Author Topic: Reader Case Study - Education & Career Change PLUS FIRE by 40?  (Read 810 times)

MoneyMouse

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Topic Title: Reader Case Study - Education & Career Change PLUS FIRE by 40?

Life Situation:

Canadian, 27 F, single, no dependents (wanting a cat - ideally a dog, but FT work), desperate to get out of HR and into something that 1) pays better and 2) isn't HR.

Gross Salary/Wages:
$51,418.04
($1,970.04 bi-weekly)

Deductions (bi-weekly)
CIT $257.61
CPP $91.08
EI $32.70
Pension (matched by employer) $206.26
Union Dues $24.63
Benefits $57.07

Other Ordinary Income:
None, but I'm looking to add a side gig walking dogs using Rover and develop a Patreon for DnD resources.

Total Monthly Income: $2,829

Current expenses:

**NOTE: This is an approximate. I am now in my 6th month of living on my own for the first time and my spending has kind of stabilized recently.**

Living   $1,338.00
Rent      $750.00
Food      $300.00 (working on lowering this - this also includes eye drops [recovering from eye surgery], home cleaning products and small misc items I get from convenience or grocery stores)
Insurance   $75.00
Cellphone   $35.00
Gas      $60.00
Electricity   $60.00
Laundry   $20.00 (we have coin-laundry in my place. This is an approximate.)
Internet   $38.00
   
Expenses   $461.00
Entertainment   $75.00 (movies, board game cafes, escape rooms)
Netflix      $11.00
Spotify      $10.00
Other      $50.00
Gym      $60.00
Coffees   $35.00
LTSS      $60.00 (LTSS = Long Term Saving for Spending, basically a catch-all for gifts or larger purchases)
Vacation   $100.00
Eating out   $50.00
YNAB      $10.00 (favourite budgeting app)

TOTAL SPENDING: $1,800 (-$1, but let's round up)

Assets:
RRSP:   $6,154 (invested in Tangerine's Equity Growth portfolio)
TFSA:   $4,038 (invested in WealthSimple's Aggressive Growth portfolio)

'07 Honda Fit

*Note: Iím not sure how much is actually in my Pension. I work for the public service, and would love to stay with them until I FIRE, but Iím not married to that. Since, well, Iíll be FIRE-ing and I wonít stay with them until the age Iíd have to be to access it. Question: is it worth

Liabilities:
None (though my Fit is kind of a liability in that it seems to be requiring more and more maintenance)

NET WORTH: $10,200~ (varies according to market - my current plan is to put all my savings into my RRSP and apply my tax return to the TFSA)

Specific Question(s):

I have several questions which I'll separate out below.

One: How can I keep my job, career change and still save some money?

I am hating my job and industry. I work in Human Resources and thought all throughout high school and university that it was my jam. I like people, I enjoy motivating them, I enjoy studying them and I enjoy business.

Or at least I thought I did.

Iím in the public service and I am hating my work. I used to be on the strategies side of things working on engagement, programs and so on and, while it still sucked, it was better. Half a year ago, I took a developmental assignment into HR Operations and I freakin' hate it. The sheer amount of inane detail that I have to manage, combined with the huge volume and insane pace, are not at all my speed. I also can't go back, because since the start of the assignment, my base position has changed significantly. It's no longer the job I used to have.

I also took a look and my earning potential in HR and in the government are so dismal, it would take me 30+ years to retire if I were to spend all 30 years at the highest earning rate and with the same expenses.

My primary financial goal is the "FI" in "FIRE". By my calculations, this would come at $850,000 saved (assuming at $30,000 annual spend - a higher number than my current spend, but best to be conservative).

That said, I have been considering going back to school part-time (evenings and weekends) for a Business Analyst Certificate.

I really enjoy needs assessment, requirement assessment and bridging communication gaps between groups. The times my job has been the most enjoyable have been when I feel like I'm the one interpreting what two groups are saying to each other and bringing them onto the same page.

I also miss learning and I feel like going back to school would be fun. Most of the base courses of the certificate really appeal to me and sound like topics I would enjoy.

Business Analysts in my area earn on average in the $65-75k a year range. The low end is about the same as what I earn now and the high end is in the low $100k/year range.

That said, the education would cost $6,000 in tuition and likely more including books.

I am going to ask my employer if they would support paying for a few courses and possibly giving me a few days off to handle the school work. That said, I doubt they would pay for many if at all. The government I work for is operating out of a deficit and they have not been supportive of me in the past. They may in fact discourage me because I face performance issues in this job that is a horrible fit for me.

I am thinking I will split my savings 50/50 between putting some into my RRSP and some towards an education fund.

My questions are as follows:
  • If youíre a Business Analyst, can you tell me about your average day?
  • Do you have any strategies for "bucking up and kicking ass" at work while I hate it?
  • Do you think my 50/50 RRSP/education plan is sound?

Mostly, I want to do this, but I'm feeling scared that I'm just going to end up back in a job that sucks, that I hate and that I fail at. I joke that 90% of why I want to FIRE is so I can get a rescue dog (and then another one or two) and spend all day with them, but that's probably 75% of why I want to do it. 25% (and sometimes it feels like 100% of why) is so that I don't have to drag myself through a day where I feel like I'm drowning in work and sucking ass at it despite doing my best.

...think I just had a bit of a breakthrough with that...

Two: My FIRE plan - is it realistic/doable?
I anticipate needing $750,000 as my FI number. I hope to retire by 40 (if not sooner) and live until I'm 100 (all my grandparents and extended family have died before 100, so I will likely follow suit). FIRECalc (using all default settings) gives this an 82% success rate. Good 'nuff for me, as I will be earning money throughout my early retirement and will also likely reduce my spending as I age. This also only takes into account my staying single, which I hope not to be the case.

With my current assets at $10k, I would need to save about $4,750 a month every month until 40 to get there. Right now, I don't even make $3k before expenses.

I plan to House Hack by age 35, which would reduce the amount of expenses (and ideally actually make money) I spend on living. I am not adverse to also leveraging that to own several rental properties.

I also plan to start a side gig walking dogs using the Rover app (anyone have experience with that?) and hope to turn a DnD DM hobby into a Patreon/blog/ebook side gig as well.

I am currently looking into small things like beer money sites and Kijiji flipping to fund a few other small purchases (coffees, eating out, etc) so I can eek out more savings.

But do you think I could FIRE by 40?

I'm honestly feeling sort of... trapped and hopeless. The job situation doesn't help, but my financial situation isn't making me any more confident either.

Three: Am I just overthinking this?
Maybe it's my recent corrective eye surgery, but I have, like, 20/10 hindsight.

If only I had gone into Computing Science, I could have been making mega-bucks right now. If only I hadn't bought into my mom's crazy cult-like "find yourself" courses for $5k in my first year of University I could have done better (I feel like that's where it all started to go downhill). If only I hadn't taken my first job where it was so boring I ended up on the internet all day. If only I hadn't bought IKEA furniture new when I knew how cheap it was on Kijiji.

I know retiring at 40 is still early, and still better than 90% of the people I know. But I feel like it's so hopelessly far away and so hopelessly impossible given my current salary.

Help?

reeshau

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Re: Reader Case Study - Education & Career Change PLUS FIRE by 40?
« Reply #1 on: July 30, 2018, 02:53:17 PM »
While you do have some issues here, I think you have assumed / rounded yourself out of FI.

My primary financial goal is the "FI" in "FIRE". By my calculations, this would come at $850,000 saved (assuming at $30,000 annual spend - a higher number than my current spend, but best to be conservative).

Current expenses:

**NOTE: This is an approximate. I am now in my 6th month of living on my own for the first time and my spending has kind of stabilized recently.**

Living   $1,338.00
Rent      $750.00
Food      $300.00 (working on lowering this - this also includes eye drops [recovering from eye surgery], home cleaning products and small misc items I get from convenience or grocery stores)
Insurance   $75.00
Cellphone   $35.00
Gas      $60.00
Electricity   $60.00
Laundry   $20.00 (we have coin-laundry in my place. This is an approximate.)
Internet   $38.00
   
Expenses   $461.00
Entertainment   $75.00 (movies, board game cafes, escape rooms)
Netflix      $11.00
Spotify      $10.00
Other      $50.00
Gym      $60.00
Coffees   $35.00
LTSS      $60.00 (LTSS = Long Term Saving for Spending, basically a catch-all for gifts or larger purchases)
Vacation   $100.00
Eating out   $50.00
YNAB      $10.00 (favourite budgeting app)

TOTAL SPENDING: $1,800 (-$1, but let's round up)

So, $30k is not just more than you spend now...it's 50% more.  That's more than a margin of safety.  And you have done a smart thing, separating your needs from your wants.  You are spending $21,600 total, and you have a basic spending level of just $16k.

Two: My FIRE plan - is it realistic/doable?
I anticipate needing $750,000 as my FI number. I hope to retire by 40 (if not sooner) and live until I'm 100 (all my grandparents and extended family have died before 100, so I will likely follow suit). FIRECalc (using all default settings) gives this an 82% success rate. Good 'nuff for me, as I will be earning money throughout my early retirement and will also likely reduce my spending as I age. This also only takes into account my staying single, which I hope not to be the case.

$750k supports $30k of spending by the 4% rule.  But, given the step above, you need just $540k to support $21,600 or $400k to support $16k of spending.  I see the lower level as a potential target because you talk openly of working during FIRE; you could set it up that you have basic expenses covered, and work for your wants--it would be a natural way of throttling expenses and income.

With my current assets at $10k, I would need to save about $4,750 a month every month until 40 to get there. Right now, I don't even make $3k before expenses.

Here, you are literally saving $750k--as if you are socking it away under the mattress.  But with 13 years before FI target, and 60 years to live after that, you should be investing in sensible index funds to allow your money to grow with you.  Starting with $10k, investing at an 8% for return for 13 years, you would need to contribute $1,950 per month.  Still beyond your means today, but much closer--and certainly within reach for a Business Analyst job.  You would only need $1,400 a month to support your basic budget.  While that's not a place you would want to be for 13 years, you could technically do that now.  (this is using your categories, but does not include large capital expenditures, such as car repair / replacement, emergency fund, house payment, etc.)

In terms of career, it sounds like you liked your old job.  Is HR the problem, or is government HR the problem?  Do you think you might have a chance to reset your expectations in a different environment?  Maybe a startup company, where the environment is more dynamic and the rules a little looser than a union environment?  A jump to a new employer could be a way to recharge without a tuition bill.

Not that a business analyst position is a bad way to go, either.  You talk about tuition assistance--is there anything you qualify for as part of your union membership?  Maybe a reskilling program, or annual support amount?  Given the uncertainty, I would suggest you save up for your tuition, and do not go into debt for it.  Cutting back your wants by 50%, and focusing your savings, could get you there in a year.  If you are making this large an investment, I would not suggest splitting your money into retirement and education:  focus on this, get it over, and you can make up for retirement investing with your fat paycheck.

That's not to say you should give up on your pension.  In the US, anyway, once you stop contributing, you are out.  A pension, and a public one at that, is a safer investment option than many people have access to today.  Take it while you can get it; it doesn't really fit in with an FI plan, but it's a great backstop.
« Last Edit: July 30, 2018, 03:03:31 PM by reeshau »

MoneyMouse

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Re: Reader Case Study - Education & Career Change PLUS FIRE by 40?
« Reply #2 on: July 31, 2018, 07:42:51 AM »
Thank you so much for your comments and feedback, reeshau!

While you do have some issues here, I think you have assumed / rounded yourself out of FI.

So, $30k is not just more than you spend now...it's 50% more.  That's more than a margin of safety.  And you have done a smart thing, separating your needs from your wants.  You are spending $21,600 total, and you have a basic spending level of just $16k.

That's true. Thank you for pointing that out.
I have a tendency to assume the worst and then go doom-and-gloom from there.

Looking at things from a "needs vs wants" perspective definitely helps. I've been looking at my TFSA and feel like I can make that my "FU" fund - it would cover 4 months of living and give me an out if I find my mental health deteriorating at work.

Quote from: reeshau
$750k supports $30k of spending by the 4% rule.  But, given the step above, you need just $540k to support $21,600 or $400k to support $16k of spending.  I see the lower level as a potential target because you talk openly of working during FIRE; you could set it up that you have basic expenses covered, and work for your wants--it would be a natural way of throttling expenses and income.

Another good point.
I've been considering looking into becoming a fitness class instructor (but I want to lose my excess weight first, because I believe in leading by example) and making dog walking/visits a side gig as well. I could see downshifting to those as my "work" after I reach $540k for sure.

I think perhaps to give myself milestones, I should aim for $540k first, and then $750k from there.

Quote from: reeshau
Here, you are literally saving $750k--as if you are socking it away under the mattress.  But with 13 years before FI target, and 60 years to live after that, you should be investing in sensible index funds to allow your money to grow with you.  Starting with $10k, investing at an 8% for return for 13 years, you would need to contribute $1,950 per month.  Still beyond your means today, but much closer--and certainly within reach for a Business Analyst job.  You would only need $1,400 a month to support your basic budget.  While that's not a place you would want to be for 13 years, you could technically do that now.  (this is using your categories, but does not include large capital expenditures, such as car repair / replacement, emergency fund, house payment, etc.)

Ha ha! This is why I am not an accountant. Oh, dear.
I am definitely investing them in index funds and plan to switch to Vanguard at some point in the near future as well, which I think would have better returns than Tangerine as well as be cheaper on management fees.

Combined with the point you made above about the $540k mark, you've lifted my spirits considerably. Thank you.

I have a tendency to lose hope and revert to wasteful and self-destructive behaviours (overspending, overeating, over indulging, etc) when I feel like something's an impossible goal.

Quote from: reeshau
In terms of career, it sounds like you liked your old job.  Is HR the problem, or is government HR the problem?  Do you think you might have a chance to reset your expectations in a different environment?  Maybe a startup company, where the environment is more dynamic and the rules a little looser than a union environment?  A jump to a new employer could be a way to recharge without a tuition bill.

I think HR is somewhat the problem, but mostly it is the way in which my section of the public service is going. I'm not entirely comfortable sharing many details online, to be honest. On one hand, I think the way they're going is fantastic - it'll definitely be the update and change in the way HR is handled that will help the bottom line. But as a temporary salary employee (as most of our HR employees are, strangely) I'm not guaranteed anything - my job could be gone by September.

Another problem is the directive by which my salary was set. I was desperate and feeling worthless (see my notes below) when I was offered the job and didn't know I could negotiate with the government. I entered at at least two steps lower in salary what I should have asked for - and that 100% determines the earning ceiling I have. I was, in no small way, fucked over when I agreed to my current salary. If I had known more about how setting compensation goes in government, I would have pressed the issue to get more money and it would have set me up for success - but as-is, unless I leave the government and come back to "reset" my salary, I'm capped at a very low earning rate no matter what position I end up.

I did have an interview for a start up with that dynamic and loose environment but unfortunately wasn't selected. But the feedback from my application was also positive, so there's that.

That said, I honestly don't like HR as a whole. I had a different perspective of it and I've now worked HR in non-profit, pseudo-public and public service sectors. I'm not sure private industry would make a large difference.

I have applied to an entry-level BA position with a private company, citing my aim to complete a BA Certificate. That competition is still in progress, but we'll see how it goes.

I honestly believe I've developed anxiety through trying to make HR as a career fit. I took 6 months of disability off my non-profit job and two weeks' from this government job. I can't hack the administrative shit of HR. I'm strong in the programs side, but too much of HR is paperwork to allow me to progress into a job I would actually enjoy - I'd have to suffer through too much paperwork and "giving your due". I am unwilling to put myself through any more mental health issues to try to adhere to a mistaken career choice. Not when there's a $6k program that stands to earn me more money and connect me with a career I'd actually like.

Honestly, HR work has gutted my self-esteem and my perception of myself and my skills. In every other arena - creative writing, karate, drumming - I'm skilled and competent. But I wake up on Monday morning and I feel like I'm doomed to make a fool of myself and do nothing but get berated or blamed. It's not worth it, in my mind. $6k is a small price to pay for happiness. Or at least not soul-crushing anxiety.

My strengths of being strategic, big-picture and conceptual are not at all suited for the tiny-detail-orientation and neurotic nature of HR. I think it's just become a very bad fit, ha ha!

Quote from: reeshau
Not that a business analyst position is a bad way to go, either.  You talk about tuition assistance--is there anything you qualify for as part of your union membership?  Maybe a reskilling program, or annual support amount?  Given the uncertainty, I would suggest you save up for your tuition, and do not go into debt for it.  Cutting back your wants by 50%, and focusing your savings, could get you there in a year.  If you are making this large an investment, I would not suggest splitting your money into retirement and education:  focus on this, get it over, and you can make up for retirement investing with your fat paycheck.

That's not to say you should give up on your pension.  In the US, anyway, once you stop contributing, you are out.  A pension, and a public one at that, is a safer investment option than many people have access to today.  Take it while you can get it; it doesn't really fit in with an FI plan, but it's a great backstop.

I find the work I most enjoy - and the work that I get excited about - is bridging communication gaps. Especially where technology is involved. I'm good at it, it plays to my strengths and I get to feel like the smartest person in the room.

That's a good point on asking the union. I'll have to take a look into that.

Thanks for the feedback on focusing on the education vs. retirement savings. I feel like maybe I'll still kick in $5 here and there to just keep a small ball rolling, but I'll focus on the education.

What's good is that the program runs evenings and weekends, and from what I understand I can pay piece-meal. So I can start it as soon as I have the first $450~ saved up.

I hear you on the pension. I feel like I could possibly get a BA position within government. There's a few out there. I mentioned above that I could leave government and come back - doing so would reinstate me into the pension, so that could be an option.

I should give them a call though - see what the options are for early retirement, what happens if I leave the Public Service and how much I have in there total.