Author Topic: Risk Savings Rate to Change Career?  (Read 1569 times)

FIreDrill

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Risk Savings Rate to Change Career?
« on: January 12, 2017, 02:07:12 PM »
My wife and I are in our early/mid 20's and over the last four years we have been able to build up a solid income and savings rate between the two of us.  It's taken us a while to get where we are, but now that might change rather fast, and I'm not sure how I feel about it.  My wife is seriously considering changing career fields that would put her into a commission only position.  The main reason for this change would be to obtain more satisfaction from work and to improve her work/life balance.  Below is our current financial standings.


My gross income   = 72,000 (60k Net after taxes/med insurance)
Her gross income  = 57,500 (50k Net after taxes)

Yearly spending            = 44k Approx.
Yearly savings               = 66k  (60%) Approx.

Debt                                     = 4k (credit cards paid in full every month)
Non tax sheltered savings    = 21,000
Tax Sheltered Investments   = 210,000
Home Equity/Other              = 55,000

Total Net Worth                    = 282,000


As you can see, a large majority of our savings comes from her income.  I believe we can take the risk of her going to a commission only basis and live just off of my income, but at the same time, it seems like taking 10 steps backwards when it comes to our savings rate.  Now, I really believe she will bring in a decent amount of money once she gets started but we really don't have a clue how much.  It could be 10k a year, or it could be 150k....  I'm guessing it could take several months for her to wind down from her current job before she really goes at the new one.  So there is a good chance she would not have any sizable income for a while.

If her new career really took off there could be some huge upsides to it.  Including up to 52k a year in tax sheltered savings from a SOLO 401k.  Right now I am really torn on this but we have started making changes to build up a more aggressive emergency fund for if she leaves.  The goal is to have 50k in non tax sheltered savings before she jumps ship. 

So, would you give up guaranteed income for a better work/life balance in this situation and are there any other steps you would take to prepare for the unstable income?  Am I just over complicating this or what? lol




cluelesswithcash

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Re: Risk Savings Rate to Change Career?
« Reply #1 on: January 12, 2017, 09:05:56 PM »
My wife and I are in our early/mid 20's and over the last four years we have been able to build up a solid income and savings rate between the two of us.  It's taken us a while to get where we are, but now that might change rather fast, and I'm not sure how I feel about it.  My wife is seriously considering changing career fields that would put her into a commission only position.  The main reason for this change would be to obtain more satisfaction from work and to improve her work/life balance.  Below is our current financial standings.


My gross income   = 72,000 (60k Net after taxes/med insurance)
Her gross income  = 57,500 (50k Net after taxes)

Yearly spending            = 44k Approx.
Yearly savings               = 66k  (60%) Approx.

Debt                                     = 4k (credit cards paid in full every month)
Non tax sheltered savings    = 21,000
Tax Sheltered Investments   = 210,000
Home Equity/Other              = 55,000

Total Net Worth                    = 282,000


As you can see, a large majority of our savings comes from her income.  I believe we can take the risk of her going to a commission only basis and live just off of my income, but at the same time, it seems like taking 10 steps backwards when it comes to our savings rate.  Now, I really believe she will bring in a decent amount of money once she gets started but we really don't have a clue how much.  It could be 10k a year, or it could be 150k....  I'm guessing it could take several months for her to wind down from her current job before she really goes at the new one.  So there is a good chance she would not have any sizable income for a while.

If her new career really took off there could be some huge upsides to it.  Including up to 52k a year in tax sheltered savings from a SOLO 401k.  Right now I am really torn on this but we have started making changes to build up a more aggressive emergency fund for if she leaves.  The goal is to have 50k in non tax sheltered savings before she jumps ship. 

So, would you give up guaranteed income for a better work/life balance in this situation and are there any other steps you would take to prepare for the unstable income?  Am I just over complicating this or what? lol

This may sound lame but I don't care - if this new job will make her happier - she should do it.  Ultimately, happiness is what matters and if she is happier, you'll probably be happier too.  You won't go broke if she's not making as much money at first either since you make a decent amount of money.  And this is coming from someone who was completely broke for years while going to college so I know what it's like to live without money.

JLee

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Re: Risk Savings Rate to Change Career?
« Reply #2 on: January 12, 2017, 09:13:10 PM »
What sort of job has a pay range from $10k to $150k...?  I would expect to be able to come up with a reasonable estimate for an average, no?

FIreDrill

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Re: Risk Savings Rate to Change Career?
« Reply #3 on: January 12, 2017, 10:13:58 PM »
What sort of job has a pay range from $10k to $150k...?  I would expect to be able to come up with a reasonable estimate for an average, no?
Real estate.  Commissions are usually 2.5% to 3% of sale price minus brokerage fees.   Then there would be other business expenses that would come along with it.  Overall pay really depends on how motivated you are and how many transactions you close.

Fixed expenses would be around 10k a year.  From what I have seen, most agents will do between 3 and 10 transactions their first year.  Assuming our local average sales price,  that would be 22k to 75k in commission over a year minus the 10k estimated expenses for a rough estimate of 12k to 65k the first year.

With all that being said, I'd rather prepare for it being on the lower end.  If it's higher, then that's a bonus.



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pbkmaine

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Re: Risk Savings Rate to Change Career?
« Reply #4 on: January 12, 2017, 10:27:15 PM »
Real estate sales takes an interesting combination of skills. There's not only friendliness, networking and love of houses; there's also organization, determination and drive. I have seen a lot of people fail because they have the first 3 qualities but not the next 3.