017 that is another helpful kick in the ass to quit on my deadline since I would be throwing away the money if I do not (I have full family coverage through work).

 

Here is the email from Blue Shield who happily accepted my dough.

 

 

I Am Nervous As Hell

I am in a really good position. Even though I am quitting a job that pays me about a $150,000 dollars a year, I have over a years worth of living expense saved up.

 

Not my retirement, not my investments, but actual cash set aside just for this purpose.

 

On top of that, even if I make the minimum in 2017 that I made in 2016 in my Internet business, that should cover at least 6-8 months of living expense. And of course I should earn way more in 2017 since I only worked 4-5 hours a week on my business because of the full time demands of my job.

 

But guess what? Even with all of that preparation I am still nervous as hell about quitting my job!

 

Overcoming the Fear of Quitting

Its tough to overcome fear. I think its the number one reason most people don’t even attempt to pursue their dreams.

 

Even logically knowing and understanding this it is still very difficult to quiet that voice that is whispering “What the hell are you doing!?”

 

So I have come up with some strategies to deal with this fear and make sure I follow through for myself.

 

The Examples of Others

Looking at what others have done that were in a similar position that I am in now helps. For every excuse I have their are examples out there of people who have overcome them.

 

For example someone who has inspired me to believe I can do this is Gregory Ortiz. You can find a brief bio on him here. But the bottom line is for every excuse I could come up with he already overcame something similar.

 

 

Lack of knowledge and expertise? He started in SEO and online business after I did.

Family to support? He also has one son like me (and I believe a wife at the time of starting)

Lack of funds? Greg was manager of Bed, Bath and Beyond and also living in NYC, one of the few places more costly than Los Angeles. I do not know how much he made at his job but I am guessing he did not save over a $100,000 in cash before quitting his job like I have.

 

The point of all this is no matter what excuse you make for yourself that you cannot do it, there is someone out there that has proven that excuse wrong.

 

Here are some of the main fears/excuses I had to overcome.

 

I cant risk quitting because we are a one income household

Now is there anyone else out there that was successful online in this same position? Of course there was. I found people who not only had a one income household but had a much bigger family to support than I do. I only have one son and one wife to support.

 

I cant risk quitting because I am not (_fill_in_the_blank) enough

Whenever I feel lacking in something. Lets say, I am not good on video how can I be successful online? I find someone out there that proves that wrong. There are of course plenty of people who make money online and do not ever appear on video.

 

Questioning your age? You will find teenagers, people over 50 and every age in between who have all made the successful transition to an online lifestyle business.

 

Using Rationale to Defeat Fear.

When fear creeps in it almost always imagines the worse scenario. What happens if you quit your job and all of a sudden your Internet business stops doing well?

 

What happens if the cost of having a business is to much and you do not make it?

 

What I have found works for me is to battle back these voices with strict rationale counter arguments.

 

For example I would counter to myself when having these doubts, “Look I have made x amount of money in my Internet business just working on it 4-5 hours a week so I just think how much I can make when I am working on it 4-5 hours a day!

 

Another rationale argument is imagining if the worse case scenario did come true how would it be dealt with.

 

The truth is if I absolutely bombed after one year of working on my own Internet business and went through all my savings I could always go back to work.

 

Now the job I have now is probably the best one I ever had and I will likely not get that exact job back. But I could get a very similar job with very similar pay at any time.

 

So the worse case scenario is a year from now I’m at another similar, but not quite as good job. That is a pretty low risk to take in exchange for one year off from work and giving myself a chance to pursue my dream lifestyle.

 

On the other hand I could just keep the comfortable job I am in now for the next 20 years, living unfulfilled knowing I never took that shot of going all in for my Internet Lifestyle business.

 

 

 Strategic Self Pressure

One of the strategies I have used is to put myself in a position where its going to be very uncomfortable for me if I do not follow through and quit.

 

I did this by putting social pressure on the decision by not only sharing with family and close friends my plans to quit but what month I planned on quitting. This is a really good way to hold yourself accountable.

 

By telling my family and close friends enthusiastically about my plans they pretty much bring it up every time I see them. No one wants to be that person that tells people something they are going to do and than does not actually do it. It is kind of embarrassing and you will fight extra hard not to be in that position.

 

I also put pressure on myself by already putting things in place for after I quit date that cannot be undone.

 

For example I ordered and paid for Private Health Insurance to cover my family starting in February. If I don’t quit my job by that chosen date than I just threw away over $800 dollars.

 

Another useful tactic was choosing an exact date to quit. Before I would just say around the time I was going to quit. I finally narrowed down to the month. But what I noticed was there was ALWAYS a reason to extend it.

 

So I chose an exact date of January 23rd to give my 2 weeks notice. I even circled it on my calendar at home so I look at it every single day.

 

Even since I chose a specific date there have been more reasons that came up for me to postpone the quit date. But since I chose an exact date now, I have committed to that date regardless of the circumstances and will be following through.

 

 

Following My Path To Quitting Your Job

So what can you take away from this for yourself if you to plan on quitting your full time job and turning your part time Internet business into your full time passion?

 

Well first take note that I am very conservative with this. I planned this for over a year and like I mentioned have saved up a years worth of living expenses for me and my family. Even if I somehow failed miserably I should still not have to go back to work for at least one year.

 

So many people that do this are not as conservative about it as me. Part of that is my personality and the fact that I live in a very expensive place and I am the sole income provider for my family. If you have a low cost of living or no one depending on you it may make sense to be more aggressive with this.

 

Here are my suggestions to get going.

 

STEP 1: START YOUR BUSINESS NOW!

The first step I recommend you do is start an online side business today if you do not already have one! Do not wait to quit your job before starting your business. Use those evenings and weekends to validate your ideas and start generating profits.

 

I do not mean spending weeks trying to come up with a brand name, website etc.. All you need to be in business is a service or product and a customer. Go out and get that first customer!

 

STEP 2: OPTIMIZE YOUR DAY JOB

Next you need to optimize your day job while you still have it. So much time is wasted in a typical white collar work day, especially when you work for a large company like I do. Get obsessive about efficiency and getting the most impactful work done with as little time and effort as possible. This will not only free up more time for you to work on your side business but make you way more effective when you eventually go full time on your own.

 

STEP 3: EARN in YOUR SIDE BUSINESS

Now start earning money in your side business and be sure to keep all the money from your online profits separate from your personal or day job finances. Use only your business income to pay for your business expenses. You will than start to get a clear picture of how much profit you can expect from your side business (total revenue – cost) See if that is enough to live off of.

 

STEP 4: SAVE

Save like crazy! Again I am conservative and saved a years worth of living expense for myself and my family. Since we live near Los Angeles one of the most expensive cities in America and we live a pretty decent lifestyle that came out to over a $100,000. If that sounds like a lot of money do not let that discourage you. Much of that savings came from my side business while I was still working my day job. So if you have no savings start making money in your side business, save it and quit when you have a certain amount of months living expenses saved up.

 

STEP 5: SET DEADLINES

Make deadlines and stick to them! Give yourself an exact deadline to quit your job. A mistake I made was making my plan to quitting my day job to vague. Since there was no set date it kept getting delayed. There was always a reason to put it off a little longer. Now there is a set date of January 23rd 2017 and there is no getting around it. When that date comes its going down!

 

 

Conclusion:

If you are in a similar position I hope you found this article helpful. I am not going to lie. Even will all of this preparation, I am still in fear of quitting my job. It is the best job I have ever had and the most money I have ever made. But when I reflect on my life every time there was a big decision like this (especially career wise) I have always had some fear.

 

And every single time it has worked out. Every single time I have looked back and said, “Why did I not do that sooner?”

 

And the answer has always been fear.

 

Fear is a very powerful thing. Often we are more motivated by fear of loss than excitement for gain. The question you have to ask yourself is, “What is on the other side of this fear?” Is it the life you have always dreamed of?

 

After all you know what life will be like if you stay where you are.

 

I do not know about you but I am very excited to find out.

 

 

The Most Important Decision That Will Determine Your Success Or Failure Online

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internet business fails

I remember when I first started learning about this Internet Lifestyle and the people who were having success in it.

 

At first there was a ton of skepticism if what they were saying was actually true.

 

You mean these people were able to quit their jobs, remove the ceilings on their income and have total control of their time while the rest of us were stuck slaving away at our 9-5 jobs all day?

 

After accepting that what (most of them) were saying was true and even more, then came the next hurdle.

 

I started to think that there must be something special about these guys and gals that they were able to have so much success online.

 

Maybe these are just really unusually smart and talented people?

 

But after meeting many of them in person at conferences, I came to another realization. Most of them worked really hard for sure, but for the most part they were pretty much like most of the people I have known my entire life. Some were smarter and more talented than the average person and some not so much.

 

But the more and more I thought about it the more I realized that there are some common reasons why these particular people were more successful than most but ONE stood out above the rest.

 

What separates the people who have achieved their goals of a successful online business and the ones who quit and never accomplished them?

 

Well like I said there could be plenty of factors depending on the situations but the key here is THEY DID NOT QUIT.

 

Situations are different for everyone which could contribute to faster or slower success but no matter what the situation is, one thing remains true for everyone; if you quit at something you will never succeed.

 

It really is that cut and dry. If you quit you will not succeed. If you have tried and tried but still cannot make this Internet Business thing work, that is still not failure.

 

Failure only comes when you have given up because only then do you guarantee yourself no chance of success.

 

 

Reasons Why We Want To Give Up

Comparing Ourselves to Others

One of the reasons why we want to quit Online is when we compare ourselves to others. Maybe you know or see a person who is having success online in a similar niche as you but you are still not able to make it happen.

 

You begin to question yourself. Why is not working for me like it did for this person? Are they just smarter than me? Do they know some secret formula that I just do not have?

 

One of the problems with comparing yourself to people you see who are having success online is its not an accurate or fair comparison.

 

Often times you are seeing their end success outcome, while never experiencing the struggles they had at the start. In other words, in the past they may have had the same or even more problems getting good results then you are having now.

 

At some point they overcame those struggles and now you are just seeing the fruits of their success but you did not see how difficult it was for them to get there.

 

People online are typically slow to share their difficulties but quick to share their victories. This is natural as people want to feel smart and crave recognition for their accomplishments.

 

But this also sometimes gives the impression that success is quick and easy and if you do not have good results right away your not going to be successful.

 

That is why I started this blog now before I am making crazy money and before I have even quit my day job. I want to share the struggles, not just the success.

 

Hopefully a year or two from now I can say that I’m wealthy and living the life of my dreams online but you will be able to go back and see that is was not always like that.

 

I want to give you a quick example of the problem with comparing yourself to others.

This is Gregory Ortiz story:

I first came across him when he appeared on the SEO scene as a teacher for Alex Becker Source University. This guy was absolutely killing it!

 

He used to be the manager of a Bed and Beyond in NYC. After discovering Internet Marketing and working his tail off he had tremendous success in a very short amount of time. So much that he became a recognized teacher of Internet marketing.

 

Here is the thing. While I was inspired by Gregory’s story it actually discouraged me a bit as well. You see Gregory discovered Online Marketing after me. Not only that he was making $40,000 GRAND a month after just 6 months of getting started!

 

I had been at it for a year already and was NO where near that (even now I’m not).

 

But this discouragement was very short lived. After beating myself up a bit I quickly got over it. He has a different story than I do. His path to quick success should not be compared to my slower one.

 

I mentally shifted his stories impact on me to where it should be. An inspiration! I realize that its very possible to accomplish this and I just need to work as hard as Gregory and my time will come as well.

 

Feeling Like A Failure

Another reason people quit is because they feel like a failure or are embarrassed because lots of time has passed and they have not had the results they wanted yet.

 

If you are like most people you are probably your own harshest critic. You do not want to add to this pressure by telling all of your friends and family about your plans on building an online business.

 

Look lets be real friends or not, there are A LOT of haters out there. Even the folks who love you and want whats best for you sometimes subconsciously do not want you to kill it online because that would make them feel a bit jealous or inadequate.

 

The last thing you need when your struggling in the beginning and dealing with your own internal dialogue is to have someone else close to you throwing more shades of doubt.

 

Besides, why would you listen to the advice of anyone who has not achieved what your goals are?

 

If you wanted to get six pack abs would you listen to your buddy with a pot belly or the fitness trainer who already has the exact abs you want?

 

Same is true here. People who have never tried to make a dollar online will tell you up and down that it wont work.

 

Listen to the people who have actually succeed at what you are trying to accomplish. Most, if not all will tell you that they did not have success their first time out.

 

Even if your family and friends have the best intentions its best to downplay what your doing online until you have started having some success. If you show to much enthusiasm they might constantly ask you about it which may discourage you at the start when you have not hit your traction yet.

 

 

What Your Doing is Not Working

One way to guarantee bad results is to continue doing tactics that have been shown not to work. The great thing about the Internet and technology is you can test things and usually for a cheap price.

 

I never get those people who insist something does not work when they only tried one way of doing it. If something is not giving you the results you want the lesson is: Do not quit, change tactics!

 

Applying Kaizen To Your Business

There is a Japanese philosophy called Kaizen. It basically means: Working towards constant, continuous improvement.

It is ‘getting better at getting better’. Instead of just randomly trying things, you can put something in place and then make tiny tweaks constantly trying to improve to perfection. In this way you can eventually reach maximum potential for your business and profits.

 

Kaizen philosophy works very well in Internet business because as I mentioned before its usually pretty cheap to test new changes.

 

So for example you could create a new product and throw up a funnel selling that product. Kaizen would keep you busy as you continue making small tweaks every day with the goal of incremental improvement. The sales page copy, the auto-responder, the product, its really endless what you can test, tweak and improve on.

 

Putting Things In Perspective

Lets say you worked part time on your Internet business and for 3 months you saw little to no profit. In fact you even lost money.

 

Now another 6 months go by and your still nowhere near where you want to be. Now you have spent over a thousand on your education and tools.

 

You start to question where this is worth it and if you should just quit. Another few months go by and now its been over a year. So one year of giving up precious free time and spending your own hard earned money with not a ton of money to show for it.

 

But here is the thing. You DO have something to show for it! You have knowledge that you did not have 12 months ago when you started. You have 12 months worth of knowledge that gets you closer to your goal!

 

Really think about this. Even if it took you 2 years to succeed wouldn’t it be worth it?

 

After all a college degree takes about 4 years and can cost between $20,000 and $100,000! And trust me, after 4 years of hard work and thousands of dollars that does not even come close to guaranteeing you a job.

 

Compare that to starting your own Internet Business. Some people see success in the first 6 months but even if it takes you 2 years to start making money that’s less than a college degree and with a way bigger upside.

 

Typically people get a college degree after 4 years, then start at the very bottom of some company and take another 5-10 years working their way up the corporate ladder until they finally make good money. With good money comes long hours and giving up all your time and freedom to a boss.

 

With an Internet business the gold at the end of that rainbow is no boss, complete time freedom and unlimited ceiling on the income you can make.

 

Trust me.  If you are passionate and focused on any niche in the online business world and you work at it every day for 2 years, you should not only be successful but be one of the most knowledgeable people out there on that subject.

 

So in conclusion. No matter how discouraged you get. No matter how long it takes.

 

The real secret to succeeding in your own Online Business is. DONT. EVER. GIVE. UP!