Nuke 401k?

[RiskDown]

Some questions for all the Mustachian’s who have completely earned financial independence.

In regards to NON-INTEREST REVENUE… From what I’ve read, I’ve gotten the impression, that the vast majority of people who have earned their FI on this site, end up making either MORE or a RESPECTABLE amount of income after they retire, because they get to focus 100% on doing what they love, and no longer have the excess stress/baggage which was limiting them, when they needed to jump through other people’s hoops.

First, some quick background info:
Age = 32
Personality = INTP (have always thought very differently than most people, and consider myself creative and outside the box thinker… but my interests truly are all over the place… and change quite frequently)
Business/financial acumen = I have a pretty good understanding of business/finance and firmly have embraced the MMM principles over the last year of life.;
Currently salary = 45k/year (smaller town, low cost of living)... Wife earns 45k/year also
Stache = I have two 401k’s (one worth 13k and the other worth 12k) ...Wife has one worth 18k.
Debt = 24k student loans @ 5%
Expenses (secured by assets) =140k home loan @ 4%, Car Loan 15k @ .9% (.9% is accurate, stupidly purchased it new)... either of which could be sold for more than we currently owe.

I am married, wife makes about the same as I do, but has pretty solid long term increase in earning potential 

I’m basically at the point now, where I want to quit my job, and roll the dice on finding something I truly love and am passionate about. I’ve disliked every job I’ve ever had, and am not sure I will ever find something I truly love and want to do, while I’m working for someone else. I feel like “traditional work” combined with my personality type, greatly limits the amount of energy I have leftover to put towards becoming self-employed and accomplishing my own goals.

So my question for the financial independent mustachians, is knowing what you know now… which option would you choose… and why?

A)   Traditional approach to FI, keep working, combing my income with my wife’s, switching jobs to lesser of evils and hoops…pay car off, turn around and sell, since it's nicer than what is needed, and buy a reliable cheaper one, + use excess to apply to paying off student loans, and do best to summon enough energy to build something on the side, which I can grow… have the FI in early 50’s…  (current trajectory)

B)   Pay off debt for next 2 years, build up a little savings, and roll the dice by quitting job for 2 years…letting my wife support us (minimizing our savings) and focusing purely on leveraging my passion/love… if I fail, I go back to A… (worst case scenario=  missed time contributing to stache, no added debt, 4 year set back, re-entering job force at 36, making less, and having to earn back up)

C)   Pull money out of 401k’s to pay off debt NOW, save up a little money, let my wife support us (minimizing our savings), and JUMP NOW …. (worst case scenario= missed time contributing to stache, no added debt, throwing away 25k + X years of compound interest,  re-entering job force at 34, making less, and having to earn back up)

As I read many of your post, what seemed to resonate with me, was that for many of you FI-mustachians, the difference between Steve Jobs/Bill Gates/Mark Zuckerberg and many of you guys... was they were just more willing to roll the dice,  pursue their true love, and ignore dogma's BEFORE they secured their fortune.

/Thanks for your time, greatly appreciate any advise or follow up questions.

[surfhb]

I'd go with plan A

Let's not forget that all those men were willing to roll the dice but they also happened to be the right place at the right time.   In other words....they got lucky :).  Furthermore,  they work VERY hard!   I wonder how many sleepless nights were spent writing code on their part at the beginning?!  It's probably mind numbing to most

They were also smart and had jobs on the side.   Taking penalties & taxes on cashing out a 401k isn't wise IMO.   Also making your wife take up the slack or burning through savings doesn't seem right to me.     We all hate our jobs ( most anyway) so don't feel bad.  ;).  Image what sweetness it will be once you're FI?

I say continue to work and develop your passion on the side.    Can I ask what your passion is?

[RiskDown]

My passion = philosophy, understanding the big picture, constructing the perfect theoretical systems in my mind, and sharing/teaching others what I have learned from the process... The longer I work with any system, the more I lose interest and want to move on to the next.

[SpicyMcHaggus]

No- don't nuke your 401k.
Start off small. Downsize the car. Trade it in for one that will be paid off.
Eliminate all debt in order of highest interest on down while socking away maximum in your retirement accounts.
Consider a career change to something that might make you happier. Maybe you can teach part time at a community college as bonus income.

There is no magic algorithm to FI, and it doesn't come easy.  I'm 30 and I'm on the 10 year plan. I like a little extra cushion, spend more than your average mustachian, and go nuts when I'm not busy for more than a week. Working seems natural for me, I'll just be doing it on my terms.

[RiskDown]

Please don't get me wrong, I 100% understand and subscribe to the MMM principles. I just didn't stumble onto them until recently... and have had to do some reconnecting with a lot of old philosophies I let fall dormant in the process of life and marriage (minimalism, where happiness comes from, and the time=money equation)...And learn the value of reading/staying involved in the MMM community, to keep a fresh perspective and more discipline.

I just think, I'm going to end up really being rich and successful one day, and  realize I could have put myself there far faster, if I just followed what my instincts are screaming at me.... put energy towards self-employment and doing what you love.

I think for my personality type in particular, traditional work = devastating on energy levels. 

[matchewed]

Look you'll probably FIRE either out of any of the paths you take as long as you listen to the basic advice this group of people follow. Minimize expenses, maximize happiness, detach your happiness from the materials around you, and learn financial basics.

One of those financial basics will be not paying extra money for hip shot decisions. Paying a 10% penalty and income taxes for pulling out your 401k is one of those hip shot things. Don't nuke it.

If you feel that following your passions will lead you to success and happiness then do it. But you may need to learn how to discipline yourself. You've already admitted that you get bored with almost any project. You'll have to find a way to deal with the loss of interest. We all lose interest in the things we do sometimes. You're going to have to find the part that you enjoy so much you can't lose interest, that or just learn to bear with it.

[RiskDown]

Great advice my friend. Thanks for taking your time to read/think/respond.

[tracipam]

Unless you have a specific plan with legs under it, it doesn't make sense to quit the day job.  Idealism is awesome, but it sounds like you already know that you get distracted and move onto the new cool thing easily--not a good recipe for the nose-to-the-grindstone sort of work you'd likely have to do to get a new business off the ground.   Make sure you have an idea you're passionate about for the long term and are willing to invest huge amounts of time and energy in without getting distracted. 

It doesn't sound like you're really in a place to be branching off into the unknown right now; you still have student loans and a car loan--get your financial house in order first and get a plan together and do enough work on the side to convince yourself that you're onto something that could be successful.   

Don't know whether the 401K is for just you or both you and your wife, but it doesn't look like your savings rate is extremely high right now--if you quit your day job tomorrow could you both live comfortably on your wife's income?  And still save for retirement?   And cover all the start up expenses of the business? And is she OK with that?  If any of the answers are no, then the answer to your question is no, too. 

Tracy

[RiskDown]

Just wanted to again take the time to thank everyone who contributed.

I've decided my answer is A.... until such time, when I have a specific vision in mind, and thoroughly test it, to ensure I can stick with it and hold interest (single job)... or come up with enough separate distinct visions/projects, which are viable income makers, that I can stay passionate rotate between, without losing interest (multiple jobs)....  at which time, I might re-evaluate and consider whether B is worth risking. 

[Thegoblinchief]

There's rarely a justifiable reason to raid your 401(k).

At your income level, FI will come incredibly fast if you keep the debt at the amortized schedule and max out both you and DW's 401(k) to reduce your AGI.

If you need more budget help, do a case study or expand here, but a 50% or higher savings rate should be easy-peasy with little lifestyle change. 

[SpicyMcHaggus]

Just wanted to again take the time to thank everyone who contributed.

I've decided my answer is A.... until such time, when I have a specific vision in mind, and thoroughly test it, to ensure I can stick with it and hold interest (single job)... or come up with enough separate distinct visions/projects, which are viable income makers, that I can stay passionate rotate between, without losing interest (multiple jobs)....  at which time, I might re-evaluate and consider whether B is worth risking.

I think you're making the right choice, IMHO.