Author Topic: Case Study: Making the jump to self employment  (Read 2266 times)

pomegranate

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Case Study: Making the jump to self employment
« on: August 29, 2014, 02:48:25 PM »
I am a long time lurker and I am looking for some advice on my situation.

I make 120K a year and spouse used to make 100K. We have a 240K house that has been paid in full, in addition we have close to 100K in investments (index funds and ESPP) and about 200K in 401K. Two paid off cars, two toddlers, no debt.

A few months ago, my husband was laid off from his job. Since we had good savings and could easily live comfortably on my salary we decided that husband should try out his long term dream of having his own business. He has been dabbling in this part time for a couple years and now that he's doing it full time it has taken off pretty well. He has contracts lined up for the next 4 months. He has been so busy that I have had to chip in extensively and help him out with the business. This, while I have my full time job and we are responsible for two small toddlers. We live a fairly mustachian life but our biggest expense is a full time nanny for the kids.

Our annual expenses (not including insurance premiums, 401K or HSA) are close to 40K and we spend an additional 20K on the nanny.

Now my company recently announced that they will have to let go of some people and it is possible that I may get laid off and given a decent severance package. I am not worried about this because I am pretty confident that I can land a job with similar or better pay rather quickly. But since husband's business is growing well we have been wondering if I should join him instead of getting another full time job.

Personally, I'd prefer working with my husband but I am concerned about the insurance costs - both health and life. Right now our medical premiums are $200/mo and about $10/mo for a pretty sweet life and disability insurance policy. I have shopped for ACA policies and they sound pretty expensive - about $600 for a bronze plan that is not as good as our current open access HDHP plan. If we do try this out, should we get life insurance and if yes then what kind and for how much?

Is this a bad idea? Should I stick to having a full time job till we are FIRE?

lackofstache

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Re: Case Study: Making the jump to self employment
« Reply #1 on: August 29, 2014, 02:53:32 PM »
You seem to be in a good spot. If it'll make you happy, don't let insurance premiums keep you from doing it.

Since you'll both be depending on each other to run the business & help with kids, I'd get a couple 20-30 yr term life insurance policies, somewhere between $250k-1mil depending on how big of an impac one of you passing would hurt the other's ability to maintain your current life.