Author Topic: Case Study: Year Off or Keep Working?  (Read 3378 times)

minerstache

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Case Study: Year Off or Keep Working?
« on: December 31, 2015, 01:01:45 PM »
Life Situation: Married, 50, 2 adult children self sufficient, Full-time employment in IT. Live in US.

Gross Salary/Wages: ~$150k ($130 base + incentive based on company performance)

Pre-tax deductions: 401k- maxed for 2015+, HSA for 2016- $2500 for 2016 for Lasik eye revision

Taxes: est 25%. Married, filing jointly

Current expenses:

Mortgage- paid.

Utilities/HOA- paid by DH

Vehicles (2)- paid

Auto insurance- paid via payroll deduction from my employer for DH and I.

Medical/Dental insurance- paid via payroll deduction from my employer for DH and I.

Pet Insurance- $55

Gas/auto- $50

Groceries/Dining Out- $500

Fitness/Gym- $89

Clothing- $100

Travel (misc)- $200 I have to fly family to us if I want to see them so I pay for 3 tickets per year for them to come visit. Plus misc travel expenses w/DH

Misc- $200 A catch all in case I missed something

Car repair $50 per month. 99 Toyota w/ 301k (yay) miles. Will switch over to DHs Toyota in 2017 w/160k miles

Expected 2017 year-off total expenses: ~$25k per year

Assets: 401k- $255k. Projected savings based on 2016 YNAB budget ~ 70k so if all goes as planned 255 + 70 by end of 2016.

Liabilities: No debt, no mortgage (paid)

Specific Question(s): Married for a year to an amazing man who FIREíd from the finance industry in his 40s (now 55). I work full time in IT. As you can see from my current assets Iíve had a less than mustachian lifestyle (plenty of excuses; co-signed on DD vehicle which she defaulted on and I paid off, I could go on and on but at the end of the day just face-punch worthy excuses) 

Iím burned out w/my job and feel like a hamster on a treadmill sitting at a PC 8 hours a day. Itís not a hard job just mind-numbing. Iíll call this a mid-life crisis of sorts. Iíve been working in IT for ~ 30 years and while Iíve loved it at times there are more important things than work such as spending more time with my husband. I didnít think about this as much before my marriage.

Iíve been thinking of taking a year off to ďre-setĒ; take road trips with the husband, cook healthy meals, de-stress, etc. Then after the years up, start doing IT contract work. Iíve estimated my yearly expenses as ~ 25k which includes health insurance.

If itís relevant- my husband has sufficient income to support both of us. However I feel it would be unfair of me to expect him to make up for my previous lack of savings.

Q1: Would you recommend I keep working full-time vs taking this one-year break in 2017, while saving as much as possible w/goal of possibly FIREing faster?

Q2: How much will I need to FIRE given projected annual expenses of $25k?

Thanks in advance for any feedback!

MDM

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Re: Case Study: Year Off or Keep Working?
« Reply #1 on: December 31, 2015, 03:37:27 PM »
Iíve been thinking of taking a year off to ďre-setĒ; take road trips with the husband, cook healthy meals, de-stress, etc. Then after the years up, start doing IT contract work. Iíve estimated my yearly expenses as ~ 25k which includes health insurance.

If itís relevant- my husband has sufficient income to support both of us. However I feel it would be unfair of me to expect him to make up for my previous lack of savings.

Q1: Would you recommend I keep working full-time vs taking this one-year break in 2017, while saving as much as possible w/goal of possibly FIREing faster?

Q2: How much will I need to FIRE given projected annual expenses of $25k?

Thanks in advance for any feedback!
The rule-of-thumb answer to the last question is "twenty-five times total annual expenses" so ~$625K.

As to the larger question of what you "should" do - have you discussed this with your husband?  It is possible that he married you because he likes spending time with you and would prefer that over having you locked away in a cubicle all day.  This is related to the question of whether married finances should be "yours vs. mine" or "ours", and we're admittedly in the "ours" camp.

minerstache

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Re: Case Study: Year Off or Keep Working?
« Reply #2 on: December 31, 2015, 04:24:49 PM »
I have discussed both my job burn-out and potentially taking off work for 2017 and he is supportive of that plan. He's looking forward to us being able to travel without being limited to my amount of vacation time.  He really doesn't comment much on my plans to work beyond that year. When we married we never merged our finances so everything is still separate and so far it's worked okay for us. I pay my personal expenses out of my account but have picked up his medical/dental and auto insurance since its heavily subsidized by my employer and a lot less than what we was paying. However, he pays for all house related expenses, the majority of travel and dining out, etc. To take the year off I'd be funding my expenses for that time from funds I will save in 2016. Heck, with what I can save in one year I could take 3 years off. I think I'm secretly hoping that the year off turns out so great he doesn't want me to go back to work full-time.

Since I work from home and he's also home most of the time maybe he considers this "together" time, though I can't really go anywhere as I'm tied to the computer and phone all day so to me it's not really quality couple time.

Dee18

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Re: Case Study: Year Off or Keep Working?
« Reply #3 on: December 31, 2015, 04:27:09 PM »
Take the year off. 

mxt0133

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Re: Case Study: Year Off or Keep Working?
« Reply #4 on: December 31, 2015, 05:37:09 PM »
Do you have any savings outside of your 401k?  If not then I think your estimate of being able to get by on 25K a year is not realistic, considering you have had your career in IT for 30 years and have been making roughly that amount for some time now.

You say you want to spend more time traveling with your husband, have you taken into account how much that traveling is going to cost you?  I can't imagine your expense to stay at the same level given some of your expenses are fixed.  Unless you expect your husband to fund your traveling.

Since you keep your finance separate from your husband, then I think you and your husband need to be crystal clear on expectations when you take the year off and after.  It seems like you are hoping he will enjoy spending time with you so much that he will decide to support you for life after your year off.  That is how your responses sound like to me.

soupcxan

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Re: Case Study: Year Off or Keep Working?
« Reply #5 on: December 31, 2015, 06:18:40 PM »
Where is property tax and homeowners insurance in your list? Can a 160k car really be maintained for $50/mo?

I too think 25k is aggressive if you have not actually lived on it before, especially if you now have 40 hours a week of extra free time for travel/hobbies.

minerstache

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Re: Case Study: Year Off or Keep Working?
« Reply #6 on: December 31, 2015, 07:12:29 PM »
soupcxan- Taxes and homeowners are covered by DH at this time. I do believe the 160k car will be easy to maintain. The $50 per month is for the 301k car! All I've had to do this past year are oil changes, air filter, and battery.

mxt0133- no other savings outside of my 401k. I have not always had a high salary. For 30 of those years I spent 10 years in the military; then entry level IT jobs. Good point on costs for traveling if I'm not working.

Realistically, due to the existing job burn-out, I think a year off, followed by IT contract work might be the way to go. That way I can take on projects for a fixed length of time; 6 months, 3 months, etc. This would be offset if the job required extensive travel though.  Working contract work would possibly give me more flexibility to travel with the husband and add some variety to the work as well. While not going back to work would be nice it's not realistic nor would I not expect to contribute financially to the relationship.

Thanks for the feedback


muckety_muck

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Re: Case Study: Year Off or Keep Working?
« Reply #7 on: December 31, 2015, 09:13:40 PM »
You are married, with two incomes currently? all income is yours together... if you take a year off (which sounds great, if you have been working for 30ish years!), let the spouse cover the bills. It shouldn't be 'his vs. hers' income.

Good luck!

Shiny

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Re: Case Study: Year Off or Keep Working?
« Reply #8 on: January 01, 2016, 06:24:37 AM »
After twenty years in Social Services I took a year off. I'm back at work now, but it was one of the best things I did. 😊

use2betrix

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Re: Case Study: Year Off or Keep Working?
« Reply #9 on: January 01, 2016, 10:49:11 AM »
Well, you have a long ways to go for fire. You're maybe half the way there at 25k of expenses.

As mentioned, it seems like this is a conversation you need to have with your husband. If he would like you around more, and can easily support both of you to be retired, then why keep working if you don't want to? He's your husband, there is no "his/mine" unless it was specifically discussed and such prior to becoming married. Other than that, you can of course take a year off, but at your current rate you still have probably 5+ years of more work.

Don Jean

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Re: Case Study: Year Off or Keep Working?
« Reply #10 on: January 02, 2016, 05:12:29 AM »
Check out this article, which I believe is salient to some or all of your considerations.

http://livingafi.com/2015/08/04/taking-a-gap-year/

minerstache

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Re: Case Study: Year Off or Keep Working?
« Reply #11 on: January 02, 2016, 11:22:41 AM »
Great article. Spot on for me. Thanks!