Author Topic: Could we advance our plan by half a year?  (Read 7533 times)

Roland of Gilead

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Could we advance our plan by half a year?
« on: August 13, 2014, 04:16:08 PM »
Hi guys,

This is definitely going to sound like a first world problem whine but here goes.

My wife is very unhappy at work and getting depressed.   Our current plan is to retire early in about a year.   She makes all of the money (a bit over $250K) and gets part of it in a hefty bonus in the fall.

I have our current net worth at about $1,300,000 which includes a house we plan to sell.   In my figures I have valued the house at what it should be worth once fixed up.  I had planned on doing that this winter/spring and having it on the market next spring/summer.   It is an expensive house to fix and maintain (taxes, flood ins, heating).

If we stick to our plan we should easily hit $1,400,000 by next fall even with a flat market.  I am trying to figure out a way we could bail early and not do too much damage to the finances, as setting a earlier date might cheer her up.

An exit in early Feb 2015 would generate some 2015 income (for Roths and such) and capture a small vest of stock plus a partial HSA contribution.   Probably our income could be controlled down to about $30,000 that year instead of ~$200,000 if we left in October 2015.   Tax-wise we would make out better, as we should be able to pay near zero tax on the $30k vs about $50,000 tax on the $200K.  So we are talking $150,000 vs $30,000.   We could cut out a vehicle immediately and also save on commuting gas.   Call that another $10,000 (she has a round trip near 2 hour commute).   Now we are at $140,000 vs $30,000.

If there was some way we could sell the house much earlier without taking a total bath (it needs work)...

If our income really was only $30,000 in 2015 we could get a silver ACA plan with subsidy for only a couple hundred a month.  I believe a change in employment would qualify us to enroll.  If we bail in October we are probably going to need to go Cobra for Oct, Nov, Dec or enroll in a bronze plan for those 3 months with no subsidy (having income of $200k).

Personally I think we could live on $1,300,000 bailing early.   $1,400,000 was just a goal of having a SWR rate of 3% and living on $42,000 a year.   So we bump that to 3.5% and still get $42,000 a year.

Should I push her to leave early or not argue with her and let her stick it out but stay depressed?

mozar

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Re: Could we advance our plan by half a year?
« Reply #1 on: August 13, 2014, 06:28:09 PM »
Depends on what your expenses actually are.

Roland of Gilead

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Re: Could we advance our plan by half a year?
« Reply #2 on: August 13, 2014, 06:46:02 PM »
Depends on what your expenses actually are.

A hard figure to nail down but we plan on either heading south in our RV and boondocking for fall/winter 2015 or with this plan we would probably head up to Alaska and spend the rest of 2015 and up until Sept 2016 in Alaska, then head south eventually to Florida.

With no house payment and if we stay on federal land a lot, I think $42,000 a year could be reasonable, even spending $6,000 to $8,000 on fuel.

edit:   In Alaska during the winter months we would probably try to find a very small house to rent near Anchorage as staying in the RV at that time might not be reasonable.
« Last Edit: August 13, 2014, 06:47:36 PM by Roland of Gilead »

dragoncar

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Re: Could we advance our plan by half a year?
« Reply #3 on: August 13, 2014, 06:49:52 PM »
Can she just intellectually bail without actually quitting?  I know some might find that... distasteful... but she'd still get a less stressful life.  Worst they can do is fire her, right?

Roland of Gilead

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Re: Could we advance our plan by half a year?
« Reply #4 on: August 13, 2014, 06:59:16 PM »
Can she just intellectually bail without actually quitting?  I know some might find that... distasteful... but she'd still get a less stressful life.  Worst they can do is fire her, right?

She isn't that type.   If a project needs to get done she makes sure it gets done.

Now layoffs coming out of the blue would be like a lottery ticket (64 weeks of severance for her length of employment)...

seattlecyclone

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Re: Could we advance our plan by half a year?
« Reply #5 on: August 13, 2014, 07:15:03 PM »
I have our current net worth at about $1,300,000 which includes a house we plan to sell.   In my figures I have valued the house at what it should be worth once fixed up.  I had planned on doing that this winter/spring and having it on the market next spring/summer.   It is an expensive house to fix and maintain (taxes, flood ins, heating).

Have you done the math to see if fixing the house is worthwhile? Sure, the house is worth less now than it would be if it were in great condition, but you'll have costs either way. You can continue paying taxes and insurance on your run-down surplus house while you wait to spend even more money fixing it up, or you could just sell it as is and get that money working for you right now. Once the house is sold you'll have a better handle on how much money is actually in your stash, which will give you a better idea about whether it would be a good idea for your wife to retire a few months earlier than planned.

mozar

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Re: Could we advance our plan by half a year?
« Reply #6 on: August 13, 2014, 08:46:41 PM »
You can come up with some pretty good estimates of what your expenses will be. Without that it's hard to comment.

Sdsailing

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Re: Could we advance our plan by half a year?
« Reply #7 on: August 13, 2014, 09:03:31 PM »

Far too little data.

Examples:

Not clear how many houses you currently own.

Not clear if you own or need to buy RV.

Long term housing plan?

Children?

Age?

Roland of Gilead

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Re: Could we advance our plan by half a year?
« Reply #8 on: August 13, 2014, 10:01:23 PM »

"Not clear how many houses you currently own."

One

"Not clear if you own or need to buy RV."

Own.  Custom built by us.  Truck, camper, smaller sailboat not included in net worth.

"Long term housing plan?"

Five year plan is travel in the truck/camper/sailboat then sell that and buy a used blue water sailboat.

"Children?"

None.

"Age?"

44,45


Sdsailing

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Re: Could we advance our plan by half a year?
« Reply #9 on: August 13, 2014, 10:26:15 PM »
Given your params my main concern would be that at some point you may want to "land" in a regular house again, and would then need cash for a house purchase or the equivalent in rent.

My inclination would be to either keep current house for rental and real estatr inflation hedge, or sell it and buy something now to use as a rental and potential later in life residence. 


ShortInSeattle

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Re: Could we advance our plan by half a year?
« Reply #10 on: August 13, 2014, 10:48:23 PM »
I don't think your numbers are solid enough to recommend her departure.

IF you can sell the house for what you plan...
IF the market doesn't tank...
IF your ER budget estimates are realistic...

Too many ifs. 

It's not an all or nothing thing though... right? She could quit for a year then seek other employment, you could work for a few years....  These may not be as efficient as her sucking it up for a year, but they are options.

Perhaps her depression is worth tackling, separate from the ER decision. Quitting may not be a fix, anyways. Most folks would consider getting paid $250k for one year of work to be a tremendous blessing, so unless her company is truly abusive, there could be something else going on.

Best of luck to you and the missus.

Sdsailing

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Re: Could we advance our plan by half a year?
« Reply #11 on: August 13, 2014, 10:54:48 PM »

 Most folks would consider getting paid $250k for one year of work to be a tremendous blessing,

Most folks do not have the training or skill set required for such a job.  More to the point, most folks have not experienced the incredible levels of stress that often accompany this type of job, or the pressure that results from the constant need to perform at a very high level.

ShortInSeattle

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Re: Could we advance our plan by half a year?
« Reply #12 on: August 13, 2014, 11:08:01 PM »

 Most folks would consider getting paid $250k for one year of work to be a tremendous blessing,

Most folks do not have the training or skill set required for such a job.  More to the point, most folks have not experienced the incredible levels of stress that often accompany this type of job, or the pressure that results from the constant need to perform at a very high level.

I understand your point, but I don't completely share your perspective.  I think the whole "high earners have higher levels of stress - regular people can't understand" thing is mostly a myth. I have advanced training and am a highly compensated person. So are many in my social circle. I was *more* stressed when I worked crap jobs in college than when I started pulling in good money in my professional career.

For every investment banker who talks about how tough their gig is, I invite them to work as a WalMart cashier for a week, or as a CNA caring for the elderly.

In any case, I wasn't trying to chide OP's wife for her success. Apologies if it read that way.

Thegoblinchief

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Re: Could we advance our plan by half a year?
« Reply #13 on: August 14, 2014, 08:42:43 AM »
I know a bit about your plans and your design for the camper based in prior posts. $42000 seems like an awful lot to spend per year for a nomad lifestyle. Go Curry Cracker lives pretty damn well, has airfare, more eating out, no advantage of the RV, and they average about $30K.

A true gunslinger wouldn't need $42K, not even if he was chasing the Man in Black through a 5-star hotel the size of an entire planet...

Roland of Gilead

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Re: Could we advance our plan by half a year?
« Reply #14 on: August 14, 2014, 08:58:32 AM »
I know a bit about your plans and your design for the camper based in prior posts. $42000 seems like an awful lot to spend per year for a nomad lifestyle. Go Curry Cracker lives pretty damn well, has airfare, more eating out, no advantage of the RV, and they average about $30K.

A true gunslinger wouldn't need $42K, not even if he was chasing the Man in Black through a 5-star hotel the size of an entire planet...

I have forgotten the face of my father  :-(

It is diesel and healthcare that have me concerned and which is why I budgeted $42k.  Our rig gets about 9mpg loaded up with the camper, motorcycles and 3000 pounds of supplies (food, water, extra fuel, gear).   A 6000 mile journey is thus going to cost $3,000 plus a $200 service.   Figure another $500 for generator + motorcycle fuel, propane for heating/cooking.

We might only have one 6000 mile round trip per year but potentially a few hundred mile trips per month, so call fuel $6,000 a year.   Insurance, registration, park passes = $1200 per year.  Healthcare could be in the range of $4,000 to $12,000 a year.   Worst case then we are talking $19,200 before any food, clothing, toiletries, flights, park/camping fees.

Still sounds doable on $42k and we would have a bit of money left for entertainment, but it would be a tight budget on $30k.

Deepsouth

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Re: Could we advance our plan by half a year?
« Reply #15 on: August 14, 2014, 09:09:24 AM »
1.3 Million is a good bit of money.  I think you should spend a few weeks fixing up the house then put it up for sale.  You can always aim at checking out by December 31 of this year.  I think it's more important to make sure you have a structured spending plan/system in place to live reasonably well on the 1.2-1.3.  You definitely have the OMY syndrome.  Where in Florida are you two going?  I recently purchased a cheapo condo in the Destin/Fort Walton area for ER.  Good luck.

dragoncar

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Re: Could we advance our plan by half a year?
« Reply #16 on: August 14, 2014, 09:11:38 AM »
Can she just intellectually bail without actually quitting?  I know some might find that... distasteful... but she'd still get a less stressful life.  Worst they can do is fire her, right?

She isn't that type.   If a project needs to get done she makes sure it gets done.

Now layoffs coming out of the blue would be like a lottery ticket (64 weeks of severance for her length of employment)...

If she's not that type, then I'd question whether leaving will reduce her stress at all.  There's always something to stress about

Thegoblinchief

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Re: Could we advance our plan by half a year?
« Reply #17 on: August 14, 2014, 09:16:55 AM »
Still sounds doable on $42k and we would have a bit of money left for entertainment, but it would be a tight budget on $30k.

But you yourself said the massive diesel fuel bill is only going to be for a few years.

Cheddar Stacker

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Re: Could we advance our plan by half a year?
« Reply #18 on: August 14, 2014, 09:19:43 AM »
I've seen the pictures of the RV, and after all that hard work I can see why you're in a hurry to get on the road.

I would begin fixing the house immediately, and hire out a lot of help if you have to. If it sells for your expected market value you should be fine, but that's your biggest "if" IMO.

Can you sell the house and either park the RV close to her work or rent a cheap apartment close to her work? Maybe the 2 hour commute is a big part of the stress? If that's a good compromise that keeps her working 1 more year to pad the stache it could be a good solution.

All that said though, I think you can easily get out after the fall bonus this year or in February. If you have any doubts about the stache lasting, just keep the RV parked a little longer and save a ton on gas. There's a lot of flexibility on that $42K if housing is pretty well taken care of.

Deepsouth

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Re: Could we advance our plan by half a year?
« Reply #19 on: August 14, 2014, 09:23:04 AM »
I agree with this post.  I would start clearing stuff out for either storage, donation, or Craig's list.  It can take months to get ready for this type of change, from a strategic perspective.  I would definitely start on the real process of downsizing now!

MandyM

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Re: Could we advance our plan by half a year?
« Reply #20 on: August 14, 2014, 09:27:29 AM »
Like ShortinSeattle said, it doesn't have to be all or nothing.

I say pull the plug whenever you want. The worst thing that could happen is that you pick up the occasional PT job to cover entertainment/luxuries.

Estimate what you will need for "old person money" calculate what that is in today's dollars and set that aside. http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

Use the rest to fund your RE. Earn some money here and there doing fun things. Enjoy.

chasesfish

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Re: Could we advance our plan by half a year?
« Reply #21 on: August 14, 2014, 09:31:00 AM »
I'll chime in, I think you're being too conservative at 3.5% swr.   It's really up to your wife, lay out the facts, let her decide, and tell her you support her either way.

You have enough assess and might have OMY syndrome

deedeezee

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Re: Could we advance our plan by half a year?
« Reply #22 on: August 14, 2014, 09:37:51 AM »
It's really up to your wife, lay out the facts, let her decide, and tell her you support her either way.


+1.  I think it might free up a great deal of stress if you just say to your wife - the longer you work next year, the better our stash will be, but we will be financially ok if you want to quit on [date].  I swear, once I realized that and had my FU money stored and knew we were on the same page, the work stress seemed to ease up.  The stress is still there - don't get me wrong - but the effect on me is totally different.

former player

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Re: Could we advance our plan by half a year?
« Reply #23 on: August 14, 2014, 09:43:13 AM »
How much notice does your wife have to give her job?  As she is going into ER, strictly speaking she already has FU money and could walk out at any time.  So the question might become: how much notice would she want to give to feel good about leaving?  Something for her to be thinking about, perhaps.

Whatever her proposed notice period, dealing with the house (getting it done up, on the market and sold) looks to me to be the likely time-limit on retirement, rather than the stash or notice periods.  So if you can speed up the getting the house sorted and ready to sell, that might cheer your wife up.

I do wonder what your savings rate is on an income of $250K per annum plus investments of $1.3M if you are expecting your net worth to only go up by $100k in over a year.  If you started spending now at the rate you expect to spend after ER, you will be making each day left in your wife's working life worth so much more to you both.

Roland of Gilead

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Re: Could we advance our plan by half a year?
« Reply #24 on: August 14, 2014, 10:23:46 AM »
Good replies all and something to think about.

I think I can concentrate now on fixing/selling the house and take off a lot of pressure from my wife.   She was really pushing me to finish the RV but now that that is mostly done I should be able to get up to speed on the house.   Winter is not a great time to sell but perhaps we could swing a fast sale in the early spring.

Our saving rate is better than I hinted but you have to realize you don't get to take home $250k when your W2 says that is what your gross earnings are.   We have no kids, paid off house, and standard deduction.   $60K federal tax, $10k SS and Medicare, 9.4% sales tax on purchases really take a chunk off.   Take home is about $190K.   We max out 401K and HSA, contribute to two backdoor Roths and also put 20K in 401K after tax then convert that to Roth before it has much gain.   If you back out the RV build spend, we probably save around $145K of the $190K.   Gas and vehicles are expensive though for the long commute.  Property tax, flood insurance, home insurance, vehicle insurance, registrations on 11 vehicles, it adds up (car, truck, sailboat, sailboat trailer, motorcycle, motorcycle, snowmobile, snowmobile, snowmobile trailer, camper).

If we have a flat market then I could see us only hitting about $1,450,000 vs about $1,360,000 depending if she works 1 more year or 6 months.  If we get another 10% increase in the market none of this discussion matters as we will be over $1,500,000  :-D

PloddingInsight

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Re: Could we advance our plan by half a year?
« Reply #25 on: August 14, 2014, 10:41:02 AM »
I would brainstorm about ways to earn a little money while living a mostly retired lifestyle.  Even if you have to do that for 4-5 years, your wife might prefer it to another year at a job she hates.

Gin1984

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Re: Could we advance our plan by half a year?
« Reply #26 on: August 14, 2014, 10:44:04 AM »
I've seen the pictures of the RV, and after all that hard work I can see why you're in a hurry to get on the road.

I would begin fixing the house immediately, and hire out a lot of help if you have to. If it sells for your expected market value you should be fine, but that's your biggest "if" IMO.

Can you sell the house and either park the RV close to her work or rent a cheap apartment close to her work? Maybe the 2 hour commute is a big part of the stress? If that's a good compromise that keeps her working 1 more year to pad the stache it could be a good solution.

All that said though, I think you can easily get out after the fall bonus this year or in February. If you have any doubts about the stache lasting, just keep the RV parked a little longer and save a ton on gas. There's a lot of flexibility on that $42K if housing is pretty well taken care of.
I like this idea.