I'm 38 years old and my wife is 36. We have one son who's 2.5 and we may have one more. We've always lived below our means though in truth we haven't been very good Mustachians. Looking back, we could have saved far more if we had made some of the changes we're making now much sooner. That said, we've been fortunate to have high incomes that have compensated for the lack of frugality.
I've been thinking about leaving my current 8-5 high pay, high stress job and just recently came across MMM. It's been a revelation and my outlook has completely shifted. In the last month I've radically cut spending and I'm much more focused on the things that I truly value - including my family, my friends, exercise, etc. As I've been running the numbers, I think I may have achieved FI without realizing it. I've been chugging away on the corporate hamster wheel without a clear goal other than "to be successful and retire someday". Suddenly, a life that involves me doing what I WANT to do seems both reasonable and attainable. What I'd like to do is take some time to decompress and then possibly open a business that I've been thinking and planning for recently. I'd probably wait
at least a year to start it but startup costs would probably be about $350K. Here's the current situation:
Income: My Gross Salary: $132,000/yr plus $19,000 annual bonus
My Stock Options/RSUs: Approximately $50,000 of additional options/RSUs vest in March each year
Wife's Gross Salary: $95,000/yr
Current Expenses (monthly): Mortgage Principle/Interest: $1,095
Home Insurance/Property Taxes: $354
Food (Groceries, Restaurants): $920 - we expect to cut more here but this is down from $1,300 last month
Daycare/Preschool: $733 - we'd like to keep this going for the social aspects of preschool but expect it to disappear in a couple years when he starts public school
Utilities: $341 - just reduced this from almost $400 by cutting TV service, I'm looking at other cuts to drop this significantly
Auto (Insurance/Gas, 2 cars): $333 - just dropped $70/month by getting new insurance, expect this will drop with only one person working/commuting regularly
General Merchandise (clothing, kid stuff, etc.): $200 - huge opportunity here but this is already down from over $900+ a couple months ago (we deserve a face punch but not as much as we did a couple months ago)
Personal Care: $50 - wife's haircuts, etc.
Pets: $30
Health (prescription copays, etc): $55
Family Activities: $100
Total Monthly Spending: $4,211
We could definitely cut this further but since we're very new to living a Mustachian existence, we're still identifying how low we can go. Once preschool is done and we've paid of the mortgage, it'll be much better.
Assets: My 401k/Roth IRA Values: $571,000
Wife's 403b/Roth IRA Values: $164,000
Son's 529: $18,000
Taxable Accounts: $241,000
Stock Option Value: $132,000 (after tax value if I exercised today)
Cash: $50,000
House: $220,000
Cars: 2008 Honda Fit, 2012 Honda CRV both paid off
Total Portfolio: $1,176,000
Total Assets: $220,000 The retirement portfolio is entirely in the Vanguard Target Retirement 2040 (90% stock, 10% bond). The taxable portfolio is 100% stock with a 76/18 split domestic/international. It's in a few different funds but all new investment is going to VTSAX, VEMAX, and VTMGX (most of it to VTSAX which is a Total Stock Market index).
Liabilities: Mortage: $135,000 on a 15 year mortgage @ 2.875%
We're currently putting an additional $800/month towards this to pay it off in about 6.5 years though we'd like stop if I FIREd. Due to the low rate it's not the wisest financial move but we value the security and we'd like to pay it off.
Net Worth: $1,261,000My wife doesn't want to retire any time in the near future. She has a tenured faculty position and I could move to her health insurance if I stopped working. We definitely
have room to improve on the expense side of things but it seems like we could BOTH retire now if we were willing to cut a bit more on the expense side of things.
Questions:- It feels like I could be FI now - is there anything I'm missing?
- I could leave my job now or I could tough it out for six months and get an extra $69K in bonus/stock options/RSUs. Leaving before then seems financially stupid but the same will likely be true next year. If I don't NEED the money, is it worth hanging in there? What would you do?
- Spending ~$350K on a business is a big investment but I do have the safety net of my wife continuing to work. I've thought about getting a part-time job in the industry I'm looking at to make sure it's the thing I want. What do the Mustachians think of investing this much of the nest egg in a business?