Author Topic: Who wants to help change my life forever!?  (Read 6441 times)

James!

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Who wants to help change my life forever!?
« on: April 10, 2015, 03:58:20 PM »
So, I am going to quit my job, I just need some help deciding when and how.

Iím 31, and we welcomed our first child 3 months ago. It has been even more amazing, and trying, than I ever could have imagined. This incredible life change has also become the impetus for additional major life change.

A colleague and I are proceeding towards starting our own engineering design firm. This is happening!

The main question is when. Here is a bit of background on my current life status/financials.

Income (all #ís are gross (gross like financially speaking, not gross like boogers. I love numbers!))
Me: I currently earn ~90k.

Transition into consulting may take a few years, but earning potential in my industry is significantly higher once we are up to speed. For the sake of this discussion let's just assume that once I've transitioned into consulting it will be a successful endeavor.

Wife: SAHM for now, and she will return to work 3 days a week starting in Sept. At PT she will earn approximately 32k.
Other: We have a cool little house that will be on Airbnb for Ĺ of each calendar year, starting 5/1 (see my sig). I anticipate 3-4k/mo over this time period.
From 8/1 on, I will be a property manager for a friend/neighbors Airbnb. I anticipate 600-800/mo from this.

Assets:
I have ~$250k equity in our ďhomeĒ, because this includes the baby house. I anticipate opening a HELOC while Iím still employed and I assume Iíll have access to ~120k.
Otherwise about 80k in retirement accts and 20k taxable short term investments (currently in betterment at 90/10).
Our expenses are relatively high monthly because 1.5 years ago we did a re-fi to a 15y mortgage at 3.75%. So our PITI is $3k/mo.

No other debt outside of mortgage.

Total monthly expenses are ~$5000-5500. We havenít finished our Q1 review yet and having a baby has messed things up a bit. (New gear, relatives visiting, etc.)

Anyway, I didnít intend this to be a full case study, but I wanted to supply enough financials to warrant advice. I can provide more if itís relevant.

Iím tired (no surprise) but more importantly Iím unhappy with how little time Iím spending with my son. I see him for 1-1.5 hrs a day on weekdays. This is making me sad! Iím also just very ready for a change. Iíve been at the same place for 6 years, and unfortunately itís just changing in all the wrong ways. There is nothing particularly toxic or dire, just a manager that doesnít appreciate me, and a culture that supports complacency.

The only work-related reason I donít want to quit right now is that Iíve been leading the same project for over 2 years, and it launches ~7/1. I design orthopedic implants, so my only opportunity to actually attend live surgery and see my work in use will be if Iím still employed here. Otherwise I will miss that chance. So on that Iím torn.

Here are my options as I see them, and hereís where Iím looking for input!

1) Quit right now.
Pros: Immediate time at home. Time to go camping. Time to focus on starting new business. Time. Recharge. Go to my brothersí wedding in June and stay as long as I want!
Cons: Cash flow will be negative until wife starts back to work in August, so weíll eat in to savings. With 120k in heloc itís not a real concern because Iíll easily be able to earn and pay it back, but itís just a step backwards towards FIRE.

2) Quit in August.
Pros: No negative cash flow, anticipated additional 6-8k go in to savings between now and then.
Cons: Trip for brothersí wedding has to be short, because babytime took all my PTO. I am stressed and exhausted and Iíd have to ride this for another few months. Not so sure I can. Less time to focus on starting the business until then.

3) Quit only once the new business is completely ready to go, and potential clients are lined up.
Pros: Most financially responsible, as of august I can anticipate 4-5k in to savings per month. Least likelihood of significant gap in stable income. Also, Iím currently 80% vested in my 401k and on 10/12/15 that goes to 100%. I think the difference is roughly 8k.
Cons: Feels like an eternity from now. Iím having a hard time making real progress on the business while working, because I spend free time either with lil man, or catching up on house stuff, or sleeping.

Regarding PTO, intermittent or full FMLA leave: Unfortunately I've already exhausted all my PTO when he was first born, and intermittent leave is not covered under FMLA, and this isn't an option with my role. I've already asked. As for taking full FMLA leave, I have considered this, but I feel that since I know I am quitting imminently, it would be disingenuous to take FMLA leave now as "parental leave" but knowing I would be focusing on starting a business, and leaving soon after I returned. Also, my employer is potential future client once I'm consulting so I want to maintain the relationship as best as possible.

As for gaps in employment. If I have a hard time getting that first client, or things are slow, I have plenty of other ways of earning income, and I am a resourceful bugger. Iíve already talked to a family friend contractor who would be glad to have me anytime.

Also, health insurance. Weíre on mine now, so if we quit before my wife is working we have to figure something out. Even once sheís back, we may not be able to count on hers. As part time her coverage is free but adding son and I is stupidly expensive ($740/mo).

So Iím asking for input, advice, questions, facepunches, whatever. I value the input this community has to offer.

What Iím feeling is that I have plenty of savings for my age, and I believe I have more than enough earning potential for my financial goals. We are shooting for FIRE on or before turning 45, but the likelihood of my post-fire enterprises providing income are ~100%. The HELOC gives us a short term safety net. My wife is the most incredible human and will welcome whatever I choose with grace and style. She has done an incredible job of pre-emptively focusing on optimizing our spending all on her own and is happy doing it.

I want to quit now, but it seems irrational. Iím good at rationalizing impulsive decisions so Iím looking for impartial assessment.

Man, that was a lot. I hope someone cares (or is bored) enough to respond. 

Cheers!
James
« Last Edit: April 10, 2015, 06:55:21 PM by James! »

Retire-Canada

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Re: Who wants to help change my life forever!?
« Reply #1 on: April 10, 2015, 05:20:19 PM »
How about taking 1 day/week off unpaid? Keeps positive cashflow and you can spend it with your son to recharge your batteries.

See how things go. You can always pull the plug fully if you have to at a later date.

-- Vik
« Last Edit: April 10, 2015, 05:33:58 PM by Vikb »

Mother Fussbudget

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Re: Who wants to help change my life forever!?
« Reply #2 on: April 10, 2015, 05:32:19 PM »
You should arrange to take infant care leave before you quit.  This is unpaid leave - it's like the father's version of maternity leave. Check with your HR person, find out how much Infant Care Leave your company offers... and take it. 

After the leave, return to work, THEN decide if you still want to quit. 

Retire-Canada

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Re: Who wants to help change my life forever!?
« Reply #3 on: April 10, 2015, 05:34:33 PM »
You should arrange to take infant care leave before you quit.  This is unpaid leave - it's like the father's version of maternity leave. Check with your HR person, find out how much Infant Care Leave your company offers... and take it. 

After the leave, return to work, THEN decide if you still want to quit.

Good idea. An unpaid leave of absence let's you come back and earn $$ easily if you need to.

-- Vik

firewalker

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Re: Who wants to help change my life forever!?
« Reply #4 on: April 10, 2015, 05:44:29 PM »
I have never started a business. But everyone I have known or read says to have finances in place to operate at a loss for 3 years. Once you are set with that you can give it a go.

James!

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Re: Who wants to help change my life forever!?
« Reply #5 on: April 10, 2015, 06:52:27 PM »
Hi All,

Thanks for the feedback. Here's some additional info and responses, and I'll update the original post as well.

How about taking 1 day/week off unpaid? Keeps positive cashflow and you can spend it with your son to recharge your batteries.

See how things go. You can always pull the plug fully if you have to at a later date.

-- Vik
This is a great idea. Unfortunately I've already exhausted all my PTO when he was first born, and intermittent leave is not covered under FMLA, and this isn't an option with my role. I've already asked.

You should arrange to take infant care leave before you quit.  This is unpaid leave - it's like the father's version of maternity leave. Check with your HR person, find out how much Infant Care Leave your company offers... and take it. 

After the leave, return to work, THEN decide if you still want to quit.

Good idea. An unpaid leave of absence let's you come back and earn $$ easily if you need to.

-- Vik

Also a good idea! I have considered this, but I feel that since I know I am quitting imminently, it would be disingenuous to take FMLA leave now as "parental leave" but knowing I would be focusing on starting a business, and leaving soon after I returned. Also, my employer is potential future client once I'm consulting so I want to maintain the relationship as best as possible.


I have never started a business. But everyone I have known or read says to have finances in place to operate at a loss for 3 years. Once you are set with that you can give it a go.

I appreciate this, and it's probably great advice. For the sake of this discussion let's just assume that once I've transitioned into consulting it will be a successful endeavor. Once my wife is working again and I income from property management I need to earn very little to be able to continue.

Keep the advice coming!

Cheers,
James

kathrynd

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Re: Who wants to help change my life forever!?
« Reply #6 on: April 10, 2015, 07:10:02 PM »
Congratulations on your baby.

I am always amused, when I hear people say they want to start their own business, so they will have more free time.
If anything, you will find you are working more.

Maybe change your attitude at work, and just slow down?
Get yourself to FI, and then if you want to quit or start your own business, do it then.

Working for family or friends is not recommended.

James!

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Re: Who wants to help change my life forever!?
« Reply #7 on: April 10, 2015, 07:22:24 PM »
Congratulations on your baby.

I am always amused, when I hear people say they want to start their own business, so they will have more free time.
If anything, you will find you are working more.

Maybe change your attitude at work, and just slow down?
Get yourself to FI, and then if you want to quit or start your own business, do it then.

Working for family or friends is not recommended.

If my post implied to you that I think working on my own will be more free time, that wasn't my intention. First I quit, then enjoy a break, then start a business. I will have no problem with the workload needed to thrive on my own, especially because I will be using my time efficiently, as opposed to sitting in meetings and trainings all day! I'll accomplish more in 20 hours at home than I do in 40 at the office.

This is not a daydream fueled by delusion and lack of sleep. :-)  This is capitalizing on market opportunity because I have significant experience, a valuable skill set, an exceptional partner with double the experience and network, and I love a challenge.

As for the second half of your comment, I'm sorry but I couldn't possibly agree LESS! I am driven and passionate, and I want to enjoy the rewards of exceptional performance and hard work. If you're suggesting I cruise, and just work until FIRE (another 10+ years), that's just crazy talk to me. I'd rather work hard, long hours for less pay but be doing it on my own, responsible and rewarded for every success and failure, then work another year at a place where everyone is just "getting through the day".

I hope that makes sense, and if I misunderstood your intentions then disregard my enthusiasm.

-J

totesmahgoats

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Re: Who wants to help change my life forever!?
« Reply #8 on: April 10, 2015, 07:23:45 PM »


I am always amused, when I hear people say they want to start their own business, so they will have more free time.
If anything, you will find you are working more.


This.

James!

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Re: Who wants to help change my life forever!?
« Reply #9 on: April 10, 2015, 07:30:20 PM »


I am always amused, when I hear people say they want to start their own business, so they will have more free time.
If anything, you will find you are working more.


This.
Not that.

kathrynd

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Re: Who wants to help change my life forever!?
« Reply #10 on: April 10, 2015, 07:34:25 PM »
Good luck with whatever you decide James.

As a business owner (with my husband) ..we know, you will be working more, not less.

James!

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Re: Who wants to help change my life forever!?
« Reply #11 on: April 10, 2015, 07:58:25 PM »
Good luck with whatever you decide James.

As a business owner (with my husband) ..we know, you will be working more, not less.

I'll say again, I'm not disagreeing with that! I'm saying I never thought otherwise. I'm fine with lots of time and work.

Also, please consider that while your experience as a business owner is relevant, there are infinite types of businesses, industries and business models, not all are created equal. I know successful business owners who work 100 hrs/wk and others who work 30. I know business owners who make cupcakes for a living and others who have 50 employees, work in tech, and have hundreds of millions in revenue.

I really don't want this to be about if I should start a business. It is happening. It will be hard, it will be wonderful.

Im really looking for perspective on the  different scenarios I'm considering and I appreciate you all taking the time to consider it.

Cheers,
James
« Last Edit: April 10, 2015, 08:01:56 PM by James! »

kathrynd

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Re: Who wants to help change my life forever!?
« Reply #12 on: April 10, 2015, 08:00:54 PM »
No problem.

I just emphasize the time issue, because you stated you are tired of only spending a small amount of time with your son.

James!

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Re: Who wants to help change my life forever!?
« Reply #13 on: April 10, 2015, 08:04:00 PM »
No problem.

I just emphasize the time issue, because you stated you are tired of only spending a small amount of time with your son.

I appreciate that. I will have more control over when I work. I can cover 40 hrs/ wk just during his naps or after he's asleep, and still have time all day for some work and some play. I also will be able to modify my schedule for apts, sick days, fun days without someone else's approval.
That's what I'm looking for!

GetSmart

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Re: Who wants to help change my life forever!?
« Reply #14 on: April 10, 2015, 08:22:25 PM »
I'm voting for option #3!  6 months from now you'll have quite a few extra things that seem to make sense both financially and emotionally (wife working, fully vested, etc). 

Schedule out the next 6 months to get the business set up.  Have everything in place - especially potential clients.  This is key.  You don't want to be sitting around "waiting for the work to show up" or having to hustle days on end just making contacts and drumming up possibilities.  Hash everything out with your partner as to responsibilities.  It will be a much smoother transition if you plan while you still have a paycheck coming in.  Plus it just might make your current job more tolerable, knowing there's an end goal in sight.  Six months is short!  Good luck!

okits

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Re: Who wants to help change my life forever!?
« Reply #15 on: April 10, 2015, 10:31:27 PM »
Your three choices belong on a continuum.  They progressively ask more of you but each one sets you up better for the future.

If it were me, I'd do as much as I could without incurring some kind of physical or mental breakdown.  #3 if you can, if not #2, and #1 if you absolutely must.

Congratulations on your little man.  :) 

Allie

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Re: Who wants to help change my life forever!?
« Reply #16 on: April 10, 2015, 11:24:04 PM »
What an adorable home! 

It sounds like you have a very unique skill set in a very specialized field.  Awesome!  I'm certainly not an engineer and my field pays less and is in less demand than yours, I imagine, but when I quit my job to be a stay at home, as a professional with a narrow focus, it was pretty easy to set up some paying consulting gigs.  I hope this is your experience, too!

If I were you, I would take my parental leave.  While on leave, I would work on the underlying business and spend oodles and oodles of time with my kid.  Then I would return to my job, enjoy the surgery, be a stellar employee, and keep working on the business on the side.  Give it a few months and offer your employer a long time horizon to replace you or some other arrangement where you come on as a consultant. 

Also, in my experience, working during naps or around their schedule isn't nearly as easy as it sounds if you do any sort of work that involves concentrating for any length of time. 

Good luck!

Mother Fussbudget

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Re: Who wants to help change my life forever!?
« Reply #17 on: April 13, 2015, 10:05:29 AM »
+1 to Allie.  You can't feel it's disingenuous to take FMLA leave - it's a right for every employee. 
What you *do* while on leave is your own business. 
I would be SURE to spend any waking hours with your baby - you can't get those hours back. 

You may well decide (as *I* did) that after a month off the work doesn't seem as hard as taking care of an infant.
Also, I would take some pointers from "Six Months Off" (by Hope Dlugozima and James Scott - available from your library). 

Good luck in whatever your future holds for you!

feelingroovy

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Re: Who wants to help change my life forever!?
« Reply #18 on: April 13, 2015, 09:56:29 PM »
I have a successful consulting business in a tech field.

I agree you should start the business. You sound like you'd be a great entrepreneur.

I can also tell you that it took me a good two years to replace my salary, and I vastly underestimated this. We made it without taking on debt but it was very tight and very stressful.

I think it's impossible to imagine the amount of unbillable time and energy you have to spend to set up Every. Single. System.

It's definitely worth it in the end, at least it was for me.  But waiting until August would get you way ahead on putting things into place and ease the financial pressure.

Good luck!

James!

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Re: Who wants to help change my life forever!?
« Reply #19 on: April 14, 2015, 08:48:01 AM »
Thanks everyone for the feedback.

It seems like the universal advice is against option 1. I can accept that. I know I'm not functioning rationally due to major sleep deprivation and just general life transition.

As for option 2 vs. 3, that may be a moot point.

The more my wife and I talk, the more we're thinking she isn't going to go back to work, at least right now. Working part time she would only make $32k year. After taxes, daycare, potentially needing another vehicle, she'd only be really making a few thousand a year. That doesn't seem worth it when we'd both love for her to be home.

So then really it's just a matter of how quickly I can be ready to make the jump. It makes sense to wait at least a few months, and work in parallel on finishing the logistics. Whether or not I wait until an actual contract materializes or not, I'll have to see how I feel in a few months.

My partner and I made an agreement that come 1/1/2016 if we hadn't secured a client yet, we would both quit anyway at that point. So at the longest, I have ~8 months left. Our company allocates the 401k match and profit share based on calendar year, hence the 1/1 date.

Anyway, thanks for listening, and I'm wide open to any further advice!


Cheers,
James

kathrynd

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Re: Who wants to help change my life forever!?
« Reply #20 on: April 17, 2015, 06:48:09 PM »
Thanks everyone for the feedback.

It seems like the universal advice is against option 1. I can accept that. I know I'm not functioning rationally due to major sleep deprivation and just general life transition.

As for option 2 vs. 3, that may be a moot point.

The more my wife and I talk, the more we're thinking she isn't going to go back to work, at least right now. Working part time she would only make $32k year. After taxes, daycare, potentially needing another vehicle, she'd only be really making a few thousand a year. That doesn't seem worth it when we'd both love for her to be home.

So then really it's just a matter of how quickly I can be ready to make the jump. It makes sense to wait at least a few months, and work in parallel on finishing the logistics. Whether or not I wait until an actual contract materializes or not, I'll have to see how I feel in a few months.

My partner and I made an agreement that come 1/1/2016 if we hadn't secured a client yet, we would both quit anyway at that point. So at the longest, I have ~8 months left. Our company allocates the 401k match and profit share based on calendar year, hence the 1/1 date.

Anyway, thanks for listening, and I'm wide open to any further advice!


Cheers,
James

Just to clarify:

So your wife is going to quit  work altogether.
You are going to quit 01/01/16 at the latest...even if you don't have a client lined up.

Braver than me... if everything doesn't pan out, you will find yourself without an income and start living off savings.
Potential recipe for disaster.

Good luck
as your thread title says ""who wants to help change my life forever"
« Last Edit: April 17, 2015, 06:53:28 PM by kathrynd »