Author Topic: Please shoot holes in my plan: Three month paternity leave, then a year off  (Read 5438 times)

SemiRetiredLife

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Greetings fellow Mustachians,

I have a wild idea. 

I have personally been unable to shoot holes in it.  Every time I try, I view it as an even better idea.  The short version is that I currently have two years of living expenses in an after tax account, and will soon have three (details below).  My wife and I are due to have our first child later this year, and I would like to take the full 12 weeks of FMLA leave, shortly followed by approximately one year off from formal work.

Here is the longer version, with additional details:

My wife and I have been on the FI road for a little while now.  We're maybe 5 years from being done if I keep working.  We spent $33k last year.  This was a rather spendy year, with a few sizable optional expenses.  In October when our child is due, our after-tax FU account should have approximately two years of expenses in it (invested with vanguard).  Work for me is a clusterfun at the moment, and I will be receiving a retention bonus of six months salary in May 2017.  Nine months salary if I am laid off sooner.  When sporting a 65-70% savings rate, this is a check for a serious amount of freedom.

The current iteration of my plan involves taking off 12 weeks from November through the end of January following our child being born (note: this does not affect the retention bonus).  Four weeks should be paid (saved sick/vacation time), with eight weeks of it unpaid.  Part of this may be part time, but the financials of it work out the same regardless: there will be 8 weeks unpaid in some form.  I will then return to work until my retention pays out, then peace out.  I am 99% sure this company is not one I (or many others I work with) will want to work at once the retention period is over.

In the following year I intend to plan the financials as though I won't make money, but will likely take a few months to focus on enjoying life with my family before trying to work as a freelance developer.  The goal would be to cover our expenses by working part time, as our long term goal is to both work part time with at least one of those careers having flexible hours.  It's worth mentioning my wife has a side gig that makes approximately $500/month.

Here are the reasons I am confident and convinced this is a great idea:

 - We have three years of expenses saved, and only intend to take a year off (I have to be off by a factor of three to fail wildly)
 - Even in the "worst case" scenario (my wife not working at all), we will end 2017 with more $ in our FU account than we have at the moment, even assuming we continue maxing out our IRAs
 - The timing of this coincides with major life events, and is an excellent time to exercise freedom
 - We will both have generous amounts of time to give our newest family member
 - It allows me to setup a flexible "side" job without simultaneously working a full time job and raising a family
 - None of these numbers involve our 6 month emergency fund
 - I have a ton of hobbies that would keep me occupied and cannot imagine a universe where I get "bored"
 - "Borrowing" a year of retirement from my late 30's or 40's to use now seems so very logical

Here are some concerns I have:
 - I don't have hard numbers on health insurance.  It will likely be unsubsidized due to the sizable bonus.
 - Children may be more expensive than I realize.  The FI community has me 95% convince a young child is not expensive unless daycare is needed.
 - Friends/family thinking I'm batshit crazy.  I probably won't tell any but my closest friends what is really going on.
 - Failing at or not enjoying freelancing, and not wanting to go back to cubicle life once I take a break from it.

What are your thoughts?  Is this a great idea? Mediocre?  Would you do it if you were in my shoes?  Can you shoot holes in my epic plan of an early taste of freedom? 

Thanks for reading, and for your thoughts/advice!

mozar

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So you've been told you're going to be laid off? I'm confused about that.
I can't speak to your plan, because I would just wait 5 years and be done, but at least wait to see whether the baby has any complications after birth or a short time after birth before you quit.

SemiRetiredLife

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We're merging with another company, and writing is on the wall that our office will be closed once our part of the integration effort is complete.  Also the company is already turning into one that I'd prefer not to work at.

And yes, this plan assumes that all is healthy with the baby.  Obviously a plan like this would change in less fortunate circumstances.

Goldielocks

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Good plan.  Like an early retirement scheme.

Babies are pretty cheap for the first year or two, if you avoid buying things for baby (fancy strollers and furniture), and are not too tired and stressed from work and no sleep that you stop being frugal.  With no work, that should be great.

Just keep growing your employable life skills as you plan -- towards your own business or take a course, or whatever, so it is an easy transition back to work for yourself or others should you need it.

Why...

Because kids are expensive for activities starting around age 7 or so, and it gets to be more and more cost as they get older.... expÍnsive compared to babies, that is...

jjcamembert

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Really depends what your FIRE goals are. If you keep $33k in a stock account you should appreciate around $10k in 10 years. $10k big deal? Well if you also count that you are not saving any extra money for a whole year (that also is not compounding), I've found that a year spent off now costs about two years off 10 years down the line. Unsubsidized health insurance in the US is quite expensive also, but you should be eligible for COBRA for a little while which is probably not cheap but you'll get more for your money. Mathematically I'd say that's your biggest downside risk.

Freelancing "on the side" and flexibility, especially when starting out, may be a pipe-dream. I know several freelancers and have done some work myself but don't know any who are living the Internet entrepreneur dream; most of them are on call and working a lot more for their customers than they would at a company with infrastructure that insulates devs from customers. Or, the ones living the flexible lifestyle aren't pulling in much money because they're not spending time on their business. Not to say you can't get there, but it's a lot of work to build a business.

I'm all for taking time off for the intangibles though. I always think, "If I'm dying tomorrow, I'm gonna be pissed that I didn't take that time off!" From a financial standpoint I'd say you are right, you don't have much risk. So it's just up to you if that time now is worth more than the time later.

SemiRetiredLife

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Unsubsidized health insurance in the US is quite expensive also, but you should be eligible for COBRA for a little while which is probably not cheap but you'll get more for your money. Mathematically I'd say that's your biggest downside risk.
I agree.  I definitely need to quantify this cost/risk.  Fortunately, I will be covered during paternity leave so that piece of my plan is safe.  Also if I get laid off (not if I quit), they will cover my COBRA for six months (unless severance changes, which may be more probable than I'd like).  But yes, if this ends up costing $1000+/month this would be a notable risk for a full year off since it would increase our expenses by nearly 50%.

Freelancing "on the side" and flexibility, especially when starting out, may be a pipe-dream. I know several freelancers and have done some work myself but don't know any who are living the Internet entrepreneur dream; most of them are on call and working a lot more for their customers than they would at a company with infrastructure that insulates devs from customers. Or, the ones living the flexible lifestyle aren't pulling in much money because they're not spending time on their business. Not to say you can't get there, but it's a lot of work to build a business.
I would put myself in the latter camp.  The goal wouldn't be to pull in crazy amounts of cash.  If I'm working flexibly, the goal is to find a happy long term balance to cover our expenses; it would no longer be a race to the finish line as many in the FI community view it.  I'm also considering short term contract work; since it's too risky for most folks, it tends to pay more.  This would involve working full time just a 3-4 months per year to cover expenses.

MrsPete

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You want holes shot in your plan?  Okay:

- You're saying that this time off work will allow you time to pursue a side business and hobbies -- you're neglecting something:  Newborn babies take all your time.   Every new mom I know (and I assume fathers too) falls into this trap.  Whether they're planning on taking off work a scant few weeks or a year, they have so many plans for things they're going to accomplish in this time.  Factor in mom's physical recovery, lack of sleep, and learning to care for a newborn, and you're likely to complete only a small percentage of what you intend to do.  You just won't be as efficient as you are today -- at least not right away, and it's right that you focus your attention on the baby.

Couple this with the reality of freelancing:  You only succeed in that world if you're very driven.  It's not something that happens accidentally during naptime. 

- No one ever wants to talk about it, but it's the truth:  Most babies are healthy, so the numbers are skewed in your favor, but you just never know.  My good friend was in her mid-20s, healthy as a horse, doing all the right things -- still had her baby at 26 weeks gestation; the bills were outrageous as her child stayed in the neonatal intensive care unit for months; she actually returned to work to "save" her time off for the days when her special needs infant came home; she also said working kept her from focusing too much on the things out of her control.  Fortunately today the child faces only moderate health challenges today as an 8-year old.  Again, something like this is highly unlikely, but it could make the difference in whether working is a choice. 

- Yes, you can make choices to raise a child much, much more cheaply than "they" say you can.  And in many cases it's better for the child.  For a newborn who isn't in daycare, your biggest expenses will be the increase in health insurance and diapers.  You'll find ages 3-5 are very cheap (diapers are gone, used clothes are still very easy to find, no school expenses yet).  Elementary and middle school you'll have some school expenses (though they'll be reasonable) and you'll find fewer and fewer used clothing options.  Even if you've firmly instilled a concept of frugality and the child is used to the word NO, the teen years are going to be expensive. 

- You may or may not have trouble reentering the work force after your year away.  So many factors are specific to you personally and to your specific career.

Good luck as you make these choices! 
« Last Edit: April 17, 2016, 10:00:20 AM by MrsPete »

MonkeyJenga

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Why can't you try freelancing now? You've got six months to make it work. I would imagine it's easier to find contacts and build credibility while working in your field, and you can get some sense of whether you like it and are good at it (hustling for clients, handling the admin side, dealing with the mental overhead of juggling those things).

ETA: You say you haven't been able to find holes in the plan. Have you discussed with your wife yet?

MMMaybe

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Given recent events in my life, where 2 family members died and 2 friends in their early 40's received Stage 4 cancer diagnoses (one subsequently died), I am going to throw you a YOLO bone. You really don't know what is around the corner and this time off will be precious regardless.

I think if you plan carefully for this, you should do it. Keep an eye out for jobs and if something comes up before your year is up, be flexible about taking it.

I am currently spending 2 months in Barcelona because #YOLO :)

MrsPete

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Why can't you try freelancing now? You've got six months to make it work. I would imagine it's easier to find contacts and build credibility while working in your field, and you can get some sense of whether you like it and are good at it (hustling for clients, handling the admin side, dealing with the mental overhead of juggling those things).
Excellent idea. 

Given recent events in my life, where 2 family members died and 2 friends in their early 40's received Stage 4 cancer diagnoses (one subsequently died), I am going to throw you a YOLO bone. You really don't know what is around the corner and this time off will be precious regardless.
I also know a couple people to whom such awful things have happened, but don't lose sight of the fact that they're the outliers, the unfortunate few.  The majority of us will live well past our 40s. 

So how to proceed?  With balance. 

SemiRetiredLife

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Thanks all for the continued feedback.

Of course I have discussed this with my wife.  We talk about all things, especially important ones.  She also views it as a great idea, as this fits with our long term plan to both work part time rather than the standard "one bread winner" or "two bread winners" model.

Regarding freelancing, I have dabbled with it while working full time.  I've done a few small time projects, less than $500 each.  I recently had an opportunity for a much larger project but had to turn it down due to commitments to my full time job.  It's been enjoyable, but my interest in doing work after work goes in cycles.  I believe without programming 40-50 hours per week at my day job, my interest in other programming projects would increase.  A time boxed trial run of this would be helpful to evaluate this.

That said, I am probably being overly optimistic on the time that can be committed to this.  My current thoughts are that because my wife works part time, and I intend to work part time, that we will be able to strike a balance and share duties.  Time will tell if this is naive.

I believe with everyone's input it seems that there are still a lot of variables to lock down before deciding to take a full year off.  We need to decide on my wife's working situation, we need to make sure baby/mother are both healthy, we need to see if I get laid off earlier than May 2017, etc, etc. 

However, I haven't seen a good argument against taking 12 weeks of FMLA granted paternity leave.  This is such a small speedbump in terms of long term FI, at a very critical time, and will likely be even more necessary if health issues arise.  I believe by the end of a 12 week break from work, a lot of questions will be answered.  Do I enjoy having a more flexible schedule?  Does my wife feel like working after-child?  Is poop better than meetings and office politics?  Do I have time for hobbies?  Are they enough?

obstinate

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I don't know if you have had kids before, but they are pretty boring for the first year. I'd rather do this in the year before child #1's kindergarten.

okobrien

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Semiretiredlife, I am in a surprisingly similar situation as you. I posted about it last week. (early escape from wage slavery) sorry I don't know how to put a link to it on my cell phone. I say go for it! Heed the warnings but don't give in to the naysayers.
Also, my son is three months and has been way more work than expected.  That is not a reason to return to work however.   

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asiljoy

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I don't know if you have had kids before, but they are pretty boring for the first year. I'd rather do this in the year before child #1's kindergarten.
Simultaneously boring and exhausting.

FLBiker

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I like your plan!

We had a daughter last April, and my wife used her (generous) maternity leave, then took a 1 year unpaid leave of absence.  We might be expanding this to 1.5/2 years.  During the same time, I took 4 weeks off fully, and then did part time (3 days a week) for 5 months.  Of course doing my wife's unpaid year or two will slow our retirement a bit, but there is no question in my mind that it was the best move for us.  For one thing, breastfeeding wasn't so easy, so having time was absolutely essential.

We haven't found having a baby to be particularly expensive, but we breastfeed and use cloth diapers (mostly bought used / via registry) so that has helped.  We're also still on my health insurance.  I am also a huge proponent of consignment sales.  Here in Tampa we have a couple per year at the state fair grounds.  Stuff is extremely cheap, and it's a great way to get rid of stuff as you outgrow it.

And I agree with other folks about not planning to get too much done with a new baby.  I figured during those first weeks home I'd be able to get some house projects done (since my wife was also home) and that didn't happen.  Everything I did during that time was related to taking care of the baby or my wife (and it was great).  And, personally, I didn't find spending time w/ the baby boring, even when she was tiny.  Everybody's different, though.

forummm

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Really depends what your FIRE goals are. If you keep $33k in a stock account you should appreciate around $10k in 10 years.
Only $10k? The $33k should double even after adjusting for inflation. 10 years is a long time.

forummm

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I don't know if you have had kids before, but they are pretty boring for the first year. I'd rather do this in the year before child #1's kindergarten.
Simultaneously boring and exhausting.
And very distracting. It's hard to get much done while watching them. With ours, he's typically needed a lot of attention starting about 6-8 weeks in. He gets bored and fussy if he isn't moving around and doing stuff. Add in the feedings, changes, and getting him to nap, and it's pretty time and attention consuming.

SemiRetiredLife

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Semiretiredlife, I am in a surprisingly similar situation as you. I posted about it last week. (early escape from wage slavery) sorry I don't know how to put a link to it on my cell phone. I say go for it! Heed the warnings but don't give in to the naysayers.
Also, my son is three months and has been way more work than expected.  That is not a reason to return to work however.   

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I sent you a PM, hoping to pick your brain a bit!

meerkat

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I don't know if you have had kids before, but they are pretty boring for the first year. I'd rather do this in the year before child #1's kindergarten.
Simultaneously boring and exhausting.
And very distracting. It's hard to get much done while watching them. With ours, he's typically needed a lot of attention starting about 6-8 weeks in. He gets bored and fussy if he isn't moving around and doing stuff. Add in the feedings, changes, and getting him to nap, and it's pretty time and attention consuming.

Yes to all of this. I know at the end of my twelve week leave I felt like I spent all day chasing naps. This meant not only could I not leave the house, I was stuck in the rocking chair because he seemed sleepy but 90 minutes of soothing would only yield a 30 minute nap (which was barely enough time for me to recover from the physical exhaustion of trying to get him to nap), then he'd wake up and be cranky because he didn't sleep enough and we'd be repeating the same thing almost immediately because it would be time for him to nap again. On a good day I'd get to run an errand. Not two errands, just one.

Regarding health - our baby was born healthy but some health issues are coming to light now. Nothing major, but it still sucks up our time in chasing to the pediatrician, to specialists, to PT/OT appointments. Luckily my work is being very flexible and where we live nothing is too far away so I can get stuff done during "lunch", but I think with the timeline you laid out if I were in your shoes these health issues would be coming up during your back to work period before the year off? It's not really something you can predict in advance, but it might be worth discussing as a "what if" scenario.

nobody123

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If you're sure the layoff is definitely going to happen, I would:
1. Double-check with HR that your FMLA time off doesn't count against whatever years of service accrual they are using to determine your possible severance
2. Get through the birth and use your FMLA time if you still feel like using it.  You've done a great job saving, and if that's what you want to spend that money on, do it.
3. Assuming everyone is healthy and you're still on track financially to take the time off, wait to be laid off.  Yes, that might mean staying around for a little while after the retention bonus is paid out, but you might as well get an unemployment check and some sort of severance if you're going to try doing freelance work on the side. 

As others have said, it's a bit rough to get into the new routine after the baby arrives, and they are a constant drain on your energy for a while.  Delaying your exit from the workforce until you and your wife are settled into your new normal routine adds a safety net.  Newborns pretty much just eat, sleep, pee, poop, and cry, so you won't really be missing much sticking to your day job for a little while.

asiljoy

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I don't know if you have had kids before, but they are pretty boring for the first year. I'd rather do this in the year before child #1's kindergarten.
Simultaneously boring and exhausting.
And very distracting. It's hard to get much done while watching them. With ours, he's typically needed a lot of attention starting about 6-8 weeks in. He gets bored and fussy if he isn't moving around and doing stuff. Add in the feedings, changes, and getting him to nap, and it's pretty time and attention consuming.

Yes to all of this. I know at the end of my twelve week leave I felt like I spent all day chasing naps. This meant not only could I not leave the house, I was stuck in the rocking chair because he seemed sleepy but 90 minutes of soothing would only yield a 30 minute nap (which was barely enough time for me to recover from the physical exhaustion of trying to get him to nap), then he'd wake up and be cranky because he didn't sleep enough and we'd be repeating the same thing almost immediately because it would be time for him to nap again. On a good day I'd get to run an errand. Not two errands, just one.

Regarding health - our baby was born healthy but some health issues are coming to light now. Nothing major, but it still sucks up our time in chasing to the pediatrician, to specialists, to PT/OT appointments. Luckily my work is being very flexible and where we live nothing is too far away so I can get stuff done during "lunch", but I think with the timeline you laid out if I were in your shoes these health issues would be coming up during your back to work period before the year off? It's not really something you can predict in advance, but it might be worth discussing as a "what if" scenario.
Yeah, I remember this. My baby went through a couple week stretch around the 4 month mark where he'd only sleep if you were holding him. I watched soooooooooo much Netflix with the sound off and captions on, just rocking and rocking and rocking and rocking...gawd forbid I left the remote across the room and that stupid 'Are you still watching?' screen came on.

zarfus

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I don't know if you have had kids before, but they are pretty boring for the first year. I'd rather do this in the year before child #1's kindergarten.
Simultaneously boring and exhausting.
And very distracting. It's hard to get much done while watching them. With ours, he's typically needed a lot of attention starting about 6-8 weeks in. He gets bored and fussy if he isn't moving around and doing stuff. Add in the feedings, changes, and getting him to nap, and it's pretty time and attention consuming.

Yes to all of this. I know at the end of my twelve week leave I felt like I spent all day chasing naps. This meant not only could I not leave the house, I was stuck in the rocking chair because he seemed sleepy but 90 minutes of soothing would only yield a 30 minute nap (which was barely enough time for me to recover from the physical exhaustion of trying to get him to nap), then he'd wake up and be cranky because he didn't sleep enough and we'd be repeating the same thing almost immediately because it would be time for him to nap again. On a good day I'd get to run an errand. Not two errands, just one.

Regarding health - our baby was born healthy but some health issues are coming to light now. Nothing major, but it still sucks up our time in chasing to the pediatrician, to specialists, to PT/OT appointments. Luckily my work is being very flexible and where we live nothing is too far away so I can get stuff done during "lunch", but I think with the timeline you laid out if I were in your shoes these health issues would be coming up during your back to work period before the year off? It's not really something you can predict in advance, but it might be worth discussing as a "what if" scenario.
Yeah, I remember this. My baby went through a couple week stretch around the 4 month mark where he'd only sleep if you were holding him. I watched soooooooooo much Netflix with the sound off and captions on, just rocking and rocking and rocking and rocking...gawd forbid I left the remote across the room and that stupid 'Are you still watching?' screen came on.

Agreed with all of this. Haha.

I actually am planning something similar, but right at the aforementioned pre-kindergarden phase.  Here's an example of daily baby care that just happened yesterday:

I took vacay day because my PT wife needed to work a day she normally wouldn't.  I was going to do some yard work and maybe do some homebrew related stuff.

Buuuut my 1.5 yr old son woke up with ear infections.  I managed to snag an apt right when my 4mo was waking up from nap.

Noon comes along...this is great, both kids are lining up their nap schedules!  Buuut I cut my 4mo son's nail too short and he can't compose himself with my help.  So he naps on me for 2 hours (silence!)

Both kids are awake, and you can't get anything "productive" done, so I just pick up the house and play outside with them until wife comes home.

Evening, we're both bushed. Maybe we can get more done tomorrow :)