Talk me off the ledge?

[nexus]

Backstory
I (33M) left my day job back in April to give coast FIRE a go. I ended up quickly transitioning into a part-time tennis instructor role where I work 10-20 hours a week as a self employed person making at least $60/hr. I've been doing it as my side hustle for years, and I keep detailed logs of my income so I can track the monthly and yearly trends. Around this same time my wife(37F) also left her job to pursue self employment. She works in telehealth and makes $100-$150/hr working part time. She's slowly building her book of business. We both left stable, secure full time jobs. My role as a data analyst paid about $115k with a 6% 401k match and benefits. Her role paid roughly $70 - $80k annually. We were getting our health insurance through my employer.

We are both happier and less stressed working less hours and making decent money. For the most part we have not noticed a change in lifestyle. If anything, we're a little spendier now (thanks Ramit Sethi). We just don't save as much and aren't paying down the mortgage as aggressively as before. These days the mortgage gets an extra $200-$300 per month, and the investment accounts get between $500-$1k.

Numbers
Cash: $100k between checking, savings, high yield savings, and cash on hand
Equity: 363k. $700k home value. $337k remaining at 2.65%. Have had the loan since Dec 2020. Purchase price $508k. Put $100k down. Borrowed $408k
Taxable brokerage: $291k
Rollover IRAs: $212k
Roth: $5.1k
HSA: $13.7k
Total NW: $984.8k (a week or so ago when the market was higher we were less than $5k away from $1 million for the first time ever)

Current monthly spend (I have no idea how): $8-$10k
My income: $4-$6k per month
Wife's income: $3-5k per month

By November my income will start to taper off until next year due to colder weather and tennis being outdoors/seasonal. Wifey is still building her book of business and is planning on paying for some advertisements after she gets back from a trip she's taking later this month.

What I'm Considering
I'm considering rejoining the workforce if I can find another full-time or temp remote job. Here's why:

• Health insurance is a bitch. We are paying $500/mo for a bare bones plan. I finally used the plan to get some bloodwork in network and the plan didn't cover anything so I've got an almost $600 bill. I'm not worried about the bill, but I am concerned that if we actually have a serious medical thing happen that it could wreck our finances. Admittedly I need to do a better job finding a better plan on the ACA, even if it costs us another hundred or two a month. [This is probably the easiest, most rational course of action.]
• While I enjoy teaching tennis, I basically jumped into another full-time job anyway that now requires me driving 1-2x per day to the club. Usually an hour or two some mornings, then several evenings per week. In the TN summers, especially July & August this is brutal. Doable, but definitely wears me out to where I don't have energy or willpower to go to the gym or work on my own game any of the days I teach.
• If we don't work, we don't get paid. I'm also not at a point where I want to touch the investment accounts.
• Tennis is also dependent on the weather. If it rains, or is too hot/cold I don't get to make money.
• There have been a few days where I've *gasp* actually been bored! But this beats the heck out of being pissed off or stressed.

Here's where you come in! Below are some questions that I'd love to get some answers for.

• Should I re-join the workforce?
• If so, for how long or until I have how much more invested/saved?
• Are there any good or bad reasons to not jump back into corporate america or vice versa?

Last point/detail - we do not have children. We've also maintained our cash levels so far and our net worth has continued to increase month over month since leaving full time employment. I think if we ever decided to have kids I would have to get a job with decent health insurance. My guess is that all of the prenatal doc appointments, delivery, and following year or two of baby care/checkups would get rather costly.

[Verdure]

I have no opinion on whether you should go back to work, but I do think you should get a handle on your expenses. How do you know if you have enough to coast-FIRE if you don’t know what enough is? Analyse your spending. It sounds like you probably have a lot of fat you can trim and that could help you decide whether you’d rather cut back spending or go back to work. You seem ambivalent about whether you prefer corporate life to self employment anyway.

And are there not indoor tennis courts where you could teach?

[tj]

If the $8k-$10k per month is $8k per month, then you're fine because you're withdrawal rate on your taxable assets is extremely low. If none of the ACA plans in your state work for you, then you would not be the only person who seeks employment to get good health insurance.

[nexus]

@Verdure
Yep, expenses have been gnarly this year. August will likely be another spendy month, then things will slow down for the rest of the year.

Bare bones baseline expenses are about $3.5k so I'd need $1.05MM in investments to pull 4%. So I'm roughly halfway there. We're consistently spending twice that much, so I'd basically need $2million. That being said, my wife has zero interest in ceasing work, so we more or less just need to make ends meet (and have fun) while compounding does the work for us.

@tj
I'm going to go through all of our accounts and line by line categorize our spending. I also don't really trust the "spending report" my bank provides because it inaccurately counts transfers to savings/investments as spending which inflates the numbers. I think I'll broadly categorize things as Fixed Costs and Discretionary Spending. I also downloaded Mint so I can start tracking things that way, too.

[tj]

BTW, are you taking your insurance premiums as Self Employed Health Insurance deductions? I assume that you are entitled to.

[Catbert]

Quit paying extra on your mortgage!  Save that money somehow...brokerage, IRA, whatever.  CDs are paying more than 2.65%.  You can always pay off the mortgage later if you have cash.  Once that cash is in home equity it's time consuming and expensive to get it out.

When you look at what and how you've really been spending don't discount those one off expenses.  Yeah, you won't need a new roof again for 20 years but next year it'll be something else. 

[tj]

Quit paying extra on your mortgage!  Save that money somehow...brokerage, IRA, whatever.  CDs are paying more than 2.65%.  You can always pay off the mortgage later if you have cash.  Once that cash is in home equity it's time consuming and expensive to get it out.

When you look at what and how you've really been spending don't discount those one off expenses.  Yeah, you won't need a new roof again for 20 years but next year it'll be something else.

You don't even need a CD. A money market fund at Fidelity, Schwab or Vanguard are all paying around 5% That's basically double the mortgage rate just to keep it in short term cash.

[cangelosibrown]

Assuming you have an ACA plan, you need to sit down and figure out how it (and all health insurance) works. No, a major health issue will not "wreck your finances," it'll cost you exactly $8,700. That's the max annual amount legally allowed for the individual out of pocket max for an ACA. A decent chunk, but the mere possibility of that shouldn't push you back into the workforce. The delivery of a possible child may also cost you that much, but all routine care for children is free (although it's a rare child who manages to only need routine care).

And to join in others, you really need to get a handle on exactly how much you're spending. You were a data analyst? download all your CC and bank transactions as far back as they'll let you. With an hour of work you'll be able to get everything in usable and comparable form and know everything you need to know. Don't take a 40 hour a week job just because you didn't want to do an hour or two of work for yourself.

[tj]

Assuming you have an ACA plan, you need to sit down and figure out how it (and all health insurance) works. No, a major health issue will not "wreck your finances," it'll cost you exactly $8,700. That's the max annual amount legally allowed for the individual out of pocket max for an ACA. A decent chunk, but the mere possibility of that shouldn't push you back into the workforce. The delivery of a possible child may also cost you that much, but all routine care for children is free (although it's a rare child who manages to only need routine care).

And to join in others, you really need to get a handle on exactly how much you're spending. You were a data analyst? download all your CC and bank transactions as far back as they'll let you. With an hour of work you'll be able to get everything in usable and comparable form and know everything you need to know. Don't take a 40 hour a week job just because you didn't want to do an hour or two of work for yourself.

It may be $8700 max in network, but out of network very easily could have less protections, though it's a bit harder to be unexpectedly stuck out of network than it used to be with the no surprises act.

[nexus]

Replying in order of responses:

@tj - This is the first year using the ACA & being self employed, so yes I assume that's what'll happen come tax time.

@Catbert - Rationally I know this is the answer. Irrationally, I like shaving at least $1k off the balance each month. At some point (roughly by 2027) the minimum payment will shave $1k off the balance without having to pay extra. The last payment was $874 to principal, $740 to interest, and $336 to escrow. I also admit I'm paying more than the exact amount to shave $1k off the principal.

@tj I've got a high yield savings through Personal Capital/Empower. It is at 4.9% currently and I've got $62k parked in there for now.

@cangelosibrown I've got Ascension Personalized Care with an individual in network deductible of $9,100 and $18.2k for the whole family, which is basically $9.1k for me and $9.1k for the wife. Plan name: "ASCENSION PERSONALIZED CARE BALANCED BRONZE 2"

I think I just have a shitty plan.

Here's the spending through June* of this year. I also had the day job through Q1 of this year. Fixed costs vary (seasonality of utilities, and variances with how much I throw at the mortgage). I'm counting the following as fixed costs: Mortgage, utilities, subscriptions, pet stuff, groceries, healthcare premiums, car maintenance and car fuel
Jan:
Fixed cost: $4,705.07
Discretionary: $2,035.91
Feb:
Fixed cost: $3,533.97
Discretionary: $2,023.52
Mar: (wife's bday month)
Fixed cost: $4,538.90
Discretionary: $2,824.32
Apr: (my bday month)
Fixed cost: $9,872.91 -- paid quarterly taxes for 2023, annual taxes for 2022, plus tax service fees
Discretionary: $1,630.91
May:
Fixed cost: $5,531.86
Discretionary: $3,987.94
June:
Fixed cost: $4,580.07
Discretionary: $2,954.35
July:
Fixed cost:
Discretionary:
August MTD:
Fixed cost:
Discretionary:

Wifey is also going on a trip in September that has generated many amazon purchases over the course of the year, in addition to purchasing a ticket for the event, and a future lump sum payment at the conclusion of it when they settle up.

The reality is that we spend a shit ton more than I'd like to -- and despite leaving my day job I still bring in more than half of our income. Until her client base gets larger (she's gaining a couple net new clients per month) I think I'm just going to feel sort of uneasy keepin' on keepin' on. Having gone through nearly 500 transactions so far, I'm not the reason why our expenses are so much higher than I expected. That being said, wifey wants to work and be the breadwinner, so at some point the scales will tip and she will be earning more and spending more rather than the current "I earn, she spends" dynamic.

*Part of my to-do's for the day is to catch up to current

[LifeHappens]

You keep saying tennis is an outdoor sport but indoor tennis clubs are a thing that exists in the world. Do you have any near you? Could you coach at one?

[tj]

How much of your tax cost is taxes vs tax preparation? Since you have more free time now, why don't you prepare your own taxes with software? Didn't you have a lot of issues with the accuracy of your tax preparer's work last year?

[Catbert]

I do understand the allure of a paid off house.  Could you scratch that itch by setting up a separate account or subaccount where you deposit the extra $1000?  Invest that money in a CD, money market or mutual fund.  When the amount in that account equals your payoff balance plus any taxes owed then payoff the mortgage.  Or decide to let it ride.

[nexus]

@LifeHappens
The indoor facilities are 35+ minutes away at a minimum. Logistically it does not make sense, and if I were to agree to commuting it would be for a six figure job with benefits. Working for a different club/facility would have its own hurdles in addition to the commute. I'm friends with several of the pros in the area and have looked into it before. I lose autonomy of my rates and schedule. For group classes, the indoor clubs pay the pros a flat rate, which is less than my minimum hourly rate. They require pros to do a minimum number of clinics per week/month and then allow them to set their own rates for private lessons. Depending on the club/facility, they may also take a percentage of private lessons.

It doesn't make sense to me, nor does it seem feasible to drive over an hour round trip to make $40 for a 90 minute class, then try and teach private lessons for another 2-3 hours for a fraction of what I make at my own club. I'll note that the indoor facilities are in high demand and winter court time is sold in blocks of contract hours that I've been lucky enough to utilize as a player (can't teach on them) so I absolutely would not be able to work consecutive hours in an indoor setting. At best I'd sit around with a lesson or class peppered in every few hours, or end up just teaching a class and spending more time driving than actually on court. I'd rather have a job through a temp agency through the winter than subject myself to idle time away from home.

_______________________________________________________________________________________________________________________

@tj YTD we have paid over $5k between quarterly taxes and what we owed last year. Our tax folks charged us almost $1k. I could see paying another $5k in the next two quarters depending on how much self employment income we net. Take this all with a grain of salt. I can write SQL and play in excel all day long, but tax protocol is just something that does not sink in. 

Long answer why I don't DIY - it seems daunting and I'm afraid to fuck anything up. I don't know the laws and the reason I went with my in law's tax person/firm* is because after moving to a different state and buying a home (living in two different states with different state income taxes), TurboTax wasn't sophisticated enough. Or I wasn't sophisticated enough to select the right options. Essentially it was trying to get me to pay state income tax as if I'd lived in CA for 100% of the year instead of the actual % of time before moving to a no state income tax state.

Additionally, I don't know how to treat/handle all of the self employment expenses (or whether that's a separate return or just rolled into the rest of the stuff), the health insurance stuff, or how going from being W2 employees to self employed factors into everything. All I'm willing to do is track everything meticulously, organize it, and send it over to the "experts" to handle it. With that being said, I am considering going to a different tax person that will charge less and perhaps be available in person if needed. If our taxes were simpler and less convoluted, I'd opt for maybe DIY'ing.

Or maybe I should go get trained on how to do taxes from H&R Block or something? Not sure if they even have a paid training sort of thing. But that goes back to the whole "If I'm re-joining corporate america I'm going to do it for the firehose of cash income level, not an entry level role or for less than I make now" aaaand in that case I can afford to waste money paying a tax person.

*I also thought working with this firm would be good given my wife's eventual trust/inheritance stuff. They already know the ins and outs of all of that so I figured it was a good idea to get on their radar so that when the time comes they'll be able to advise her and help her/us prepare

[nexus]

Adding I just found a self paced course through H&R Block that appears free. For some states it is $149. For my particular one, there is no charge.

https://hrblock.csod.com/LMS/LoDetails/DetailsLo.aspx?loid=2f4f7396-2d09-40fc-9ef2-30976f570ec1#t=1

Kinda cheesy that it's basically unpaid training, but would probably make it easy to get hired by them if completed. There's also a live online class as well as an in person option. I did not check pricing for those.

Edit: fixed a word, added the below
Will I stick with this? Who knows. Definitely not starting it today, though. I did apply for some snazzy remote roles with a totally unrelated company that aren't tax-related.

[wantstoinvest]

It sounds like you are working to stem some sort of boredom more than anything. Health insurance is extremely annoying, I made a thread about it on this sub-forum a few weeks ago myself, but you sound like you're already in the marketplace and have figured it out.

If you're a data analyst, why not take a remote job that pays just enough where you make money for your lifestyle but don't get the added responsibilities and stressors assoicated with higher paying positions?

[cangelosibrown]

@cangelosibrown I've got Ascension Personalized Care with an individual in network deductible of $9,100 and $18.2k for the whole family, which is basically $9.1k for me and $9.1k for the wife. Plan name: "ASCENSION PERSONALIZED CARE BALANCED BRONZE 2"

I think I just have a shitty plan.

sorry, the $8700 I said was last year's number, it's $9100 now. It's not necessarily shitty, it's just the cheapest legally allowable plan. You pay the first $9100, the insurance pays the rest (assuming you stay in network). It's lower than my home insurance deductible. Obviously the math is different for every situation, but for me the cheapest plan pretty much always makes sense -- I'm not expecting to have any medical costs any more than I'm expecting my house to burn down. I carry insurance just in case.

[Gremlin]

You are now in the situation where you have options and choices, so well done.  You should explore all your options, not just 'return to full time work' or not?

Data analysts are in demand.  Part-time remote data analyst roles are available, if that's something you may consider.  Full-time roles are more readily available.

Also, I would highly recommend you critique (or ask the MMM community to critique) your budget.  That amount of spending might be completely reasonable or it might have some easy wins that you can carve out without barely noticing a difference to your lifestyle.  Mrs G and I found that when we moved from full time to part time SWAMIs a lot of expenses that we'd previously assumed were necessary, were simply... not.  We recast our budget, added in a bunch of truly discretionary things that were actually life enhancing, but at the same time carved out a good chunk of expenses that no longer stacked up.  Expenses that we might've continued to pay blindly without that critique.  Remember that every $1 you save out of your long-term budget is $25 you don't need to accrue in your 'stache, if you're targeting a 4% WR.

I don't have an issue with paying for good quality tax advice.  Sounds like you might need it if your personal affairs are complex. But like all your services, you should review annually and see whether it's meeting your needs in its current form.  I wouldn't use a 'cookie-cutter' mega-shop tax agent if I have a series of complex tax issues myself, but YMMV. 

[Turtle]

There's nothing wrong with temporarily going back to work.  What's the worst that could happen?  You land in a gig that isn't for you and you quit again?  That's not much of a down side.

It doesn't hurt to see what's currently available.  3-6 month contract gig would put you through to early tennis season again.  Depending on what your specialties are, maybe you can even set yourself up for a regular "only part of the year" type of situation. 

I have a friend who does that for a part time job - only works tax season and has the rest of the year off.  Full time for a few months and nothing the rest works out to similar pay as a weekly part time job, but with several months of complete freedom available.

[tj]

There's nothing wrong with temporarily going back to work.  What's the worst that could happen?  You land in a gig that isn't for you and you quit again?  That's not much of a down side.

It doesn't hurt to see what's currently available.  3-6 month contract gig would put you through to early tennis season again.  Depending on what your specialties are, maybe you can even set yourself up for a regular "only part of the year" type of situation. 

I have a friend who does that for a part time job - only works tax season and has the rest of the year off.  Full time for a few months and nothing the rest works out to similar pay as a weekly part time job, but with several months of complete freedom available.

That is bad ass. Who does he work for? I might be interested in something like that. I am a former tax auditor, but I don't have any actual tax prep experience other than self-preparing my returns.