Author Topic: Quit my job before comfortably FI?  (Read 5633 times)

Cottonswab

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Quit my job before comfortably FI?
« on: July 06, 2015, 11:01:30 PM »
I recently transferred to a new role within the same corporation that I have been working at for the last 7 years.  My previous plan was to stick with it, until June 2016.  However, I am really not enjoying the work and it would be difficult to get another transfer so soon, after starting a new job.  I also don't have much of a desire to continue a career with this company.  Given the size of my stache, every incremental pay check is worth less and less to me.  So, I like to get some feedback from the peanut gallery on the timing of my purported resignation, before I make a rash decision.

Age                    = 28 years
Marital Status     = Single. No children.

Assets                = $1,220,000 (25% in cash equivalents, 20% in 401k)
Liabilities            = $0*
Salary                = $156,000 /yr (from job that I am not enjoying, but can irritably tolerate)
Passive income    = $18,000 to $45,000/yr (100% dividends and realized capital gains from publicly traded stocks and REITs)
Expenditures       = $24,000 to $45,000/yr (current lifestyle is closer to $24k, $45k includes desired lifestyle inflation)

*Claw back clause = -$20,000, if I leave before June 2016
*Tax issues           = Company currently hires Deliotte to file taxes and pays foreign taxes for recent foreign assignment.  Not an issue if I stay with the Company through June of 2016, but I don't know how quitting before filing 2015 taxes will affect that, and I am afraid to ask. 
*My mother and brother may eventually come to depend on me for financial support.  However, that day should (hopefully) be at least 10 years from now.

So, the net difference in projected net worth between quitting now and quitting in June 2016 is likely to be about $120,000 (after taxes), which would equate to an approximately $4,000/yr in ongoing annual income (after accounting for inflation).  This would also likely get me close to my desired FI target of >$1,300,000 be worth or >$40,000/yr in passive income.

After I quit, I plan to travel for 6-12 months and then eventually plan to look for part-time or seasonal work that would hopefully cover most, if not all of my base expenses.  Either that or I will get a Professional Engineering License and join / start a consulting firm.  There is not much demand for metallurgists / materials engineers, in the places that I want to live, so I am considering a career change that may require  going back to school, or a permanent pay cut.

Thanks for your advice and input, in advance!

vagon

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Re: Quit my job before comfortably FI?
« Reply #1 on: July 06, 2015, 11:13:01 PM »
I would negotiate to see if you can take a career break or one year unpaid sabbatical. Revisit after 365 days and see whether you feel like going back to work for a while.
If that is untenable I would stay to June 2016, to get the $20k and to avoid tax murkiness.
In the meantime, start looking at any qualifications required by your seasonal work (or in the careers you want to discover) and do study part time. Do this to spend money on education while still getting a salary (perhaps there's a tax offset?) and to see if you are actually mentally interested in whatever you're heading towards.

/peanuts

raikoi

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Re: Quit my job before comfortably FI?
« Reply #2 on: July 06, 2015, 11:25:26 PM »
IŽd say quit.

Good stache to even fully retire and you are willing to work part time and highly employable. Still young too to make it back to the job market if you want to.

Zamboni

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Re: Quit my job before comfortably FI?
« Reply #3 on: July 06, 2015, 11:32:09 PM »
I had to think about this one for a bit.

With the assets you have, quitting now seems reasonable.

But be sure to consider that there is something called the "7 year itch" for a reason. Ask yourself:
Do you really hate your job that much, or is this just temporary blahs?
If you take a week or three of vacation right now, would it help?
If you were allowed to telecommute some days per week, or some other flexible work arrangement, would that help?

The suggested idea of asking for an unpaid leave of absence also seems like a very good way to hedge your bets. 

Don't be afraid to ask for whatever you want at your job! Whatertheygonnado, fire you?

All that is to say: sure, quit if you want.

MDM

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Re: Quit my job before comfortably FI?
« Reply #4 on: July 07, 2015, 12:00:54 AM »
After I quit, I plan to travel for 6-12 months and then eventually plan to ... get a Professional Engineering License and ....

If you want the PE license as a safety margin, consider getting that before you quit (aka go on sabbatical) and forget some of the arcane details you might be tested on.  Have you completed all the prerequisites?

Ricky

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Re: Quit my job before comfortably FI?
« Reply #5 on: July 07, 2015, 12:12:08 AM »
So if you want to spend $45k a year, you're basically already there. Personally, I'd do as other suggested and negotiate some time off or a different situation first to make sure you really want to quit. If you do end up quitting, I'll bet you won't need/want to spend as much as you think you do.

If you can hold off till 30 though, I think you'll really be set.

moustache1979

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Re: Quit my job before comfortably FI?
« Reply #6 on: July 07, 2015, 06:21:30 AM »
Be careful with the company tax equalization / preperation for foreign assignment.  You could owe tax that could be huge and not get a US deduction/credit.  Research and understand fully before you quit.

johnny847

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Re: Quit my job before comfortably FI?
« Reply #7 on: July 07, 2015, 06:27:07 AM »
Cottonswab, you're already past the 4% benchmark. Now granted, you're only 28, and the 4% rule was only ever claimed for 30 year or shorter retirements. But see the stop worrying about the 4% rule sticky in the Investor Alley section to see why that's not actually a problem.

If you want to quit, just quit. And if you need to hire an accountant for this year, just do it.

forummm

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Re: Quit my job before comfortably FI?
« Reply #8 on: July 07, 2015, 06:36:44 AM »
You've got some good feedback here. But I wanted to say Congrats!

I think it's hard to make too wrong of a decision here. Your numbers are pretty good. You're basically FI now. And since it sounds like you're going to keep working later, you should have no trouble with money as long as you keep your expenses in check.

Do what you want with your life. You're there. Maybe that means sticking around for a year. But you certainly don't need to. If you can do $18k for a year or two here and there if you need to, your $1.2M will be way more than enough, even if we hit an extended bear market. Plus, if you're going to work even part time with an engineering certification, you've got a lot of levels of safety.

hope2retire

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Re: Quit my job before comfortably FI?
« Reply #9 on: July 07, 2015, 06:44:55 AM »
You are a metallurgist/materials science engr and earning >150K and age <30. Vow. that is very very good. Is it a security clearance required position? I would be interested to know more if you are comfortable sharing.

On FIRE. looks like you are in an excellent position to choose what you want to do.

H2R

Cottonswab

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Re: Quit my job before comfortably FI?
« Reply #10 on: July 07, 2015, 09:42:08 PM »
Be careful with the company tax equalization / preperation for foreign assignment.  You could owe tax that could be huge and not get a US deduction/credit.  Research and understand fully before you quit.

Thanks! This is my biggest concern / undefined liability.  Unfortunately, the country in which the tax is owed is a little known country in the South Pacific that most US tax preparation firms are likely unfamiliar with and does not have a tax treaty with the US.  Any advice on where to start my research or find a competent income tax / legal specialist (that does not work for my employer)?

EscapeVelocity2020

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Re: Quit my job before comfortably FI?
« Reply #11 on: July 07, 2015, 10:15:32 PM »
I don't really know.  You have a nice stache, but you're only 28.  This has always been my 'peccadillo' with ER, that I am too young to retire, but have the money to do so if I so choose.  Maybe it limits future choices?  I guess this 'beauty is all in the eye of the beholder' - you are giving up all those future options, but you have alternative options opening up.  At the end of the day, what do you want?

moustache1979

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Re: Quit my job before comfortably FI?
« Reply #12 on: July 08, 2015, 05:40:02 AM »
Be careful with the company tax equalization / preperation for foreign assignment.  You could owe tax that could be huge and not get a US deduction/credit.  Research and understand fully before you quit.

Thanks! This is my biggest concern / undefined liability.  Unfortunately, the country in which the tax is owed is a little known country in the South Pacific that most US tax preparation firms are likely unfamiliar with and does not have a tax treaty with the US.  Any advice on where to start my research or find a competent income tax / legal specialist (that does not work for my employer)?

Were you there in prior year?  If so can that be used as a basis?

When I did an assignment overseas, in a well known country, and making less then you, my company paid tax on my allowances for housing, cost of living, relocation, etc and also local income tax.  Those added up to a large number, and again, I was making ~75k at the time. 

Other than a company hired tax advisor, mine was deloitte, I wouldn't know where to start.  I know that a tax advisor like this costs the company about $10-15k just for the advisor due to the complexity.

Also. If you redeived deferred pay or bonus relating to prior year that means same tax problem in future years (if deferred pay earned when overseas).  I left an assignment in 2010, but received a. Bonus in 2011 for prior year work and needed tax equalization ffor my 2011 return.

Cottonswab

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Re: Quit my job before comfortably FI?
« Reply #13 on: July 09, 2015, 05:31:04 AM »
Be careful with the company tax equalization / preperation for foreign assignment.  You could owe tax that could be huge and not get a US deduction/credit.  Research and understand fully before you quit.

Thanks! This is my biggest concern / undefined liability.  Unfortunately, the country in which the tax is owed is a little known country in the South Pacific that most US tax preparation firms are likely unfamiliar with and does not have a tax treaty with the US.  Any advice on where to start my research or find a competent income tax / legal specialist (that does not work for my employer)?

Were you there in prior year?  If so can that be used as a basis?

When I did an assignment overseas, in a well known country, and making less then you, my company paid tax on my allowances for housing, cost of living, relocation, etc and also local income tax.  Those added up to a large number, and again, I was making ~75k at the time. 

Other than a company hired tax advisor, mine was deloitte, I wouldn't know where to start.  I know that a tax advisor like this costs the company about $10-15k just for the advisor due to the complexity.

Also. If you redeived deferred pay or bonus relating to prior year that means same tax problem in future years (if deferred pay earned when overseas).  I left an assignment in 2010, but received a. Bonus in 2011 for prior year work and needed tax equalization ffor my 2011 return.

No deferred pay or bonus, but I did work for several months in the foreign country in 2015.  My adjusted gross income likely will be quite high, when you include employer provided housing and other items.  The accounting costs and the tax liability seems high enough to keep me working through the next tax filing.
« Last Edit: July 11, 2016, 01:57:48 AM by Cottonswab »

Bob W

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Re: Quit my job before comfortably FI?
« Reply #14 on: July 09, 2015, 09:01:31 AM »
Option 3. Part time international consulting.  Talk to a placement firm.

Kiwi Mustache

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Re: Quit my job before comfortably FI?
« Reply #15 on: July 09, 2015, 05:49:40 PM »
Read the book "30 Something and Over It"

It's perfect for your situation.