I posted a case study summer of 2016 and then again this June, but now I have a specific question; namely "Can I transition to becoming a novelist starting in December 2019 while still being financially responsible and pursuing FIRE??"
Stats
Assets:
Home: $200,000
Retirement: $138,000
Cars (2): $17,500
Cash Reserve: $12,500
Misc Home Items, Checking Acct, etc.: $5,000
Total Assets: $373,000
Liabilities:
Mortgage: $130,000
Student Loans: $58,000
Car: $8,000
Total Liabilities: $196,000
Net Worth: $177,000
Monthly Income: (all net)
$3800 (my attorney job, no benefits - I work for a small office)(extra withholding for state/fed to account for my writing income)
$2300 (her accounting job, she now puts 20% into 401k with a 3% match and also takes out her own health insurance before net)
$500 (my writing/novel income, the amount fluctuates month to month, but has been around $500/month for the past year)
$500 (her car reimbursement payment from her work)
$7100 total net income per month
Monthly Expenses:
Student Loans $1,000 (making double payments)
Maxing IRAs: $916 (this has already been done for the year)
Mortgage $880
Groceries $800
Health Insurance $750 (this is for me and the kiddos; my wife is insured through work)
1 Car $500
Daycare $350 (1 child, before and after school)
Medical/Braces $250 on average
Blow Money $240 (each of us gets $120 per month)
Eating out $160
Gas/Oil $150 (tops - our jobs are close and my wife's mileage is paid by work)
Utilities (electric/gas/water) $150
Cable/Internet $125
Auto Insurance $100 (2 vehicles, about $600 every six months)
Clothes $100 (mostly for the kids)
Gifts/Charity $100
Phone $75 (my wife's work pays for her phone)
Life Insurance $50
Total Monthly Expenses: $6,696
You can see that we have about $404 left most months, although it's a lot more these last three months of the year as we've already maxed out our 2017 IRAs.
So here is the crazy part; I LOVE writing fiction and I'd LOVE to do that as a career sooner rather than later (yeah so would a lot of other people, I know!) I know a part-time job will also be necessary, at least for the first few years post-transition. I need to figure out if even even a conservative plan is doable. Also, I need to talk more with my wife. She knows I love writing, and she's proud of my first book, but I am keeping all of this $ part inside my head for now.
My Plan:
I keep kicking ass at my attorney job through December 2019 (another 26 months from now)
In the first half of 2018, I release a second novel. This should spike my writing income. Right now, I've earned over $17,000 from my first novel. It's almost 2 years old. I need to see if Part 2 does as well.
If it does well, I start taking this plan MUCH more seriously.
By December 2019, the car payment will be GONE. The daycare will be GONE. The student loans should be down to around $38,000 if I keep the double payments going from now to then. I could always chop the payments down to "regular payments" from December 2019, moving forward.
Our investments, assuming decent returns, and putting around $20,000 per year into them, should be around $200,000 in December 2019.
Net Worth should be around $300,000 with only debts being $38,000 in student loans and a mortgage.
THEN in December 2019, I ask my boss to let me work part-time (20-25 hours), maybe for just $40,000 or so, and clear $2,000 net per month. I'd have to make up the difference of the $3800 net I make now, so $1800. I wouldn't be able to earn $1800 extra per month writing, BUT I might be able to earn $1000 per month writing, so a net loss of $1300 (because I already earn $500 writing now) as compared to my current situation. And I would sell it to him by stressing that I current make $90K. If I go PT for $40K, then that gives him $50K to hire a newbie attorney, so he'd have 1.5 attorneys for the price of old me.
How I would close the gap: $1300 gap - no car payment ($500) - no daycare ($350) and making only regular student loan payments ($500) would do the trick, in theory. And maybe a few years from then, I'm able to keep growing my writing income and jettison the part-time legal job. And really there are other places in the budget to chop too.
So what does everyone think? If you were passionate about a field, would you push toward something like this? Is it reckless? Naive? And yes I have to talk to my wife, but first I need to get this all fixed in my head. I also need to wait until Part 2 comes out and see if it does well.
*I wanted to add that my plan still has us maxing IRAs each year. In theory, this investment could be reduced or eliminated if we were willing to just leave the stache alone from December 2019 forward. Using Rule of 72, the $200,000 should double twice, once at age 56, and another time at 66, so $800,000 in 2039 dollars plus Social Security. However, I would much rather continue putting money into the IRAs to give us a lot more wiggle room in our future, at least for a few more years.*