Author Topic: DC Workahlolic trying to Escape the Rat Race  (Read 6262 times)

DCisExpensive

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DC Workahlolic trying to Escape the Rat Race
« on: December 22, 2014, 06:01:49 PM »
Hey MMM-ers,
Can I ask for your advice?  I'm burning myself out in a high-stress job as an executive leader in a 100-person small business.  The work is interesting, but the hours are long, the stress is high as I try to hold lots of things together; and I'd like to be able to spend fewer hours at the office and more hours with my lovely wife.  I'd appreciate any recommendations regarding how to get out of the rat race and enjoy life, however to get there.

About Us:
* My wife and I have high-paying jobs in the Virginia suburbs of DC, but I'm working entirely too many hours and we want to enjoy life more and work less (my job comes with lots of long hours and stress)
* We're currently grossing about $230K/year in combined salary, though we'd like my wife to be able to stop working once we have kids (my salary is around $140K)
* We currently rent an apartment
* We don't have any children, though we'd like to have our first next year
* I'm in my early 30s and she's in her late 20s
* We don't have any debt (no student loans, no mortgage, no car loans, no credit card debt)

We're thinking we should keep saving for now, and maybe look for less stressful jobs and/or move to a cheaper area (e.g. Charlottesville, VA; Virginia Beach, VA; or Richmond, VA) in the next few years.  We'd like to start having kids next year, and buy a house in the next 2-5 years.

What do you think wise MMM community:
1. What should we be doing different?
2. Do you think we could actually ER in the next few years (I imagine that our costs will go up with kids, so my http://networthify.com/calculator/earlyretirement calculations showing that we're ER-eligible in mid-2017 are likely too optimistic)?
3. What are we doing that you think is crazy?

Thanks,
Overworked DC-er

=======================================================================

Assets (Combined for my wife and me)
* $355K in personal (not tax-deferred) Vanguard index fund investments (mostly mix of funds to align with 2050 retirement fund allocation)
* $145K in Traditional IRA Vanguard index fund investments
* $63K in Roth IRA Vanguard index fund investments
* $198K in 401k's
* $7.2K in Lending Club P2P loans (I'm getting about 7.8% returns, so I'm not sure if I should invest more, leave it alone, or move this money to Vanguard)
* Cars ('05 Accord / '07 CR-V):  Worth somewhere around $17K

TOTAL ASSETS:  Around $780K

=======================================================================

Monthly Saving:
* Our 401k's:  Around $3K (we both max out our 401k's)
* Personal investments: Around $5K

TOTAL MONTHLY SAVINGS:  About $8K

=======================================================================

Monthly Expenses:
* Rent (ugh):  $1715
* Utilities:  $250 ($150 electric; $100 water, sewage, trash)
* Internet:  $50
* Car Payments:  None (no car debt)
* TV/cable bill:  None (we have an antenna)
* Gas for cars:  $260 (my commute is 2 miles, my wife's is about 20 miles)
* Car repairs/maintenance:  $147
* Entertainment:  $93
* Coffee Shops:  $15
* Groceries:  $600
* Restaurants:  $530
* Charitable Giving:  $375
* Miscellaneous:  $200

TOTAL MONTHLY EXPENSES:  About $4,235

mozar

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #1 on: December 22, 2014, 06:33:27 PM »
Whats your FIRE number, or what will your expenses be in retirement? Your current expenses are about 50k a year which means you will need about 1.3 million to retire. If you can get your expenses down to 31k a year (31k X 25 is 780k) by getting rid of ridiculous grocery shopping, restaurants and moving some place cheaper, you could retire tomorrow.

r3dt4rget

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #2 on: December 22, 2014, 08:20:29 PM »
"What are we doing that you think is crazy?"

1. You spend more on gas and car repairs than me, who drives 600 miles a week to work and has an old 98 Civic that needs lots of repairs.
2. Two people don't need $1130/month to eat. Other than that your expenses are pretty low for such high income.

DoNorth

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #3 on: December 23, 2014, 05:54:22 AM »
We live in Alexandria and are getting ready to FIRE and move to Michigan next fall; my wife (34) is self employed and works from home and I (36) work in Bethesda.  The  27 miles on 495 everyday at 5:50  made up the decision for us.  It's probably better I didn't get a closer job because we may have gotten comfortable enough to stay longer.

Based on your assets, you could definitely pull off FIRE if you lived somewhere cheaper.  $1715 for rent isn't high by DC standards, but to put it in perspective, I live off of Franconia in an older neighborhood and I bought a completely renovated house for $400K @ 3.375% with 1/3 acre and a large backyard (close to V. Dorn and Huntington) Our mortgage is $1950 with about $750 going to principal and the rest to interest; so for a family of four, I'm effectively paying $1200/month to live in DC.  I will most likely end up renting my house out for $2700-$2800/month when we leave.

Your electric @ $150 is really high.  We pay about $90 in the summer and $60 in the winter.  Also, how is your water so high?  Even when I water my lawn all summer, my quarterly bill is about $200.  Are you in Fairfax County?   As others mentioned, food bill is up there; try Costco or Aldi and definitely cut back eating out to 1-2 times per month.

Beyond that, you'd have to shift some of your asset allocations to maximize passive income streams, probably buy a house in a cash and find some side hustle work, but @$780K with no debts, you're just padding the stache' for your own peace of mind.


MayDay

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #4 on: December 23, 2014, 09:25:23 AM »
I would say move to a new, lower cost city, get easier jobs, buy the house, and then figure out what your new expenses are going to be within the first year or so after the kid.

Yes some costs will increase (food will definitely go up within a few years if not immediately) and even if you are both at home you may very will want to pay for some childcare/preschool before your kid(s) is in public school, and sports or other activities once they are older.  You also should plan for medical costs to go up quite a bit, and then you can be pleasantly surprised if your kid is healthy and you don't need it. 

Those things can probably be offset a lot with reduction in car spending and food/restaurant spending.  It might be reasonable to go down to one car if you both retire.

EDSMedS

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #5 on: December 23, 2014, 09:36:43 AM »
Way to go, bro!  You're free for the rest of your life!  Your wife can QUIT HER JOB TOMORROW!

Without changing a damn thing, you need ~$50K/yr to live.  Hire someone to do 2/3 of your current job for $100K, continue to do 1/3 and earn $50K.  BOOM!  There's your time AND money! 

At 7% growth, your current investments can generate ~$50K/yr.  That means you will get RICHER by only working 15hrs/wk!

If you don't feel comfortable only earning what you need to live, maybe cut that ~$500/month on groceries down.  If you cut it 50%, you can save $3K/yr.  Easy.

Now go procreate. 

mm1970

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #6 on: December 23, 2014, 10:34:40 AM »
I can sympathize for sure.  I lived in DC in my 20's (5 years).  I rented, it was expensive.  The traffic, the stress!  I went back to visit a couple of times and I do not miss the stress.

It was a difficult transition to move to the more laid-back atmosphere of California.  But I enjoy it.

How big is your apartment?  Can you downsize?

Why are you driving 2 miles to work?  I don't know where you live/ work, but I lived in Arlington and my boyfriend (now spouse) lived in Alexandria.  He often biked and I walked to work or walked/ metro'd (depending on where I lived at the time).  I walked easily a mile or more each way.  (Yes in the winter you may want to curtail that.)

Your food bill is too high.  But when I was your age, we easily spent like that too.  Took me years to improve, but I cut it in half.  Our eating out is down a lot (can you start by cutting it in half?  Or only go out once or twice?  Pick what is important to you - is it brunch with your friends?  Friday  night out?  Lunch once a week?)

surfhb

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #7 on: December 23, 2014, 10:38:53 AM »
Hmmm...... I don't think you're ready just yet.   Kids and the lower income will take a bite for sure.   

Continue to reduce your eating habits and possibly look at setting a date on the calendar for FIRE but   youre doing great job already!   Knowing what date EXACTLY just might help out with the stress

Maybe look at your 40th bday to quit?    I mean,  look at what would have accomplished by 40?    That's pretty commendable bro.   

Save $10k a month for another 7or8 years?  It goes fast!   Jeesh  Congrats!
« Last Edit: December 23, 2014, 10:43:35 AM by surfhb »

EDSMedS

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #8 on: December 23, 2014, 11:14:04 AM »
Hmmm...... I don't think you're ready just yet.   Kids and the lower income will take a bite for sure.   

I'm going to argue this point b/c I have argued this again and again with friends and family.  OP is not trying to never work again, he is trying to enjoy his time/life.  With current investments in accessible non-restrictive accounts, at current expense rates, and ignoring the very real potential that his assets will appreciate, he can live for 7 years (~360/50)!!  Why do a minute more of something he hates?  When a little human pops out, his frugality muscles will be enormous!   He'll find ways to increase expense efficiency.

Not to mention that he is making a shitload of money in his early 30s.  Whatever skills brought him to this point will surely allow him to find a more enjoyable income scheme in the future.  He's going to make more money.

OP, do the world a favor: do what makes you HAPPY, not what adds to your already unnecessarily enormous wealth!

TerriM

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #9 on: December 23, 2014, 11:28:11 AM »
Just wanted to say, as someone who had kids in mid to late 30s, I'm glad you are thinking of having them in your wife's 20s.  I think the pregnancy and birthing will be much easier for her.

surfhb

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #10 on: December 23, 2014, 02:34:51 PM »
Hmmm...... I don't think you're ready just yet.   Kids and the lower income will take a bite for sure.   

I'm going to argue this point b/c I have argued this again and again with friends and family.  OP is not trying to never work again, he is trying to enjoy his time/life.  With current investments in accessible non-restrictive accounts, at current expense rates, and ignoring the very real potential that his assets will appreciate, he can live for 7 years (~360/50)!!  Why do a minute more of something he hates?  When a little human pops out, his frugality muscles will be enormous!   He'll find ways to increase expense efficiency.

Not to mention that he is making a shitload of money in his early 30s.  Whatever skills brought him to this point will surely allow him to find a more enjoyable income scheme in the future.  He's going to make more money.

OP, do the world a favor: do what makes you HAPPY, not what adds to your already unnecessarily enormous wealth!

Oh he can definitely retire but I like to be on the safe side.     A net worth of $800K with no primary residence with a kid or 2 on the way when both are barely out of their 20s isnt exactly an enormous nest egg by any means   

But what do I know....Im 46 and will be working into my 60s :)

EDSMedS

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #11 on: December 24, 2014, 04:32:34 AM »
Hmmm...... I don't think you're ready just yet.   Kids and the lower income will take a bite for sure.   

I'm going to argue this point b/c I have argued this again and again with friends and family.  OP is not trying to never work again, he is trying to enjoy his time/life.  With current investments in accessible non-restrictive accounts, at current expense rates, and ignoring the very real potential that his assets will appreciate, he can live for 7 years (~360/50)!!  Why do a minute more of something he hates?  When a little human pops out, his frugality muscles will be enormous!   He'll find ways to increase expense efficiency.

Not to mention that he is making a shitload of money in his early 30s.  Whatever skills brought him to this point will surely allow him to find a more enjoyable income scheme in the future.  He's going to make more money.

OP, do the world a favor: do what makes you HAPPY, not what adds to your already unnecessarily enormous wealth!

Oh he can definitely retire but I like to be on the safe side.

THERE WE GO!  (With your consent, I'm assuming that I have now convinced every single one of my friends and family!  Thanks!)  Let's go, OP; tell us all what early retirement feels like!

DCisExpensive

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #12 on: January 05, 2015, 08:38:37 AM »
Thanks for all the great analysis and recommendations.  It sounds like we need to cut down our crazy food budget, shop for a good deal on a house (once I figure out where we want to settle down), and go make some kids.

Thanks everyone!

FeynmanFan

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #13 on: January 05, 2015, 11:26:18 AM »
Best wishes to you; I'm in Northern Virginia, too (NVA, or the "People's Republic of Northern Virginia"); been here since 1986.

Once advantage of living in this area is (or was, anyway) home ownership -- i.e., this being a relatively high COLA area, you generally can (or could) downsize into a smaller house elsewhere in the country, thereby freeing up equity for investment, FI, etc. DC is one of those areas you want to move from, not to, in mid-career or later. Precisely one-third of our net worth is due to the value of our NVA house. Buying homes in NVA has simply been the best investment I have ever made over the decades. And if we had to, we could bail out of here and go to a double-wide anyplace else in the country and be just fine.

Just be aware that once you leave DC and downsize, it may be prohibitively expensive for you to go the opposite direction later in life.

This is also an argument for hanging out in DC a bit longer. Buy a house, live in it for five years, then sell and head for the hills.

You also cannot beat the great schools in the area. The metro DC area has tremendously excellent public schools. So when you leave the region and simplify elsewhere, keep in mind the quality of the school system in your new habitat. I have friends who sunk a ton of $ into homes, only to have to move when their oldest child reached 8th grade as they realized their nice inexpensive home was subject to a crummy high school.

I didn't see in your estimates information about the upcoming costs of parenthood -- kids ain't cheap, even if you don't pay for their college. You might be shocked how expensive children are. This is not an argument for not having children. It instead is an argument for making sure you have built those expenses into your economics.

EDSMedS

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Re: DC Workahlolic trying to Escape the Rat Race
« Reply #14 on: January 05, 2015, 01:00:18 PM »
I didn't see in your estimates information about the upcoming costs of parenthood -- kids ain't cheap, even if you don't pay for their college. You might be shocked how expensive children are. This is not an argument for not having children. It instead is an argument for making sure you have built those expenses into your economics.

While I am still unseasoned in this area, and MAY eat my words, I know a smart guy that disagrees with you. --> http://www.mrmoneymustache.com/2011/05/26/what-is-the-real-cost-of-raising-children/