Author Topic: Advice on a little smaller portfolio than Mr. Mustache  (Read 1747 times)

mountainmustache

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Advice on a little smaller portfolio than Mr. Mustache
« on: January 02, 2019, 08:42:29 PM »
Hi I've been reading the blogs for weeks and love it.  Just joined the forum today and glad to be here.  Almost all MMM articles are based on drawing 4%, 40K, off of a portfolio of about $1M.  My net worth is more like 850K, with 650K of this working hard in the stock market.  The rest is my home, paid for, and I only need about 24K per year to live on.  Based on the 4% rule, for me this is 26K.  Based on this, I might stop now, but we all know the next few years are going to be volatile in the markets.  Otherwise, I can keep going in my prime earning years, adding about 100K per year to my portfolio, in years where stocks will be cheap, but I'll continue to be miserable in a hellish job situation.  Any thoughts?  Thanks a lot.

kenaces

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #1 on: January 02, 2019, 09:07:48 PM »
I get that it is hard to give up a big paycheck.  Lots of emotion around money(fear/greed/envy/ego...) but if your job is truly "hellish" I would start prepping to leave.  Maybe just retire? Maybe find fun job that doesn't pay much? Maybe find less hellish job that pays well?

As far as the markets - who know?  That said I wouldn't have all my money in stocks.  There is a strong case for having some in CDs/munis/RE... in order to diversify.  I think this case becomes stronger the older you are and the closer you are to FIRE.

Frankies Girl

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #2 on: January 02, 2019, 09:26:41 PM »
The 1 million portfolio is just an example. MMM actually pulled the trigger at under 1 million if I'm remembering the early stuff properly, with a spouse and small kid to boot.

IF you needed 40K, THEN you would need a minimum of 1 million to survive. It should break down to get your yearly expenses figured out, multiply it by 25X, and there's your number. Once you know it, that is what you're aiming for. If you can live off of $24K/year including every possible expense you can think of (got insurance in there? Gone through budget for several years to see your actual spending rate and all the unexpected things that pop up?) you're going to likely be just fine.

Also, don't count any house equity unless you plan on selling it and pouring that money into investments. Your portfolio/liquid funds should be what look at for living expenses. You may be able to get a HELOC but a house is technically not liquid, and is a money sink (always will have to have maintenance, taxes, insurance) more than anything.
« Last Edit: January 02, 2019, 09:28:25 PM by Frankies Girl »

Linea_Norway

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #3 on: January 03, 2019, 04:19:48 AM »
Life can be unexpectedly shorter than you think. Please don't waste it being miserable in a job. Quit as soon as you can afford it. If you like some extra economic safety, try to do it by doing some PT consultancy work. Or with a very PT job, maybe 2 days a week. This would probably cover your whole expenses. Or find some lower paying sidegig in something you enjoy.

former player

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #4 on: January 03, 2019, 04:24:38 AM »
Hello and welcome.  Congratulations on the portfolio and the paid off home.

As others have mentioned, your choice is not between working in a well paid but hellish job situation and complete retirement.  There are a lot of options out there, but they might be difficult for you to see while you are in that hellish situation.

One of the excellent concepts you will see around the forums is the concept of "FU money" - the amount of money that isn't FIRE but which allows you to walk away from a situation you don't like and find something better.  You have FU money in spades.   If you can internalise that idea it will free up your thinking to work out all your possible options and which one you might like to try next.

Good luck.

MrThatsDifferent

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #5 on: January 03, 2019, 04:47:40 AM »
Congratulations! Youíve won! Youíve achieved FI. Your job is hellish, quit yesterday. Since youíre FI, youíve got FU money for days, which means you NEVER have to work in any situation that you donít like. If youíre concerned about money at all, then you can get a part time job doing anything you want. But, most importantly, you never have to work a day inthe hellish company unless you want to.

Villanelle

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #6 on: January 03, 2019, 04:57:24 AM »
I'd quit almost immediately, and find some sort of side hustle or part time job, just for peace of mind.  I think substitute teaching, for those who qualify, is perfect.  Semi-decent money (more than minimum wage), and entirely flexible.  You can scale up or down, take weeks or months off to travel or just relax, and yet still have  semi-reliable source of at least some income. 

If that doesn't work, find something.  Barista at a local coffee place, consulting if it's viable for your line of work, something related to a hobby (just make sure you don't end up spending more buying things at the yarn store than you make working there!), seasonal work (especially at an outdoor hobby, if that appeals), or anything.  Aim to bring in maybe $8k for the year, and see how it goes. 

Linea_Norway

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #7 on: January 03, 2019, 05:56:26 AM »
You don't mention a partner, so maybe you are living alone. Is your home large enough to rent out a room, or make a semi-separate rental unit? That would give your some extra income without making a large investment or a big risk.

Laura33

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #8 on: January 03, 2019, 06:35:20 AM »
First:  congrats!  Quit now!  No need to stay one more minute in hell when you have the key right there in your hands.  You have plenty of time to find a part-time, more enjoyable job to supplement your income if you find you need it down the road.

If you are worried about the markets:  take @$50K from your 'stache and put it in cash/CDs/something "safe" and accessible.  This gives you cash to ride out two full years of market ups and downs.  That would also leave you with $600K in the market, which alone is enough to meet your stated budget.  Every year, you'd sell enough of your investments to cover a year's worth of expenses and use that to replenish the cash 'stache -- unless the markets are way down, in which case you live off the second year's cash supply, and then replenish the whole thing when the markets recover.

Note that this approach does not provide optimal returns, because you are giving up growth on $50K of your money.  But it can provide a psychological safety valve to minimize panic in turbulent markets.

des999

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #9 on: January 03, 2019, 06:53:42 AM »
I'd quit almost immediately, and find some sort of side hustle or part time job, just for peace of mind. 

this is what I would do.  Even 5-7k / year would make a huge difference.

Assetup

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #10 on: January 03, 2019, 08:12:09 AM »
As some said above it depends on how much you like or hate your job.  If you enjoy it and want to be cautious to get your swr down then work another year(or whatever time you want).  If you hate your job and it makes your life suck then walk in today and give your two weeks.  The numbers work if you can keep your spend rate where it's at.  It's really just an emotional decision at this point.

mountainmustache

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #11 on: January 03, 2019, 08:36:54 AM »
I've read some excellent responses this morning, confirming my decision to join the forum.  Thank you all very much!

mxt0133

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #12 on: January 03, 2019, 10:37:53 AM »
Can you add more details to your situation?  Do you have a partner, kids, health issues, aging parents, ect?

Based on the limited information you just gave us, why not prepare to quit this year.  Coast for the next six months and make your job as tolerable as possible, take sick days, take every other Friday off, say no to tasks that you don't like doing or delegate them to someone else while only doing stuff that you like.  Another suggestion is to take a sabbatical and test out retirement. 

Look for a part-time job that can help help with the anxiety of a volatile market.  That's what I would do if I really couldn't tolerate my job.  Otherwise look for another job that


robartsd

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #13 on: January 03, 2019, 12:09:23 PM »
650K invested today and 24k annual spend means that you're set for a 3.7% withdraw rate in spite of the poor recent returns of the markets. If you're confident in your spending level, you can FIRE. If you really feel that your job is hellish, don't fall victim to OMY syndrome. There are also lots of employment options between your current ~$125k and ~$24k that would allow you to continue accumulation at a slower rate.

Eric

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #14 on: January 03, 2019, 02:29:06 PM »
Agreed with others that you're basically there already.

Just make sure that the $24k that you're planning to live off of includes things like health insurance premiums and health care, prorated house repairs, a new (to you) car fund (for when the time comes) and things like that which aren't likely part of your "normal" spending.  Or of course you could plan to earn a bit to cover some of these areas if that's preferred.

mountainmustache

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #15 on: January 03, 2019, 08:36:53 PM »
Just to answer some of the questions posted today, I am single, in excellent health, ride a bike mostly everywhere I go like Mr moustache, have good insurance figured into my budget, have a very comfortable condo on the side of a mountain but it is low maintenance, and I'm in my late 40s.  I appreciate all the comments today because they've taught me that my decision is mostly just emotional now.  It's emotionally very strange to think about leaving such a high paying job and our culture doesn't encourage this, but the posts today have given me a lot to think about. Thank you so much.

MrThatsDifferent

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #16 on: January 03, 2019, 09:47:57 PM »
Just to answer some of the questions posted today, I am single, in excellent health, ride a bike mostly everywhere I go like Mr moustache, have good insurance figured into my budget, have a very comfortable condo on the side of a mountain but it is low maintenance, and I'm in my late 40s.  I appreciate all the comments today because they've taught me that my decision is mostly just emotional now.  It's emotionally very strange to think about leaving such a high paying job and our culture doesn't encourage this, but the posts today have given me a lot to think about. Thank you so much.

I know what you mean. When I leave in 4-7 years Iíll be walking away from a high paying job that ticks every box for me and is my dream job, and part of me thinks Iím crazy but the part Iím listening to thinks Iím awesome and is so excited for me and proud of me. Why? Because I have a plan.

Figure out your plan and get excited about that. Redirect your emotional energy from something that you hate and isnít deserving of your focus to something that you love.  Thatís the key. You get one life, donít waste a second of it on anything that doesnít bring you love, joy, peace, passion, happiness or laughter. Not. One. Second.

LifePhaseTwo

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #17 on: January 04, 2019, 12:21:42 PM »
Just to answer some of the questions posted today, I am single, in excellent health, ride a bike mostly everywhere I go like Mr moustache, have good insurance figured into my budget, have a very comfortable condo on the side of a mountain but it is low maintenance, and I'm in my late 40s.  I appreciate all the comments today because they've taught me that my decision is mostly just emotional now.  It's emotionally very strange to think about leaving such a high paying job and our culture doesn't encourage this, but the posts today have given me a lot to think about. Thank you so much.
In November I gave up a high paying job with excellent benefits. It wasnít a truly hellish job, but every day that I spent at the office felt like a burden, like I was wasting my life away. Once I shook off those golden handcuffs and experienced the joy of day to day freedom, my only regret is that I didnít do it sooner. Best of luck to you.

BicycleB

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Re: Advice on a little smaller portfolio than Mr. Mustache
« Reply #18 on: January 04, 2019, 05:51:13 PM »
Hi I've been reading the blogs for weeks and love it.  Just joined the forum today and glad to be here.  Almost all MMM articles are based on drawing 4%, 40K, off of a portfolio of about $1M.  My net worth is more like 850K, with 650K of this working hard in the stock market.  The rest is my home, paid for, and I only need about 24K per year to live on.  Based on the 4% rule, for me this is 26K.  Based on this, I might stop now, but we all know the next few years are going to be volatile in the markets.  Otherwise, I can keep going in my prime earning years, adding about 100K per year to my portfolio, in years where stocks will be cheap, but I'll continue to be miserable in a hellish job situation.  Any thoughts?  Thanks a lot.

@mountainmustache, same song different verse here. FYI, I'm early 50s former professional, still have license; 5 years since I last worked, though. In other words, your age is exactly when I left the job. Get ready to leave, my brother!

That said, for my own personal reasons, I may go back to work soon. So I will add a few pro/con/in between thoughts. TL;DR - think about what you used to like about your job. If there is anything about your profession you like, don't focus on quitting, focus on finding a different job that suits you.

Pro - like everyone, I agree your stash is sufficient. You don't have to work any more. I left with less than you, still have less than you, and am ok...ish. My deal is different but boils down to about 22k expected income and 20k to 22k expenses at present. I am fine and you will be just fine too. Do not stay in hell!!!

Con - My income vs expense is ok but still feels a bit thin. My total stash is about 480k including equity in a mortgaged home, so a much smaller stash than yours. That's a secondary reason I may return to work. A primary reason is that I'm more passive than the Mustachian Standard, and have melted into a pattern of shrinking a little in my skills and abilities, not using my time in ways that grow myself, and generally doing comfort routines without being fulfilled or challenging my mundane private fears. In short, I became more of a hermit than I want to admit...while the same weaknesses that made my work life difficult followed me into retirement because they were part of me, not the job. Still, the workplace is the spot I'm most scared of, and I feel like getting on the horse again would help me emotionally. Your mileage may be very different, but if you're not reaching for something specific in retirement, consider whether you might like to work if the conditions were better. I can tell you that if you quit and two or three years later start interviewing, there certainly are questions asked. If deep down you'd like some job, just not the job you have, find that. You can do this before you quit or after. What Color Is Your Parachute is a good resource for this. Don't squander this prime opportunity to transition into a dream situation.

In between - so there's a great big world. Work isn't the only thing. Giving yourself time to decompress and find what you want. You really don't have to work. And if you want to find something after decompressing, you can get there in your own time.

Whatever you decide - enjoy the escape from hell, and let us know what happens.

PS. To start the longer term process of deciding what you really want:
1. What is hellish about your current situation?
2. Is there anything you still like about your profession? If so, what?
3. If you quit work entirely, what would you really like to do all day? Remember...you can do ANYTHING.
4. Could a job exist that you WOULD want? If so, what would it be like?
« Last Edit: January 05, 2019, 07:18:02 AM by BicycleB »