Author Topic: Take a Pay Cut on the Path to FI?  (Read 2508 times)

olm

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Take a Pay Cut on the Path to FI?
« on: April 06, 2018, 04:42:13 PM »
Hello MM Community,

I'm 37 and currently on the path to FI. No kids, saving about 75% of my paycheck, and if models hold true, about 2.5 years away from financial independence.

Problem is I work at a large consulting firm, travel every week around the country, terrible culture and I'm burnt out. I received an offer today for a local consulting firm-- no travel, work 9-5, seemingly great culture. They would pay 25% less than what I am making now.

I am seriously considering taking the offer, but wanted insight from others on the FI path. Thoughts-- would you take it? Appreciate any advice and thanks! 
« Last Edit: April 06, 2018, 05:42:52 PM by olm »

nickybecky1

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Re: Take a Pay Cut on the Path to FI?
« Reply #1 on: April 06, 2018, 04:53:07 PM »
I vote do it! But some people might suggest running the numbers and looking into how much it would change your FI date. You might be surprised that it might not change by that much, but it's worth looking at.

My spouse took a 40% pay cut (and 40% cut in days of the week he is working) about 6 months ago and it has been a huge quality of life improvement for us both and didn't impact the bottom line/FI date as much as you'd guess. For us, we both enjoy our jobs but want to do them less, so I think a small change in date didn't matter much to us, but I know there are people who feel really differently. For us, the quality of life improvement was totally worth it!

I also recommend the book Decisive by Chip and Dan Heath for making decisions like this. It's a quick read and helps to put things in perspective and think about angles you might not have thought of yet.

robartsd

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Re: Take a Pay Cut on the Path to FI?
« Reply #2 on: April 06, 2018, 05:25:52 PM »
If you decrease savings contributions by 1/3 (25% pay cut/75% savings rate), it should take you about 3/2 (inverse of 2/3) as long to save (ignoring increased time for investment growth) so your FI date shouldn't be more than 3.75 years if you make the switch. Assuming 7% ROI during accumulation and 4% SWR, 2.5 years at 75% SR to FI would require that your current investment be about 14x annual spending and your new 67% SR due to decreased income with stable spending would lead to FI in 3.25 years after factoring in investment growth. It sounds to me like the change would be worth the cost of 9-15 months longer to FI.

Little Aussie Battler

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Re: Take a Pay Cut on the Path to FI?
« Reply #3 on: April 06, 2018, 05:31:21 PM »
How sure are you that the culture will be better? Do you know any current or past employees that you trust to give you an honest view?  Are you sure that the hours won't gradually increase?  Is the firm performing well (i.e. low risk of redundancy)?

There are probably other questions to ask, but if it's as good as it sounds I would make that trade any day of the week.

seattlecyclone

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Re: Take a Pay Cut on the Path to FI?
« Reply #4 on: April 06, 2018, 06:30:18 PM »
That seems like a very positive move. The closer you already are to FI, the less of a difference a pay cut makes in your expected time to get there. Once you're close it's mostly investment performance that gets you over the finish line. I voluntarily took a 40% pay cut a couple years ago along with a 40% cut in hours, and I have no regrets about it.

olm

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Re: Take a Pay Cut on the Path to FI?
« Reply #5 on: April 06, 2018, 06:39:56 PM »
Thank you everyone for the replies!

Nickybecky1: very much appreciate the book recommendation and real-life example!

Robartsd: thanks for the breakdown of how that would affect the FI path!

Little Aussie Battler: yes, I've spoken to 4 close friends who have left my firm to join this other one. They have only good things to say and the firm is growing. All great considerations and thank you!

SeattleCyclone: Thank you, and so good to hear someone else has done it without regrets!

trix76

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Take a Pay Cut on the Path to FI?
« Reply #6 on: April 07, 2018, 09:42:42 AM »
That much travel sounds brutal. I can only imagine how much it impacts every aspect of your life, from your relationships (both friendships and romantic relationships) to your hobbies to your health.

If you have friends on the inside at the new firm who can attest to a more positive culture there, and you think it’ll be a good fit, I would do it. If the new firm is growing, your salary will hopefully increase over time, and if you’re happier and less burned out on travel, you may be more likely to increase your pay over time in the new firm.

I would also try to arrange for a break between jobs, whether that’s a couple of weeks or a couple of months. It’s a good way to reset and come into a new role refreshed and ready to go!

Good luck with your decision!


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2Birds1Stone

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Re: Take a Pay Cut on the Path to FI?
« Reply #7 on: April 07, 2018, 12:23:35 PM »
I vote yes, take the new job.

Quality of life is very important.

Brother Esau

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Re: Take a Pay Cut on the Path to FI?
« Reply #8 on: April 07, 2018, 01:26:36 PM »
I did this recently. New jobby job is super chill, less hours, shorter commute, etc. Much improved quality of life.

McStache

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Re: Take a Pay Cut on the Path to FI?
« Reply #9 on: April 07, 2018, 04:18:29 PM »
I also just did this (our situations are eerily similar - are you me??).  I am so happy with my choice! Would definitely recommend making the switch.

Eucalyptus

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Re: Take a Pay Cut on the Path to FI?
« Reply #10 on: April 07, 2018, 05:14:39 PM »
Your mental health right now is much more important than FIREing a couple of years earlier. Definitely take the new job!


I'm in a job juxtaposition right now as well. I'm very close to burn out. On medication. New boss is awful. Massively overworked with huge responsibilities. The gap in what I have to legally do (compliance role) and what I've done is constantly widening, daily. The organisation and new boss don't recognise that. They are about to advertise my positions as three positions at a low fraction of part time for each. Its crazy. I care about my organisation and the people in it I serve. But I am not sure whether to step back. My problem is that jobs are incredibly scarce in my field in my location. So I might be unemployed for a while. I have some savings but only a few months worth. I'm a long way from FIRE, and have a small child, single parent. This will, on paper, delay my FIRE date, but, I hold hope that good things will come and there will be no long term net effect on it.


I'd also rather work in a wonderful job. with wonderful people, forever than attempt to struggle on towards an earlier FIRE date in an absolutely horrible one with the risk of me having a mental or physical breakdown.


Best of luck!

life_travel

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Re: Take a Pay Cut on the Path to FI?
« Reply #11 on: April 07, 2018, 10:42:19 PM »
Do it ! 25% is (while big )but not a huge difference to improve quality of life .