Author Topic: Threat or Opportunity?  (Read 3512 times)

mnstachian

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Threat or Opportunity?
« on: May 20, 2013, 08:33:41 AM »
Good morning. I'm a longtime lurker, but first time poster. As of January 1, both my husband and I expect to be unemployed. We both have PhDs in the social sciences with skills that are transferable to the public and private sectors. This year our net take home pay was approximately $120,000. In our field, the academic job season is in the fall. While we both planned to actively seek new jobs during that time, we're wondering if this is an opportunity to switch gears into other, part time work that won't require us to move wherever the jobs are. My instincts run conservative and I had planned to work another decade, but maybe I'm being too conservative? Should we take our cash stash, put it into the market, and keep working for 5 or 10 more years? Or should we dip our toes into semi-retirement in 2014? According to my calculations, we can stop contributing to our retirement accounts now, but I'm not sure that we've got enough to make it through the 3 decades before that (we're both in our mid-30's).

Our vital statistics:

ASSETS
Condo           $285,000    (~$199,000 remaining on mortgage)
403b & ROTH   $225,000    (which we plan to roll over)
Investments   $250,000   (ETFs and $55,000 in an actively managed fund)
Cash                   $157,000    (leftover from house savings & previous home sale)
Car                      $4,500   (2002 Civic, under 80,000 miles)

*Having so much cash on hand is a temporary thing; we wanted to have enough to make an all cash offer on our condo if necessary.

LIABILITIES
Spending   $3,000/mo   (can cut this down to $2,500)
Mortgage is 30 year fixed @3.43% APR
No kids and no plans for them.
School loans and car paid off.
No rotating debt. Credit cards paid in full each month.

Thanks in advance for your thoughts and advice! And if I've left anything important out, do let me know.

Khan

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Re: Threat or Opportunity?
« Reply #1 on: May 20, 2013, 09:12:13 AM »
First of all, I'll ask it because if I don't someone else will.

3000$/month. Why? How?

footenote

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Re: Threat or Opportunity?
« Reply #2 on: May 20, 2013, 09:41:12 AM »
Congratulations on having saved awe-inspiring assets by your mid-30's!

In OP, you say are flirting with stopping retirement account funding - help us understand what has your highest priority:

1) not having to continually move to where the work is 
2) work part time only (more free time)
3) both 1) and 2) ?
4) other / additional priorities?

What's the best life you envision for yourselves? Where and how would you most like to live?

mnstachian

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Re: Threat or Opportunity?
« Reply #3 on: May 20, 2013, 09:50:24 AM »
Well, our expenses right now are as follows:

$1400 mortgage, condo fees, property taxes
$600 insurance car, condo, health
($550 of that for the privilege of being grouped in with an elderly college faculty (which will change))
$350 food
$150 entertainment (cable, tivo, internet, netflix, (which will also change))
$300 utilities (heating oil, electricity, water, trac phone)
$200 sundry, restaurants, travel, etc.

As for our priorities, I'm not sure yet. There could be an amazing job in a fantastic location this fall. Or not. Jobs in any given year are hit or miss, but it is difficult to get back into the tenure/tenure track gigs once you've pulled yourself out for any significant period of time. Speaking for myself, I'd have to go with:

1) Living in a lively, urban, walkable location
2) Work part time

I like what I do, I'd just like to do it more on my own terms.
Thanks!
« Last Edit: May 20, 2013, 10:01:55 AM by mnstachian »

Dynasty

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Re: Threat or Opportunity?
« Reply #4 on: May 20, 2013, 01:02:31 PM »
I don't think you are being too conservative at all with the first post.

If I understand it correctly, you already live in a lively urban college town location.

If you were able to take the 157K cash on hand now, and a portion of the remainder of this year's salary your condo could be payed off. This would drastically lower your living expenses. It would take a lot of investment principle to come up with $1400/month in gains and dividends.

Does the $1400 include condo owner fees? Is it a building or a condo community? Utilities seem really high if it is a building. Then again, I heat with natural gas which costs far less than oil, and have a large SFR and never had a gas bill even half of $300.  I don't think I even spend $600 a year on natural gas.  If possible, assuming natural gas lines are available, and your condo association would even allow it, and IF, your oil furnace is solely for your unit a good investment would be replacing that oil furnace with natural gas. Big savings would be had there. If it is even possible.

Outside of academia, what types of employment activities are in the city you currently live in?  What kinds of part time jobs would you look into?

Say you paid your mortgage off this year, and cut the remainder of the majority of fat from your budget such as cable, tivo, more beans and rice, etc, and were able to get your budget down to a $1500 floor (PLUS Health Insurance) would your life be satisfying?  I don't have cable now and enjoy saving the money. However, if I weren't working there are going to be times where I just want to veg on the couch and watch some Threes Company re-runs. And not always doing fun free activities like the library, the park, bike rides, etc.  Currently, I'm not home most of the time and not having cable doesn't bother me one bit. As far as the food budget, I'd rather work a few more years or whatever to make sure prior to retirement my "plan" does not rely on living on beans and rice two meals a day to make it work.

The above would leave you with approximately $500K in retirement accounts.   

My concern is as PhDs you might get bored with not so stimulating part time work, or maybe not, but not really truly have enough money invested to fund activities to keep you stimulated.

However, maybe try it out for six months or so and see how you like it. 

Personally, I'd be a little hesitant to at this moment. But obviously you two have different employable skills than I do and taking six months or a year of "sabbatical" might not be a red flag on a resume like it would be mine. 



 

twinge

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Re: Threat or Opportunity?
« Reply #5 on: May 20, 2013, 01:26:00 PM »
Well, your investments aren't able to yet sustain your current COL (even if you could bring it down to 2500) if taxes, replacement costs, inflation etc. are figured in--and don't allow for emergencies, so you'd have to figure out a way to bring in some income.  Could you work in research part-time in the location you want (or currently are)? Consulting? Adjuncting would probably not be worth it given its dismal pay, but maybe it would be just enough to tide you over if you both did it?

The thing is, once you step off that tenure-track process you really are kind of out and there's not a whole lot more kinds of Phd work "on your own terms" outside of academia. If you're unsure about totally making that leap, what about simultaneously applying for international fellowships during the job application process? Or a year long stint in an ngo related to your field?   You could either get an academic job or spend the year doing work that keeps you in that academic loop (e.g., publishing, teaching, conducting research) and while you will have relocated for the year, you haven't moved your home base.  And a year with a prestigious name on it looks like a sabbatical rather than testing the waters outside of academia.


foobar

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Re: Threat or Opportunity?
« Reply #6 on: May 20, 2013, 02:15:39 PM »
2500/.04 is 1 million bucks. You have a bit over 700k.  SS might give you some of the money (I think you would get about ~1.5k/month in todays dollars in ~30 years ) but it seems to me that you would be cutting this pretty close.  Work for another 3 or 4 years, save another 100-150k and your would be in a much better position.  Alternatively you could think about how to find work that will bring in ~30-40k/yr to pay your yearly costs.  Maybe something like tutoring or subbing?

Good morning. I'm a longtime lurker, but first time poster. As of January 1, both my husband and I expect to be unemployed. We both have PhDs in the social sciences with skills that are transferable to the public and private sectors. This year our net take home pay was approximately $120,000. In our field, the academic job season is in the fall. While we both planned to actively seek new jobs during that time, we're wondering if this is an opportunity to switch gears into other, part time work that won't require us to move wherever the jobs are. My instincts run conservative and I had planned to work another decade, but maybe I'm being too conservative? Should we take our cash stash, put it into the market, and keep working for 5 or 10 more years? Or should we dip our toes into semi-retirement in 2014? According to my calculations, we can stop contributing to our retirement accounts now, but I'm not sure that we've got enough to make it through the 3 decades before that (we're both in our mid-30's).

Our vital statistics:

ASSETS
Condo           $285,000    (~$199,000 remaining on mortgage)
403b & ROTH   $225,000    (which we plan to roll over)
Investments   $250,000   (ETFs and $55,000 in an actively managed fund)
Cash                   $157,000    (leftover from house savings & previous home sale)
Car                      $4,500   (2002 Civic, under 80,000 miles)

*Having so much cash on hand is a temporary thing; we wanted to have enough to make an all cash offer on our condo if necessary.

LIABILITIES
Spending   $3,000/mo   (can cut this down to $2,500)
Mortgage is 30 year fixed @3.43% APR
No kids and no plans for them.
School loans and car paid off.
No rotating debt. Credit cards paid in full each month.

Thanks in advance for your thoughts and advice! And if I've left anything important out, do let me know.

smalllife

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Re: Threat or Opportunity?
« Reply #7 on: May 20, 2013, 02:31:52 PM »
How much do you want to stay in your current location?

How much are the condo fees?

What are you most looking forward to about being completely FI? (The answer to this question might steer you in one way or another.  Personally, I do want to continue to work a ~20 hr flexible/part time job even after FI so I will probably downshift my hours as soon as that is possible.  If your quest is to be completely unencumbered than you might choose a different option).