Author Topic: Can I afford to quit my job?  (Read 2048 times)

MaybeBabyMustache

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Can I afford to quit my job?
« on: September 12, 2017, 10:16:14 AM »
First time poster, long time lurker! Apologies this is so long - wanted to give as much detail as possible.

Iím looking for some advice/guidance on whether itís financially feasible for me to quit my job/semi RE. Here goes!

Background:
  • Family = 2 adults, 2 kids (ages 10 & 11). My husband is 50, Iím 41.
    Location = super high cost of living, Bay Area
    Employment = both adults employed in high paying jobs
    Plan to remain in current house for 9ish years, and then sell & move somewhere signficantly more affordable
Current net worth = $3Mish, but much of this is tied up in our primary residence

Assets:

  • $1.1M in 401Ks (between the two adults)
    No debt (other than two mortgages, below)
    Have a vacation house. We owe $225K, worth $400K
    Primary residence. We owe a smidge under $2M. Worth around $3M
    $600K in investment/liquid accounts (non-retirement)
    Not our assets, per se, but have about $100K saved for the kids college
Iíve been working in tech for 20 years, and have recently found that Iím almost physically unable to do the job. I have lupus, and while itís currently managed well, my job is demanding enough that Iím spending most of my available energy on that. Leaving me coming come exhausted, & crashing on the couch, with nothing left for the kids or myself. My priorities in life our my family, and taking care of my health, but thatís almost/always sidelined by the fact that my work is so demanding. I have a very senior role, and manage a large international team. I travel a lot, and work lots of early mornings/evenings/weekends/holidays due to time zones & other issues. To say I hate the commitments of the job (and working generally at this point, with my energy level) would be a huge understatement. I am concerned that a few more years like this will trigger really terrible things for my health. My doctor is constantly on my case about my workload & travel.

Iíd like to quit my job in March, and take a year off. (Iíll be able to save another $100K in vested stock, etc through that time period. After that, Iíd plan to work part-time. I donít have any desire to work another ďcareerĒ job. I could (I assume, relatively easily) find another job making around $100K by consulting/working part time.

Expenses/The Plan:
Our total yearly expenses are $200K. This includes close to $35K in property tax, plus the mortgages. My husbandís salary covers the primary mortgage, and his stock more than covers property taxes, etc. We would need to draw down our liquid investments for the next few years to cover the remaining expenses $60K gap. We could theoretically cover that for 10 years, until weíre ready to move, although Iíd prefer to work part-time & not draw down the full amount over that time period. My husband has zero desire to quite work, and staying in the area is a concession given he will be the primary bread winner in the future. 

In ten years, our plan would be to sell our house, and move somewhere less expensive. If needed, we could also start drawing down M's 401K, although he expresses no desire to retire fully at 60. We'll see how he feels in another 10 years. We would keep the vacation home, as itís near my family & allows us a place to crash when visiting family. I expect this to be our part time home as my parents age.

Thoughts? Advice? We could obviously cut back on our expenses, but for purposes of this exercise, Iíd like to run the numbers at our current spend level.

wordnerd

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Re: Can I afford to quit my job?
« Reply #1 on: September 12, 2017, 10:44:56 AM »
Your situation sounds hard, and prioritizing your health and well-being sounds like the right move. And, the awesome people on the forum can help you do that.

The good news you have a lot of assets, so you're working from a position of strength. The bad new is $200K/yr in annual expenses. Egads (even for SF)! You haven't posted a  full case study, so it's impossible to tell you the best way to get to a more sustainable level. Just back-of-the-envelope, a 4% SWR on a $3M stash is $120K in annual expenses (which is still a ton). Obviously, your individual situation is influenced by your DH still working and how much he makes, future pensions, etc. etc. Assuming you all will still make $80K a year after you quit, then based on this (very rough) rubric, you should be OK.

That said, selling the vacation home and downsizing from a $3M primary residency (I get that it's the Bay Area, but still...) seem like easy places to cut to give yourselves more breathing room. There is quite likely a lot of other easy expenses to cut, but you would need to post a full case study to get input on that.

Best of luck!
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Erica

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Re: Can I afford to quit my job?
« Reply #2 on: September 12, 2017, 10:52:03 AM »
I don't see a question here. You need to go part time for your health. Otherwise your children many not have a Mother. Don't push your body like that for years on end, there will be consequences.

Your idea of working part time seems the most plausible solution. You will have more time to eat right, exercise and keep your health in order. Sounds like you guys can get by just fine on that. After the kids are gone, you can make decisions maybe moving to a lower COLA area.

Raenia

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Re: Can I afford to quit my job?
« Reply #3 on: September 12, 2017, 11:01:35 AM »
Sounds like you can't afford NOT to quit your job.  You absolutely have to do what's right for your health.  You don't say exactly what your SO's income is, but as long as it makes up the gap between your current investment income and your current spend, you'll be fine financially.  If not, consider selling the vacation home and using those funds to cover the gap until your SO is ready to downsize.

Your best option, of course, would be to see about trimming some of your expenses.  Once you are not working, you may find that this comes down naturally, as you are more able to cook at home, lose transport costs to your job, no more fancy work clothes, etc. (as some easy examples).  If you'd like help with that, a full case study would be the way to go.

Laura33

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Re: Can I afford to quit my job?
« Reply #4 on: September 12, 2017, 11:09:15 AM »
Well, if you need $60K/yr for 10 years, and you have $600K post-tax investments that you are willing to spend, then by definition you can quit.

Would I do that?  Oh fuck no -- I would not be remotely comfortable not even being able to cover basic expenses off my DH's job.  What happens if there is another tech crash, and you can't find part-time work and he gets laid off (BTDT, btw -- this is not something that happens only to "other people")?  What happens if 10 years down the road he's not willing to move and sell, and you no longer have sufficient assets to either continue to cover the gap or retire at your current expense level ($200K x 25 = $5M; you are currently at $1.1M combined, and I assume your income gaps mean that you will be cutting back on those contributions).

Should you quit?  Oh, hell yes.  Nothing is worth your health and sanity.  But you should also cut your expenses so that you guys can manage long-term on your DH's salary.  Otherwise, you're just trading one stress for another -- you're not actually fixing anything.
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MaybeBabyMustache

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Re: Can I afford to quit my job?
« Reply #5 on: September 12, 2017, 12:59:45 PM »
Here are our expenses (yearly, for all categories):

Primary mortgage - 109,500
Property tax = 32,000
Vacation mortgage = 17,100
Groceries = 7,500
Travel = 7,000
House (repairs, maintenance, etc) = 5,000
Utilities = 5,400
Boys activities/school expenses/etc = 3,500
Gifts/Christmas = 2,250
Childcare/summer camps = 1,900
Dining out = 1,800
Car insurance = 1,300
Clothing/shoes = 1,200
Auto (any maintenance/expenses on our cars) = 1,000
Health/personal (I get semi regular massages to help with muscle pain + hair cuts for everyone & race fees, etc) = 1,000
Charity = 1,000 (note that this is not how much we donate to charity. We have a fixed amount taken off of our paychecks every month. This is additional stuff - donations to friends, one off ad hoc donations that come up throughout the year)
Gas = 900
Alcohol = 240
Toiletries = 240
Entertainment = 120. (Obviously, we're big party animals ;-))

We are not unwilling to sell our house and move, but we bought the only house under $3M in our school district. It would require a move out of the neighborhood/school district. I would prefer to work an additional year (or whatever is required) than to displace the kids. I consider the house a short term investment, as it's not our goal to live there permanently. (And yes, never would have started in this school district/neighborhood, but moved as part of a relocation & didn't do enough research. Ended up here, and are as committed as possible to staying to let the kids finish out school.)

For the vacation house, could definitely sell, but plan to live there part time in retirement and/or use as house while visiting parents/etc. Given the low value, not sure if it makes sense to sell, but would if we needed to.

Novik

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Re: Can I afford to quit my job?
« Reply #6 on: September 12, 2017, 01:29:28 PM »
Here are our expenses (yearly, for all categories):

Primary mortgage - 109,500
Property tax = 32,000
Vacation mortgage = 17,100

This is your 160 000$ problem. The rest of your spending is fine. Could probably be tweaked/improved, but it's not the issue here. The issue is that 80% of your spending is mortgages and property tax.

Your kids are 10 and 11 - that's pre-middle school where I live. Can you reconsider moving schools? What about re-financing your mortgage to lower that expense? Checking to see if there are any cheaper houses in the neighbourhood now? Can you get into this school across the boundary somehow? Rent out your basement?

Something has to change with your housing expenses for you not to be risking a lot when you quit your job. And you have to quit your job for your health.
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NicoleO

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Re: Can I afford to quit my job?
« Reply #7 on: September 12, 2017, 01:40:21 PM »
With Lupus, are you able to receive Social Security Disability Insurance (SSDI) benefits? 

My DH has MS and I know that if we get to the point that he is not able to work anymore SSDI is a viable option for him.  If your doctor is already all over you about working to much maybe she/he will help you walk through this process or they probably have information on groups that can help you determine if you are eligible.  Not saying that you should "play the system" but if your health is to the point that you should not be working anymore and you have an autoimmune disease, that is what SSDI is there for.

dycker1978

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Re: Can I afford to quit my job?
« Reply #8 on: September 12, 2017, 01:54:41 PM »
Here are our expenses (yearly, for all categories):

Primary mortgage - 109,500
Property tax = 32,000
Vacation mortgage = 17,100

This is your 160 000$ problem. The rest of your spending is fine. Could probably be tweaked/improved, but it's not the issue here. The issue is that 80% of your spending is mortgages and property tax.

Your kids are 10 and 11 - that's pre-middle school where I live. Can you reconsider moving schools? What about re-financing your mortgage to lower that expense? Checking to see if there are any cheaper houses in the neighbourhood now? Can you get into this school across the boundary somehow? Rent out your basement?

Something has to change with your housing expenses for you not to be risking a lot when you quit your job. And you have to quit your job for your health.

I have to second this.  You are literally working your kids out of a parent so they have a certain school district.  Wow.  Not worth it in my opinion.  Sell the house, and vacation house,   That would leave 1-1.5M if my math is close to right.  You should be able to find a cheaper house, even in the Bay area, to live.

MaybeBabyMustache

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Re: Can I afford to quit my job?
« Reply #9 on: September 12, 2017, 02:00:12 PM »
Here are our expenses (yearly, for all categories):

Primary mortgage - 109,500
Property tax = 32,000
Vacation mortgage = 17,100

This is your 160 000$ problem. The rest of your spending is fine. Could probably be tweaked/improved, but it's not the issue here. The issue is that 80% of your spending is mortgages and property tax.

Your kids are 10 and 11 - that's pre-middle school where I live. Can you reconsider moving schools? What about re-financing your mortgage to lower that expense? Checking to see if there are any cheaper houses in the neighbourhood now? Can you get into this school across the boundary somehow? Rent out your basement?

Something has to change with your housing expenses for you not to be risking a lot when you quit your job. And you have to quit your job for your health.

Totally agree. I feel like our spending is reasonable (obviously, not Mustachian level) in the other categories. I have one child in middle school, and another starting next year. There are no houses below $3M in our neighborhood/school district. If it's too risky to quit now, and/or requires a move, I'll work longer. I'm really committed to keeping the kids in the same school unless my health takes a turn for the worse. Also, no basement to rent out.

To answer the retirement savings question, my husband will continue to max out his 401K, and I'll max out my 2018 before I leave.

If I factor in my husband's stock & bonus, we are pretty close to being able to cover the full set of expenses. But, I was preferring not to plan for all of that money, in the event there's a market down turn, etc.

MaybeBabyMustache

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Re: Can I afford to quit my job?
« Reply #10 on: September 12, 2017, 03:42:01 PM »
Here are our expenses (yearly, for all categories):

Primary mortgage - 109,500
Property tax = 32,000
Vacation mortgage = 17,100

This is your 160 000$ problem. The rest of your spending is fine. Could probably be tweaked/improved, but it's not the issue here. The issue is that 80% of your spending is mortgages and property tax.

Your kids are 10 and 11 - that's pre-middle school where I live. Can you reconsider moving schools? What about re-financing your mortgage to lower that expense? Checking to see if there are any cheaper houses in the neighbourhood now? Can you get into this school across the boundary somehow? Rent out your basement?

Something has to change with your housing expenses for you not to be risking a lot when you quit your job. And you have to quit your job for your health.

I have to second this.  You are literally working your kids out of a parent so they have a certain school district.  Wow.  Not worth it in my opinion.  Sell the house, and vacation house,   That would leave 1-1.5M if my math is close to right.  You should be able to find a cheaper house, even in the Bay area, to live.

Just to be clear, all of the school districts in our neighborhood are great. It's not about being a specific school district. It's about avoiding a school shift & keeping things consistent for the kids. We'd happily keep our kids in any of the districts near us, providing it meant no change to them. One of my kids really, really struggled when we moved to California for this job, and I have major guilt facing down quitting my job if it requires a significant change for the kids. Obviously, YMMV, but I'd easily work another year if that created the right "stash" to allow the kids to remain in the same area & not to have to move. I'm trying to figure out what that "right amount of money is". It may not be possible in this scenario, in which case, yes, harder decisions have to be made.

dycker1978

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Re: Can I afford to quit my job?
« Reply #11 on: September 12, 2017, 03:48:29 PM »
Here are our expenses (yearly, for all categories):

Primary mortgage - 109,500
Property tax = 32,000
Vacation mortgage = 17,100

This is your 160 000$ problem. The rest of your spending is fine. Could probably be tweaked/improved, but it's not the issue here. The issue is that 80% of your spending is mortgages and property tax.

Your kids are 10 and 11 - that's pre-middle school where I live. Can you reconsider moving schools? What about re-financing your mortgage to lower that expense? Checking to see if there are any cheaper houses in the neighbourhood now? Can you get into this school across the boundary somehow? Rent out your basement?

Something has to change with your housing expenses for you not to be risking a lot when you quit your job. And you have to quit your job for your health.

I have to second this.  You are literally working your kids out of a parent so they have a certain school district.  Wow.  Not worth it in my opinion.  Sell the house, and vacation house,   That would leave 1-1.5M if my math is close to right.  You should be able to find a cheaper house, even in the Bay area, to live.

Just to be clear, all of the school districts in our neighborhood are great. It's not about being a specific school district. It's about avoiding a school shift & keeping things consistent for the kids. We'd happily keep our kids in any of the districts near us, providing it meant no change to them. One of my kids really, really struggled when we moved to California for this job, and I have major guilt facing down quitting my job if it requires a significant change for the kids. Obviously, YMMV, but I'd easily work another year if that created the right "stash" to allow the kids to remain in the same area & not to have to move. I'm trying to figure out what that "right amount of money is". It may not be possible in this scenario, in which case, yes, harder decisions have to be made.

Oh I heard what you were saying.  It will be a much harder transition if your kids lose a parent because of health issues, that may have been better treated while you were home.  I hope for the best for you and your family, but I know when my Dad passed away, I was not wishing he would have worked a year longer to provide me a fancy house, but I wished he would have quit and spent that time with me.   

ltt

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Re: Can I afford to quit my job?
« Reply #12 on: September 12, 2017, 10:10:20 PM »
Would you consider selling the vacation home?  When you visit your parents, stay in a hotel room.  When you retire, then buy another home near them if need be at that point.  But no sense in carrying $17,000 yearly mortgage payments for the next 9-10 years while you are visiting them if a hotel room would serve the purpose just as well.

Would it be cheaper to rent in your current area versus having a mortgage?  I'm assuming you could rent something for $5-$6k per month, a lot less than your current mortgage.  I know it's probably not the answer you want to hear, but I agree with the above poster---there's around $160k per year just tied up in house and property taxes.  That's a staggering amount.
« Last Edit: September 12, 2017, 10:19:32 PM by ltt »

skip207

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Re: Can I afford to quit my job?
« Reply #13 on: September 13, 2017, 02:33:53 AM »
I cant see you mention it, but can you give us an idea of your income level?
Would your employer be willing to allow WFH 3 days a week?

As others have pointed out your housing costs are the main issue, but until we see what your income is its hard to advise. IMHO.

Bateaux

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Re: Can I afford to quit my job?
« Reply #14 on: September 13, 2017, 02:49:40 AM »
Sell everything and move to a lower cost of living area.  You can quit then.  You're rich but house poor.
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Hula Hoop

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Re: Can I afford to quit my job?
« Reply #15 on: September 13, 2017, 04:04:53 AM »
I'm originally from NYC so I get the HCOL thing (I think NY is the only city comparable to SF in the US) but $3 million is still crazy.  It sounds like you're living right in the center of town in the most HCOL area of SF in a huge place.  There are literally no cheaper dwellings in your kids' school district? What about smaller apartments?  Can the kids share a bedroom?

 I don't know SF but I imagine that there must be areas outside the city that still have decent schools but which are cheaper.  In NY terms, if I were in your situation, I'd move from Manhattan to Queens, Staten Island or New Jersey.  Most of my native New Yorker friends have done this.  The only people I know who live in really expensive areas of NY are either people who moved from elsewhere and don't seem to know how to live less expensively in NY or people with rent controlled apartments.

You absolutely need to slash your mortgage and at least go part time.

Pennycounter

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Re: Can I afford to quit my job?
« Reply #16 on: September 13, 2017, 04:54:20 AM »
It sounds like Palo Alto because every other peninsula town has places below that price point. Could you rent out your house and have the kids keep the address and commute from nearby? I agree that your housing cost is the anchor here. Otherwise the only option I see is to sell the vacation house.

Laura33

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Re: Can I afford to quit my job?
« Reply #17 on: September 13, 2017, 06:18:09 AM »
Here are our expenses (yearly, for all categories):

Primary mortgage - 109,500
Property tax = 32,000
Vacation mortgage = 17,100

This is your 160 000$ problem. The rest of your spending is fine. Could probably be tweaked/improved, but it's not the issue here. The issue is that 80% of your spending is mortgages and property tax.

Your kids are 10 and 11 - that's pre-middle school where I live. Can you reconsider moving schools? What about re-financing your mortgage to lower that expense? Checking to see if there are any cheaper houses in the neighbourhood now? Can you get into this school across the boundary somehow? Rent out your basement?

Something has to change with your housing expenses for you not to be risking a lot when you quit your job. And you have to quit your job for your health.

I have to second this.  You are literally working your kids out of a parent so they have a certain school district.  Wow.  Not worth it in my opinion.  Sell the house, and vacation house,   That would leave 1-1.5M if my math is close to right.  You should be able to find a cheaper house, even in the Bay area, to live.

Just to be clear, all of the school districts in our neighborhood are great. It's not about being a specific school district. It's about avoiding a school shift & keeping things consistent for the kids. We'd happily keep our kids in any of the districts near us, providing it meant no change to them. One of my kids really, really struggled when we moved to California for this job, and I have major guilt facing down quitting my job if it requires a significant change for the kids. Obviously, YMMV, but I'd easily work another year if that created the right "stash" to allow the kids to remain in the same area & not to have to move. I'm trying to figure out what that "right amount of money is". It may not be possible in this scenario, in which case, yes, harder decisions have to be made.

Oh JFC.  You are spending over $170K/yr on housing expenses (don't forget maintenance and utilities).  Your kids are barely MS age.  You are, quite literally, working yourself sick -- I know you know how stress affects autoimmune diseases, so I won't even start on that.  And you're worried about the impact on the kids of changing from one great school to another?* 

This is batshit crazy.  And I mean that in the nicest possible way.  You are choosing to put your life and your kids' long-term well-being at risk because you are afraid of the short-term difficulties in changing schools.  You are far more important to your kids than any house or school.  Your body is telling you that you can't keep it up.  How are they going to manage (emotionally and financially) when you end up in the hospital, or disabled, or dead?  I guarantee you that it is a lot easier to move and downsize now than in 5 years, when they're in HS and now mom is sick/incapacitated, or when they are dealing with your untimely death.

The reality is that unless you are making about $2M/yr, you cannot just work one more year to build the 'stache necessary to fund your current lifestyle for 9 more years.  You have locked yourself into mandatory expenses that are so high that you basically need to keep working forever to cover your nut.

Sell.  Sell sell sell.  Rent an apartment if you have to.  Just get out from under the crushing weight of that mortgage.

*I am not trying to belittle the issues associated with either difficult children or autoimmune diseases.  I happen to have both, and I had similar very serious concerns about my daughter's school.  So I understand how and why you are worrying about this, especially when you have personally lived through the hell of when it goes horribly wrong.  I am just telling you that you that you are missing the forest for the trees, because what you are risking if you continue down your current path is infinitely more important to your kids' long-term well-being than a fucking school.  Plus, if your "problem" kid is at all like mine, he is the canary in the coal mine, very attuned to your own moods and stresses (when DD was younger, her losing her shit repeatedly was frequently the first signal that *I* was massively stressed -- she was like a stress antenna).  So it may be that lowering your own stress level from dealing with job/kids/disease may actually help lower the kid/household anxiety/stress, which in turn would give your sensitive one more capacity to process the school change.
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semiretired31

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Re: Can I afford to quit my job?
« Reply #18 on: September 13, 2017, 06:34:54 AM »
Here are our expenses (yearly, for all categories):

Primary mortgage - 109,500
Property tax = 32,000
Vacation mortgage = 17,100

This is your 160 000$ problem. The rest of your spending is fine. Could probably be tweaked/improved, but it's not the issue here. The issue is that 80% of your spending is mortgages and property tax.

Your kids are 10 and 11 - that's pre-middle school where I live. Can you reconsider moving schools? What about re-financing your mortgage to lower that expense? Checking to see if there are any cheaper houses in the neighbourhood now? Can you get into this school across the boundary somehow? Rent out your basement?

Something has to change with your housing expenses for you not to be risking a lot when you quit your job. And you have to quit your job for your health.

I have to second this.  You are literally working your kids out of a parent so they have a certain school district.  Wow.  Not worth it in my opinion.  Sell the house, and vacation house,   That would leave 1-1.5M if my math is close to right.  You should be able to find a cheaper house, even in the Bay area, to live.

Just to be clear, all of the school districts in our neighborhood are great. It's not about being a specific school district. It's about avoiding a school shift & keeping things consistent for the kids. We'd happily keep our kids in any of the districts near us, providing it meant no change to them. One of my kids really, really struggled when we moved to California for this job, and I have major guilt facing down quitting my job if it requires a significant change for the kids. Obviously, YMMV, but I'd easily work another year if that created the right "stash" to allow the kids to remain in the same area & not to have to move. I'm trying to figure out what that "right amount of money is". It may not be possible in this scenario, in which case, yes, harder decisions have to be made.

Oh JFC.  You are spending over $170K/yr on housing expenses (don't forget maintenance and utilities).  Your kids are barely MS age.  You are, quite literally, working yourself sick -- I know you know how stress affects autoimmune diseases, so I won't even start on that.  And you're worried about the impact on the kids of changing from one great school to another?* 

This is batshit crazy.  And I mean that in the nicest possible way.  You are choosing to put your life and your kids' long-term well-being at risk because you are afraid of the short-term difficulties in changing schools.  You are far more important to your kids than any house or school.  Your body is telling you that you can't keep it up.  How are they going to manage (emotionally and financially) when you end up in the hospital, or disabled, or dead?  I guarantee you that it is a lot easier to move and downsize now than in 5 years, when they're in HS and now mom is sick/incapacitated, or when they are dealing with your untimely death.

The reality is that unless you are making about $2M/yr, you cannot just work one more year to build the 'stache necessary to fund your current lifestyle for 9 more years.  You have locked yourself into mandatory expenses that are so high that you basically need to keep working forever to cover your nut.

Sell.  Sell sell sell.  Rent an apartment if you have to.  Just get out from under the crushing weight of that mortgage.

*I am not trying to belittle the issues associated with either difficult children or autoimmune diseases.  I happen to have both, and I had similar very serious concerns about my daughter's school.  So I understand how and why you are worrying about this, especially when you have personally lived through the hell of when it goes horribly wrong.  I am just telling you that you that you are missing the forest for the trees, because what you are risking if you continue down your current path is infinitely more important to your kids' long-term well-being than a fucking school.  Plus, if your "problem" kid is at all like mine, he is the canary in the coal mine, very attuned to your own moods and stresses (when DD was younger, her losing her shit repeatedly was frequently the first signal that *I* was massively stressed -- she was like a stress antenna).  So it may be that lowering your own stress level from dealing with job/kids/disease may actually help lower the kid/household anxiety/stress, which in turn would give your sensitive one more capacity to process the school change.

^^^^^^^
This.... all day.

Novik

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Re: Can I afford to quit my job?
« Reply #19 on: September 13, 2017, 06:56:17 AM »
I have a very senior role, and manage a large international team. I travel a lot, and work lots of early mornings/evenings/weekends/holidays due to time zones & other issues.

Iíd like to quit my job in March, and take a year off. (Iíll be able to save another $100K in vested stock, etc through that time period. After that, Iíd plan to work part-time. I donít have any desire to work another ďcareerĒ job. I could (I assume, relatively easily) find another job making around $100K by consulting/working part time.

If you're already planning to quit your job and work part-time, line that job up ASAP and quit now, hopefully with a month or more off in between. If you're so stuck on not changing neighbourhoods (or refinancing, or renting, or selling the vacation home, or or or), then at least don't also be stuck in your current high stress role.

Find something with 40 hours a week, no travel, ideally allowing some WFH. Take the job and don't look back. You only need to bring home ~60k (or 40k if you sell the vacation rental). That should be easy coming from your current position.

What about working 6 month contracts so you get downtime? What about working part-time for your current company in another role? You have a health issue and your doctor has advised you to scale back your work so you can continue to work. Listen to them!

Quitting your current job is a must-do. Making it work afterwards is where you have flexibility.

(what about calling the district and seeing if you can get the kids grandfathered in? what about broaching the subject of a school move with your kids? what about moving in June and sending them to summer camps in their new neighbourhood to meet kids before school to help ease the transition? what about selling and moving close to family now)


OR: what about you and your husband quitting now and you move into your vacation home full-time. That would bring your spending to 60-70k, which requires an invested stash of ~1.7M. Which you have in 401k and investments already. The extra million from the sale of the house means you are more than safe and can add more travel or whatever you want easily.
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MaybeBabyMustache

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Re: Can I afford to quit my job?
« Reply #20 on: September 13, 2017, 08:06:21 AM »
Thanks for all of the great advice & input. And, strong perspectives. ;-) A lot to think about, but selling the vacation house will definitely free up cash in the short term, so we will explore that option as well as go back to the drawing board on housing plans. Renting out our primary residence is also another viable option, although we'd have to really investigate the school side, as our district is pretty crazy about verification on housing. I also like the idea of lining up a part time role before leaving, so we can have a better view into what's required financially. On the income side, we make around $900K together, with that split fairly evenly between the two of us. (Small variances depending on business performance throughout the year.)

And, lest you think we live in a mansion, sadly not. We're not in the city, and the house we bought is a 1950s house in decent shape, but with minimal upgrades. We've done lots of DIY since moving in. Not Palo Alto, but similar area.

Hula Hoop

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Re: Can I afford to quit my job?
« Reply #21 on: September 13, 2017, 08:15:15 AM »
we make around $900K together,

Wow - you make more than 10 times what we make per year.  And we live in a large city too - just not the Bay Area.  Surely, you should be able to do whatever the heck you want with that kind of income.

I loved the suggestion from Laura above of thinking about selling your primary residence and moving to your vacation home now.  Sounds like it's the lifestyle you want eventually anyway and why not do it now?  With the resources you'll free up by selling your $3M home in the Bay Area you'd never have to work again.

dca

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Re: Can I afford to quit my job?
« Reply #22 on: September 13, 2017, 09:06:55 AM »
we make around $900K together,

Wow - you make more than 10 times what we make per year.  And we live in a large city too - just not the Bay Area.  Surely, you should be able to do whatever the heck you want with that kind of income.

Agree with this. With that kind of income, you should be able to do anything you want. If your husband makes ~$450k a year, his salary alone would easily cover your $200k nut, and you guys should be able to continue saving, even accounting for taxes. Something isn't adding up?

Car Jack

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Re: Can I afford to quit my job?
« Reply #23 on: September 13, 2017, 09:19:43 AM »
You want to also look at college expenses.  I know California state colleges are dirt cheap, so if you plan to limit your kids to those, you're not that bad off.  My oldest son is presently in college and I'd say that the $100k would get him most of 2 years of total expenses after his stafford loans (presently $7500 a year) and the money his grandmother on my side and grandfather on my wife's side contribute (about $15k a year altogether).  Of course, he isn't on the food plan and by the time your kids hit college, since expenses there rise faster than inflation, maybe plan on one full year paid at private college....2 years at a Cal state college.

MaybeBabyMustache

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Re: Can I afford to quit my job?
« Reply #24 on: September 13, 2017, 09:28:46 AM »
we make around $900K together,

Wow - you make more than 10 times what we make per year.  And we live in a large city too - just not the Bay Area.  Surely, you should be able to do whatever the heck you want with that kind of income.

Agree with this. With that kind of income, you should be able to do anything you want. If your husband makes ~$450k a year, his salary alone would easily cover your $200k nut, and you guys should be able to continue saving, even accounting for taxes. Something isn't adding up?

Great question. I'd have to run the numbers tonight, but let's say that 1/2 of both of our income comes from stock. I haven't included that in my husband's numbers for purposes of determining what he can cover. The salary/bonus are replaceable, unless there's a significant market crash, even at another company, but factoring in the stock feels like a really risky move for the 10 year plan. At his current comp level (assuming stock stays flat), we would be super close to covering all expenses. Make sense? Let me know if I'm not thinking about this properly - that's why I want opinions! :-)

scantee

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Re: Can I afford to quit my job?
« Reply #25 on: September 13, 2017, 09:31:11 AM »
+1 to everything Laura33 said.

You make a ton of money. You spend a ton of money. The thing you spend a ton of money on is your house. That is the millstone around your neck.

Were I in your situation, I would absolutely sell the house and rent in your current school district. That one change (and I admit it isn't "simple" but it is just one change) solves all of your problems. It allows you to quit without disrupting your children's stability.

I just looked at rentals in Palo Alto to get a sense of what similar rentals would cost in your community. I see a number of nice looking single family, three-bedroom homes for between $4k-7k a month. Even if you rent a house at the high end of that range you still would be paying nearly $5k less in housing costs each month. That, plus the near $1MM in equity you'd get from selling your house would allow you to quit your job entirely, in the very near future.

MaybeBabyMustache

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Re: Can I afford to quit my job?
« Reply #26 on: September 13, 2017, 09:42:59 AM »
+1 to everything Laura33 said.

You make a ton of money. You spend a ton of money. The thing you spend a ton of money on is your house. That is the millstone around your neck.

Were I in your situation, I would absolutely sell the house and rent in your current school district. That one change (and I admit it isn't "simple" but it is just one change) solves all of your problems. It allows you to quit without disrupting your children's stability.

I just looked at rentals in Palo Alto to get a sense of what similar rentals would cost in your community. I see a number of nice looking single family, three-bedroom homes for between $4k-7k a month. Even if you rent a house at the high end of that range you still would be paying nearly $5k less in housing costs each month. That, plus the near $1MM in equity you'd get from selling your house would allow you to quit your job entirely, in the very near future.

It's definitely worth another look at re-running the numbers of renting. However, we lose all tax advantages if we sell the house, so it's not quite apples to apples, given federal & state taxes & our income level (even without my salary).

Novik

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Re: Can I afford to quit my job?
« Reply #27 on: September 13, 2017, 09:53:15 AM »
I think you may underestimate how much less taxes you'd pay on just one income. If your husband brings home 280k, with 40k in deductions (property tax + 8k charity) and 4 personal exemptions, you have the 200k your current budget requires.

If you drop housing from 140k (primary mortgage and property taxes) to 84k  (expensive 7k/month rental), you need 56k less, or 144k. Assuming the same 8k charity (a guess) and 4 exemptions but no property tax deduction, your husband needs to make only 205k in order to cover your new annual costs. That's less than 1/4 your current earnings, and sounds like it's about his reliably earned pay.

Here's the calculator I'm using: https://smartasset.com/taxes/california-tax-calculator#MlJ6piB2sA. The numbers get even more stark if you can find a rental for 4-5k/month instead (4k rent = need husband to earn 145k annually).

(I still advocate moving to your vacation home and retiring NOW but if you want to stay, rent and save so much money)
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Laura33

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Re: Can I afford to quit my job?
« Reply #28 on: September 13, 2017, 10:03:24 AM »
we make around $900K together,

Wow - you make more than 10 times what we make per year.  And we live in a large city too - just not the Bay Area.  Surely, you should be able to do whatever the heck you want with that kind of income.

Agree with this. With that kind of income, you should be able to do anything you want. If your husband makes ~$450k a year, his salary alone would easily cover your $200k nut, and you guys should be able to continue saving, even accounting for taxes. Something isn't adding up?

Great question. I'd have to run the numbers tonight, but let's say that 1/2 of both of our income comes from stock. I haven't included that in my husband's numbers for purposes of determining what he can cover. The salary/bonus are replaceable, unless there's a significant market crash, even at another company, but factoring in the stock feels like a really risky move for the 10 year plan. At his current comp level (assuming stock stays flat), we would be super close to covering all expenses. Make sense? Let me know if I'm not thinking about this properly - that's why I want opinions! :-)

Right.  So this is the issue:  you have built a lifestyle that you can afford only if your stock pays out; but at the same time you don't *really* feel like you can count on that stock to be worth anything, and so you don't count it in your budget.  This creates both extremely high housing expenses (compared to the listed income) and a real internal insecurity/high stress level, because your financial plan does in fact rely on something happening that you're not confident of (the stock paying out).

I do agree it would be a good idea to take a very sharp pencil to the budget and maybe track expenses more closely (when I am feeling stressed/insecure, the first thing I do is go into Quicken and run the numbers, asking "will I lose the house?").  But I think you have a more conceptual problem:  you need to decide how risk-averse you really are.

If you are comfortable with risk, then count on that stock in your budget and plan accordingly.  This is the version that says "DH makes @$450K, based on that we can cover our current expenses and put a little something aside for retirement, so I can quit now."  And you know that the risk is that the stock doesn't pay out, and that if that happens, you may need to go back to work, or your DH needs to work longer, or you need to cut back expenses at that point, etc.  As long as you are ok with that, it's a reasonable approach.

But if your thinking has changed (because of illness/stress/kids/whatever) and, boy, that sounds aggressive, then you need to take a hard, fresh look at your budget given your current risk tolerance.  Maybe that means deciding that you need to sell the house and rent so you can cover your expenses and still save on your DH's take-home.  Or maybe you don't feel like you need to go that conservative yet -- maybe you're comfortable relying on the stock as the "retire early" fund, and so as long as your DH's income can cover your basic expenses, even without saving more for retirement, you can live with that (with the downside being if the stock crashes, you go back to work and/or he works longer).  The key isn't any specific answer -- it is making sure that your budget/treatment of the stock matches your current, real risk tolerance.

FWIW, my DH and I both get paid significant portions of our salary at the end of the year through bonuses/stock/etc.  Our plan has always been that our "base" expenses -- including retirement savings -- are built on the guaranteed salary.  Then the end-of-year stuff can go to extras -- mostly it's extra savings, but we have also used some of that for things like a big vacation one year, a replacement car, etc.  This helps me feel comfortable that I can maintain my current lifestyle even in a bad year, while still allowing DH to know he can get the luxuries he feels he works so hard for.
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scantee

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Re: Can I afford to quit my job?
« Reply #29 on: September 13, 2017, 10:10:14 AM »
Quote
It's definitely worth another look at re-running the numbers of renting. However, we lose all tax advantages if we sell the house, so it's not quite apples to apples, given federal & state taxes & our income level (even without my salary).

You are way overestimating the tax benefits of owning, given that you can rent a similar place for half (HALF!) of what you currently pay to own.

Renting also frees ups your $1MM in house equity. That extra million would generate an additional $40k a year. Your $2.7MM liquid stash would generate $108k a year!

You. Are. Done. if you sell this house.

What does your husband think?

Patches

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Re: Can I afford to quit my job?
« Reply #30 on: September 13, 2017, 10:43:57 AM »
ďHow many times his (Port's) friends, envying him his life, had said to him: "Your life is so simple." "Your life seems always to go in a straight line." Whenever they had said the words he heard in them an implicit reproach: it is not difficult to build a straight road on a treeless plain. He felt that what they really meant to say was: "You have chosen the easiest terrain." But if they elected to place obstacles in their own way-which they clearly did, encumbering themselves with every sort of unnecessary allegiance-that was no reason why they should object to his having simplified his life. So it was with a certain annoyance that he would say: "Everyone makes the life he wants. Right?" as though there were nothing further to be said.Ē
― Paul Bowles, The Sheltering Sky

MaybeBabyMustache

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Re: Can I afford to quit my job?
« Reply #31 on: September 13, 2017, 10:46:05 AM »
You guys are amazing. Obviously, a ton to think about, but a few one off answers

What does your husband think?

My husband loves his work (the company & the location, etc) & wants to stay in the area until the kids are done with school. He'd be hard pressed to have his current career outside of the bay area. He also is WAY more risk tolerant than I am. He would never want me to risk my health for work, but is also willing to have me quit, keep the house & evaluate where we are each year & determine next steps. (renting, selling, etc) should something significant happen. He has also expressed a little hesitation on moving to our vacation house permanently. He's not Caucasian & the town where our house is at is very, very small & relatively homogeneous. He's fine with it as a vacation house, but unsure about it as a permanent residence. (this is an answer to a related question further up).

But if your thinking has changed (because of illness/stress/kids/whatever) and, boy, that sounds aggressive, then you need to take a hard, fresh look at your budget given your current risk tolerance.  Maybe that means deciding that you need to sell the house and rent so you can cover your expenses and still save on your DH's take-home.  Or maybe you don't feel like you need to go that conservative yet -- maybe you're comfortable relying on the stock as the "retire early" fund, and so as long as your DH's income can cover your basic expenses, even without saving more for retirement, you can live with that (with the downside being if the stock crashes, you go back to work and/or he works longer).  The key isn't any specific answer -- it is making sure that your budget/treatment of the stock matches your current, real risk tolerance.

And, so, so much this. Yes, things have changed relatively quickly from where I expected to be. I'd planned to work another 5-7 years, and with just our salaries, & then the stock would be early retirement. We're now sort of back to the drawing board, given the demands of my job & how I'm feeling. It's hard because I'm not at death's door or anything, which sort of masks the urgency of dealing with my health. It also causes me personally guilt, because I can keep hacking it. I just don't feel like I'm doing a very amazing job at anything right now.

With my husband's salary & stock, the math works out okay. It's tighter than I'd like, but we could obviously cut plenty of things in the event we needed to. However, I like less risk, and would like a lifestyle that is possible just on his salary (no stock). That's a totally different equation & major changes would need to happen for that to come together.

Thanks for all of the good advice. It's crystalized some of the various stress points on this, and really appreciate the follow ups.

Novik

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Re: Can I afford to quit my job?
« Reply #32 on: September 13, 2017, 11:26:54 AM »
You guys are amazing. Obviously, a ton to think about, but a few one off answers

What does your husband think?

My husband loves his work (the company & the location, etc) & wants to stay in the area until the kids are done with school. He'd be hard pressed to have his current career outside of the bay area. He also is WAY more risk tolerant than I am. He would never want me to risk my health for work, but is also willing to have me quit, keep the house & evaluate where we are each year & determine next steps. (renting, selling, etc) should something significant happen. He has also expressed a little hesitation on moving to our vacation house permanently. He's not Caucasian & the town where our house is at is very, very small & relatively homogeneous. He's fine with it as a vacation house, but unsure about it as a permanent residence. (this is an answer to a related question further up).

This makes a lot of your responses/your family's action make sense! Within your family, there are some very valid reasons we were not aware of that made our suggestions less workable.

Thanks for following up and providing more context and continuing to engage. We can be a bit face-punchy here, but it's only because we want you to take care of yourself and your health!
Over-thinking, over-planning and over-committing, aka my 2017 goals: Procrastinating my way to FIRE
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dca

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Re: Can I afford to quit my job?
« Reply #33 on: September 13, 2017, 12:06:07 PM »
Also consider: by having so much of your wealth tied in your primary residence, you are essentially doubling down your bet on the tech sector.  Worst case scenario: the tech sector crashes, your husband is out of a job, you can't find part-time work, AND housing prices in Silicon Valley collapse so that you might even be underwater but still obligated to make the same high monthly payments. Cashing out your home equity now would mitigate against this risk.

Of course it's possible the tech sector will continue to rise & home values in your area go up & up. If you were planning to stay in the area forever, it would be a tougher decision.

Agree that you're overestimating the tax benefit of owning. The mortgage interest deduction only apples to the first $1mil of mortgage debt. With $2.2mil mortgage debt, only a fraction of the interest you're paying is tax deductible.

skip207

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Re: Can I afford to quit my job?
« Reply #34 on: September 14, 2017, 01:59:43 AM »
Mobile data was the last boom.  That's reaching saturation point now.

CryingInThePool

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Re: Can I afford to quit my job?
« Reply #35 on: September 14, 2017, 10:55:32 AM »
Quit your job?  Maybe, with a lot of the caveats already covered. Personally I'd be too risk averse with that huge mortgage debt hanging over my head to walk away from a high paying job.

The larger question to me is what could you do to change jobs and/or companies while still retaining your income.   I know you said 20 years in tech but is that all in the same role/company?  Before quitting I'd try changing things up and get paid to experiment while stretching your career, getting you out of the travel, and into something with better WLB.  Start looking around asap and line up a new offer by November with a start date in January so you can take the holidays off to decompress. 

Also maybe I missed it but do you have renters in your vacation house? I totally get wanting to hold onto it if that's where you want to end up but if it's sitting empty most of the year then I'd get to work monetizing it.


MaybeBabyMustache

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Re: Can I afford to quit my job?
« Reply #36 on: September 14, 2017, 01:19:00 PM »
Quit your job?  Maybe, with a lot of the caveats already covered. Personally I'd be too risk averse with that huge mortgage debt hanging over my head to walk away from a high paying job.

The larger question to me is what could you do to change jobs and/or companies while still retaining your income.   I know you said 20 years in tech but is that all in the same role/company?  Before quitting I'd try changing things up and get paid to experiment while stretching your career, getting you out of the travel, and into something with better WLB.  Start looking around asap and line up a new offer by November with a start date in January so you can take the holidays off to decompress. 

Also maybe I missed it but do you have renters in your vacation house? I totally get wanting to hold onto it if that's where you want to end up but if it's sitting empty most of the year then I'd get to work monetizing it.

I would really like to do this, and my plan is definitely to work part-time. I'd prefer to take time off to sort of reset my health/stress level, but would be open to a faster transition. I also plan to pitch my current employer on a part-time role. The company is not typically in favor of part-time, and I'm in a senior position, so it would take quite a bit of creativity to scope something out. But, I want to be prepared in the event they say no.

We rent out the vacation house seasonally, but not full time. There is a contractual limit on days of occupancy for renters (town ordinance), so we stick to that.

Chrissy

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Re: Can I afford to quit my job?
« Reply #37 on: September 15, 2017, 10:26:27 AM »
Sounds like it's the right time to take FMLA.  Maybe you'll sell the vacation home, or rent the current home, or take a year off, but start with some medical leave and see how you feel at the end of it.