The Money Mustache Community
Learning, Sharing, and Teaching => Case Studies => Topic started by: bliss88 on June 16, 2018, 02:27:23 PM
-
Hi Guys,
I've thought about career change for some time, but given my current income/savings, I am thinking maybe wait for "career change" when I reach FI? Thoughts? Also, I need help overcoming my fear of a market correction b/c currently 66% of my savings stay as cash and the other 33% are being robo-invested into 401K. Would much appreciate any advice for
1. making my savings work more for me; 2. is my post-FI budget realistic? I think I would be making an FI life OUTSIDE of SF Bay!
Situation: age 41, living in SF Bay as a renter since the mid-90s when I came out here for college; working in biotech industry doing scientific sales (not too stressful, lots of work hours flexibility; biggest stress comes from driving all over SF Bay mostly SSF + South Bay to meet w/ clients). Not sure how stable my income will be but I DO work for a very large (>60,000 employees) multinational company.
Income:
90000 base
25800 3 qtr bonus (say I miss a quarter)
115800 total
97300 income minus max 401K contribution
1110 6% match
19610 total tax free income
68110 post-tax income (assume 30% total taxes?) not including 401K
87720 total net income post taxes
Expenses:
$900/mo rent + util
$200/mo car (insurance + car from company; I pay personal miles)
phone + internet paid by company
being VERY generous w/ groceries, and ...
total monthly = $2100-2300
say most expensive scenario = $2600/mo (eg i had a long distance relationship for the last year so lots more travel expenses)
savings:
$56K/year of which which 19.6K will be in 401K growing tax free
leaving about $36K accumulating in my checking account b/c i'm being illogical and afraid the market will correct any moment and i'll lose that $36K
current holdings:
Cash: $145K right now
too much as a % of my net worth! I know I shouldn't try to time the market but seems a correction is inevitable?! I was holding onto cash as well thinking I might put in a downpayment for a Bay Area house but now thinking maybe not worth it and invest this instead either in properties outside of SF Bay, or into the stock market (friends have shared the headache of longdistance landlording)... given I have not yet decided, I really need to put the cash into the market but again, afraid about a correction.
$365K invested in ...
$104K = IRA (betterment)
$118.5 = ROTH IRA (vanguard, paying the small fee for guided investing)
$7.4K = IRA (self-managed), 100% in VTSAX
$4.4K = stock (biotech company, ex-employer, purchased at a discount)
$53K = taxable robo-investment account (wealthfront)
$78K = 401K via Fidelity account provided by employer; all invested in a target date retirement fund (I max $18K/year)
BUDGET FI scenario w/ a car: $2000/mo (? is this realistic in a college town like say Corvallis, OR?):
food 300
healthcare including suppments, exercise, insurance, etc. (self-care) 300
cell phone, etc 75
transportation 100
housing 900
gym 50
travel 100
gifts, donations $25
car (insurance, maintenance) 150
plus I'll need to buy a car
-
I know I shouldn't try to time the market but seems a correction is inevitable?!
Can you do better than the world's worst market timer (http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/)?
-
Thank you MDM for pointing out that awesome article!!! My concern though is that I WOULD like to semi-retire in 10 years... so if I were to put all my cash in now, and we were at the peak, then in 10 years, maybe my stash would still be recovering??? Thoughts?
Thank you again for your comment!!! :)
-
... maybe ....
Maybe yes, maybe no. Perhaps the only guarantee is that cash in a savings account will lose purchasing power due to inflation. Money in the market may due worse or better.
-
FYI, it's costing you about $240/month in inflation to keep that money in cash.
-
I'm in a very similar situation except looking for career change instead of FIRE...
43, Single, no dependents.
Net worth:
Retirement Accounts $356,509
HSA $6,298
Taxable $23,664
Taxable Cash (SHV + Cash) $2,878
Cap 360 MM $63,209
Checking $9,814
Total: $459,494
Budget:
Rent $780
Car $221 (But I pay $400) Remaining Balance loan ~2.65% interest is $4568. I'd rather be cash rich right now than pay off the loan. 2014 Corolla, low miles.
Car insurance $46
Gas $30
Utilities $60
Target $80
Food $565
Internet/Cable $42
Cell Phone $52
Savings $0
Ent.,Netflix, Pandora, X $43
Total: $2,098
Without car payment Total: $1698
My personal portfolio: $63K cash @1.60%, 10K checking, 10K Total bond (AGG) 14K stocks Total Intl., Total Domestic (IXUS, ITOT)
My 401K has 105K cash and growing in SHV (short term treasury fund @ ~1.6%), rest Vanguard 2035 fund and small tilt towards international small cap and emerging markets.
I am making the same behavioral mistake by waiting for a bear market to deploy my cash into the 2035 fund and some of my taxable funds into ITOT. I know it's not technically correct but that's where I've put myself. Plus my personal funds depend on where my life takes me- Emergency/FU fund, house down payment, stocks when they're cheaper, time off for career change (graduate school, certification, etc.)
I'm living in Appleton WI (hate it) and am trying to engineer a move back to SoCal (Orange County - Irvine area).
My income has been just shy of 90K here for the last three years, saving approximatley 45K year between 401K, HSA, company match, Taxable accounts.
I can confidently say that it is possible to live/FIRE on about 2K in a low cost of living area because I have been, and could continue to do so.