Author Topic: Excessive income redundancy?  (Read 4678 times)

okits

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Excessive income redundancy?
« on: April 06, 2015, 11:15:56 PM »
This is a topic that's filled with anxiety and emotion for me, so I hoped some smart, rational, and experienced Mustachians could advise me.

The background: Hubby and I could be described as being "Mustachian Lite".  We save about half our gross income. We could cut a lot deeper but are generally satisfied with our spendy habits as certain things are important to us.

Hubby earns a good living in a cyclical industry. We can live, raise our family, and still save a nice chunk on his pay alone.  We figure his job is good for at least two more years, reasonably safe for five. After that, we have no certainty on whether he'll command great or middling pay.

Our 'stash, at 4% SWR, would cover 30% of our living expenses if we failed to downsize anything, 40% if I was a SAHP and we didn't outsource any childcare.  And perhaps nearly 50% if we went hardcore Mustachian.  (Just to give you an idea of size.  We have no plans to touch it and it would take a substantial collapse in income for us to stop adding to it.)

We are mid-to-late 30s and live in a HCOL area.  One wonderful child who has some special needs (not huge ones but they do require extra time and effort from us.)

My dilemma: I'm nearing the end of a leave of absence and slated to return to a job that I find very stressful. I work nearly 50% longer hours than hubby, making nowhere near the same money. Holding this job (which I've had since before hubby and I met) has been bad for my health and bad for our marriage.

I've looked for other work but I appear to be pigeonholed into my current job function if I want to make a decent amount.  I have explored going back to school, but the costs are enormous unless I can identify something I really want to do (which I haven't been able to.)

My plan was always to keep earning a second income that was big enough on its own to support our family (both for FIRE goal and for security, since hubby doesn't have long-term job security.) I am now wondering if that is really necessary, especially since I am having such a hard time achieving this (unless I return to my old job.) 

Am I over-worrying our family's need for income?  At the moment we don't actually even need me to earn any money.  In the worst-case of total income loss we would do all right moving to a LCOL area and cutting expenses to the bone.  Most likely, hubby will keep earning decent money and our 'stash will keep growing.

I am wondering if it's too soon for me to step back and find an enjoyable job that might pay peanuts, but that won't consume all my time, health, or happiness.  Hubby is on board, I am the one worried about the "what if" disaster scenarios where we end up jobless and broke.

Thoughts, advice, face-punches?  I've omitted personal info but can try to provide other details if that may help.  Thanks for reading. :)

secondcor521

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Re: Excessive income redundancy?
« Reply #1 on: April 07, 2015, 01:24:54 AM »
I worry a lot, and I think you're worrying too much.

If your husband is on board, you can meet your needs and still have a few wants and save something with just his income, I would say go for it.

If you're willing to be or want to be a SAHP, my understanding is that very often the actual savings from doing so are greater than most people think (because you avoid the expenses associated with your job such as commuting, business clothes, etc. as well as indirect expenses such as eating out more frequently due to time/stress concerns, etc.).

Good luck whatever you decide.

velocistar237

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Re: Excessive income redundancy?
« Reply #2 on: April 07, 2015, 08:26:10 AM »
Is it expected that you work past 40 hours, or have things just evolved that way?
What do you think would happen if you tried to negotiate to not work beyond 40 hours?

Retired To Win

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Re: Excessive income redundancy?
« Reply #3 on: April 07, 2015, 09:15:38 AM »
Okits, if you read carefully your Original Post you'll see some nuggets of wisdom on what you could do.

The first thing I saw is that you actually seem well positioned to plan your move to an LCOL area now.  You're not happy with your job.  You're not sure if your spouse's job will be there beyond the next 2 years.  Even if you own your home, and even if you have to choose a new location keeping your child's special needs in mind, there have to be relocation opportunities that would make a HUGE difference in the balance between your living expenses and how much of it could be covered by your stash.

So, you could crank back now to a job that is less stressful and eats up less of your time... and use your newly gained free time to start planning that move.

Good luck.

kathrynd

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Re: Excessive income redundancy?
« Reply #4 on: April 07, 2015, 09:21:07 AM »
quit you job, and have a few more babies....they are worth it  :)

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Re: Excessive income redundancy?
« Reply #5 on: April 07, 2015, 11:39:49 AM »
You may have already done this, but have you done the math on your income, and then back-calculated your effective hourly wage?  Take your wages, subtract out FICA, SS, Federal income taxes, state income taxes, childcare costs, and transportation and clothing spending.  Then divide by the 60 hours/week you're working (or however much it is).  Is your health, marriage, and sanity worth that amount?

I don't know how many hours you'd be working, or how much you'd be getting paid.  It might be worth it for you, or it might not.  I'm just suggesting you run the numbers.

larmando

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Re: Excessive income redundancy?
« Reply #6 on: April 07, 2015, 11:50:35 AM »
Also what does your husband want wrt FIRE? Where would you be towards that in 2 years if you didn't work? And if you worked? Same in 5 years. And also: can you help cutting some of that time *now* maybe by cutting things you "value" but that are not necessary and you'd end up paying out of his work time/risk?

dragoncar

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Re: Excessive income redundancy?
« Reply #7 on: April 07, 2015, 11:56:46 AM »
So quitting your job would effectively increase your stash by 33%?  Sounds like it could make sense to quit or at least bargain for better conditions (walking away if your suggestions aren't implemented)

okits

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Re: Excessive income redundancy?
« Reply #8 on: April 07, 2015, 12:42:52 PM »
Is it expected that you work past 40 hours, or have things just evolved that way?
What do you think would happen if you tried to negotiate to not work beyond 40 hours?

For both my employer and my customers (B2B), overtime is company culture and expected.  I have been doing it because probably 50% of my pay derives from overtime (bonus for exceeding quota.)  There's also the "sh!t sandwich effect", where the more bread you have/make, the less you-know-what you have to eat.

I am pondering returning, trying to work the basic 40, and seeing how it goes. Hubby has (and truthfully, I have) reservations about this. It is hard to avoid slipping into old behavior patterns, and even harder when something is designed to promote habits you don't want. 

okits

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Re: Excessive income redundancy?
« Reply #9 on: April 07, 2015, 01:12:27 PM »
You may have already done this, but have you done the math on your income, and then back-calculated your effective hourly wage?  Take your wages, subtract out FICA, SS, Federal income taxes, state income taxes, childcare costs, and transportation and clothing spending.  Then divide by the 60 hours/week you're working (or however much it is).  Is your health, marriage, and sanity worth that amount?

I don't know how many hours you'd be working, or how much you'd be getting paid.  It might be worth it for you, or it might not.  I'm just suggesting you run the numbers.

Ouch. About $10/hr.  You are right, the additional money isn't so attractive for the stress and lost family time involved.

I would prefer at least part time work to maintain some marketable skills, but that's certainly not limited to my current role.

okits

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Re: Excessive income redundancy?
« Reply #10 on: April 07, 2015, 03:22:53 PM »
Okits, if you read carefully your Original Post you'll see some nuggets of wisdom on what you could do.

The first thing I saw is that you actually seem well positioned to plan your move to an LCOL area now.  You're not happy with your job.  You're not sure if your spouse's job will be there beyond the next 2 years.  Even if you own your home, and even if you have to choose a new location keeping your child's special needs in mind, there have to be relocation opportunities that would make a HUGE difference in the balance between your living expenses and how much of it could be covered by your stash.

So, you could crank back now to a job that is less stressful and eats up less of your time... and use your newly gained free time to start planning that move.

Good luck.

This is a great suggestion I hadn't thought of. A few things are holding us to the area for the medium term, but we could certainly move any time if our area and associated costs became unaffordable. It would actually be really smart to figure out now where we could live in semi-FIRE, so when we want to pull the trigger the plan is in place (vs. the nebulous "someday" idea that floats around in our minds.)

We always pictured the LCOL move to be either as empty-nesters or running away from our careers to live on a beach.  But certainly it could be part of a life redesign for our young family to work less and live better.

nereo

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Re: Excessive income redundancy?
« Reply #11 on: April 07, 2015, 04:10:41 PM »
... filled with anxiety and emotion for me...

 We save about half our gross income.

Hubby earns a good living in a cyclical industry. We can live, raise our family, and still save a nice chunk on his pay alone.  We figure his job is good for at least two more years, reasonably safe for five. After that, we have no certainty on whether he'll command great or middling pay.

Our 'stash, [is currently about 8-9 times our current living expenses, which could be reduced fairly easily]

My dilemma: I'm nearing the end of a leave of absence and slated to return to a job that I find very stressful. I work nearly 50% longer hours than hubby, making nowhere near the same money. Holding this job (which I've had since before hubby and I met) has been bad for my health and bad for our marriage.

My plan was always to keep earning a second income that was big enough on its own to support our family (both for FIRE goal and for security, since hubby doesn't have long-term job security.) I am now wondering if that is really necessary, especially since I am having such a hard time achieving this (unless I return to my old job.) 

Am I over-worrying our family's need for income?  At the moment we don't actually even need me to earn any money. 
I've shortened your OP and highlighted the things that jumped out at me.

Your job makes you stressed and miserable, and you don't even need it for the foreseeable future.  Based on your comments I see no reason why you should go back to your job if you don't want to.  Your health and your marriage are worth it, especially since you don't need the income.



Look at it this way:  Even if you never saved another penny, your current 'stach could have you retired in 16-18 years.  You have enough F-you money that you could both not work for a solid year and you'd still be able to retire in 20 years. This is the pessimistic scenario (you quit, your husband is out of work for a year, and then he gets a job that just meets your annual spending.
 Pat yourself on the back - you've done a very good job already.

Now let's say that you quit, your husband keeps working his job for 3 years allowing you to save 25% of gross income (my best guess based on your vague figures).  After 3 years he takes a job that doesn't pay nearly as well.  Your "time to retirement" is about 13-14 years.  If you absorb the childcare duties I estimate it would be closer to 10 years, since you'd require a lot less.

FInally, what would happen if you kept working, slaved away and kept saving 50% of your income.  Your FI date will only drop to 10-11 years, which is only two years faster than not working, and is the exact same time frame as it would be if you quit and took over all the currently outsourced childcare.  You would be stressing yourself out and taxing your marriage, and you wouldn't get to FI any faster.

JLR

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Re: Excessive income redundancy?
« Reply #12 on: April 08, 2015, 05:36:04 AM »
It sounds to me like you should go for it. I like the suggestions above to reduce your expenses by moving to a LCOL area. See what sort of hustles you can manage from home. If things go downhill with your husband's job you can look at returning to work yourself, or perhaps you will have had enough time to build up an income of your own.

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Re: Excessive income redundancy?
« Reply #13 on: April 08, 2015, 06:08:30 AM »
Tagging along to the benefits of quitting & being a SAHP, many friends and family members have found new passions or profitable ways to use their skills while maintaining a SAHP role.  Especially as the kids get older and involvement is needed less during the school day.

Also don't sell short the benefits to your child's development, your support to give to your husband and the well being of your own sanity, those 3 are huge plusses for staying at home.

Take the plunge, allow the absense of stressful work to show itself in all aspects of life and I'm sure you'll find ways to keep pumping the stache!

kpd905

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Re: Excessive income redundancy?
« Reply #14 on: April 08, 2015, 06:12:24 AM »
You may have already done this, but have you done the math on your income, and then back-calculated your effective hourly wage?  Take your wages, subtract out FICA, SS, Federal income taxes, state income taxes, childcare costs, and transportation and clothing spending.  Then divide by the 60 hours/week you're working (or however much it is).  Is your health, marriage, and sanity worth that amount?

I don't know how many hours you'd be working, or how much you'd be getting paid.  It might be worth it for you, or it might not.  I'm just suggesting you run the numbers.

Ouch. About $10/hr.  You are right, the additional money isn't so attractive for the stress and lost family time involved.

I would prefer at least part time work to maintain some marketable skills, but that's certainly not limited to my current role.

If you max out a 401k and maybe an HSA, you'll have less federal, state, FICA and Medicare that you need to subtract from this income. 

okits

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Re: Excessive income redundancy?
« Reply #15 on: April 08, 2015, 10:07:05 AM »
A huge thank you to everyone for your perceptive and wise comments. You've really helped me see that I've been trying to convince myself this is a financial risk issue, when the majority of it is less rational than that (identity issues around job, fear of dependency, anxiety over the future, clinging to a familiar way of life.)

Hubby has been interested in FIRE along with me (been a few years now).  We would both probably always do some kind of work (e.g. PT, contract, volunteer), but he is enticed by the security, freedom, and low-stress that our 'stash can provide.  We both really want to be present and involved with our child(ren - would like at least one more!)

We chatted a bit last night about LCOL towns we could move to.  He likes the idea of researching and planning that now, so we are informed and prepared when the time is right.

He was not very impressed with my $10/hr figure (which includes maxing out my RRSP - the Canadian 401k - and deductions for childcare expenses.) I know it's a lot of money when taken on an annual basis, but if I could net even a fraction of that in a less demanding job we feel it would be well worth it.

My leave of absence has been due to family and health reasons, so I haven't actually had a non-busy period to see what interests and pursuits surface when I have time and mental energy to explore other opportunities. 

If hubby maintains his current pay level, depending on my earnings (if any) and investment returns we'll have a seven-figure NW in 5-7 years.  If I returned to my job, using the same set of assumptions, we'd be there in 3-4 years.  Only a few years' difference makes a compelling case that we can afford a less stressful job (and more family time) for me, right now.

I appreciate being able to come here to talk about this. IRL we have nobody to discuss this with.  All our close friends or colleagues who have families seem to want (need?) every dime they can earn.  We're fortunate to be able to "buy" some of our lives back.

Cheers, and thanks again!!!

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Re: Excessive income redundancy?
« Reply #16 on: April 08, 2015, 10:30:17 AM »
sounds like you are making progress, and that your financial situation (7-figure net worth in 5-7 years) is even better than I had calculated.

In your case I don't think it is about the money.  Figure out with your SO what will bring the greatest happiness to both of your lives.
G'luck and I hope to see more posts from you soon