What would you do if you were me?

[GettingThere]

 Hi all,

   I have discovered recently MMM and I  feel like it was written for me. Financial Independence is really something I aim for. I have the following mental debate in my head and would love to hear any input :

My situation : 36 years old, Canadian, living with girlfriend and our 4 year old son (no other kids planned).  Assets 445K (house 200K + investments 245K) and debt 33K (mortgage that will be paid up in 2 years).  Spending too much per year (combined 80K annually) and working towards reducing that number to 45K once the house is paid.

Work situation : I am a self employed (incorporated) certified professional accountant. My income does vary from one year to the other but on average I will make about 115K after taxes and my girlfriend makes about 25K after taxes as well. Total 140K take home and I invest around 60K per year in the stock market.

I don't want advice on how to save more, I have already identified many items that I need to work on (I am cutting cable and home phone at the end of this month!) .  I have been driving the same car for 7 years and plan to drive it another 5 at least.

My current occupation implies that I work a lot during tax season (March April)  and the rest of the year I work on consultancy projects that pay well.  The income I derive from the tax season is sufficient to pay my annual spending excluding mortgage and savings.  The consultancy work enables me to save and invest 60K per year.

I calculated that I'd still need to work 7 years like this ( save 60K per year) to attain financial independence. Seems short but at the same time it's a long way from now in my mind. My son is growing up and I want to spend more time with him.

Knowing this : would you rather work A LOT for the next 7 years and then retire completey at 43 years old OR would you quit the consultancy work 9 months out of the year and only work tax season for 3 months a year for the next 25 years?

I am torn apart but at the same time realize that I am very fortunate to have this choice and feel grateful for it.

¨Pardon my bad english (second language) and thanks for any comment!

[Unionville]

I'm still stuck on why you aren't married to your own son's mother....not that it is any of my business...but it might unify your financial goals.  You sound independent from your family.

I should add that I would cut back consulting 1/2 time to spend time with your son in case you don't live another 7 years.

[GettingThere]

I truly believe marriage will not change a thing. Having a son together is much more unifying than a one day ceremony. We are in this together, believe me.  Marriage is just not much part of our culture here. Out of 10 couples we have as friends, only one is married.

Problem with consultancy work is that it is the  the same project I work on every year from May to January... a bit like an actual job, but not on the payroll and I choose my own schedule, but it is demanding.

[LibraTraci]

Well, there are huge advantages to working like a dog for several years, if only because a stash of money generates more money (earning you interest). 

There are also huge advantages to maniacally paying off debt , as any debt is eating your money (charging you interest). 

My thought on the matter is, there's no time like the present.  We don't really know what the future has in store for us, and how long you will continue to have the opportunities you have now. 

   

[Thegoblinchief]

It's really easy to burn out as an accountant working the busy tax season. Will you last another 7 years.

Keep your consultancy stuff, because that's something that's enjoyable (I'm assuming) that you can dial up or down at need. I'd try to strike a balance where you get time with him but are still advancing your savings.

And maybe the consultancy stuff becomes enough to power you on part-time hours year round.

[bigchrisb]

I don't see the relevance of married/non married to this discussion - you have a life partner you are committed to.

As for your financial situation - the grass looks pretty green right now - you have good earnings and a healthy savings rate.  You seem to have a two year target on getting your house paid off, along with investing an extra $120k.  At that point, you reckon you would have an annual expense of $45k, and an investment portfolio of about $370k, with your partner bringing in 25k - i.e. at that point, between investment income and your partners earnings, you would be pretty close to covering your lifestyle costs.  I'd be tempted to get to that point and then evaluate the potential of going part time - and then it wouldn't matter if part time resulted in a major loss of income?

[BPA]

Fellow Canuck who also isn't married to her long time partner.  :)

Could you do a little of both?  Cut back on the consultancy and retire before 25 years?

I switched from full-time to part-time work so that I could be around more for my kids about 8 years ago.  I am on track to retire at 50 (although if I moved I could do it now, but I'm liking work and living in my house right now, so I'm staying put).  So, I worked less and will still retire pretty early.

[Unionville]

Regarding marriage, at least in the states, in my life experience, children (and lower wage earning mothers) tend to be more financially stable when the parents are married.  FWIW.  Maybe a cultural difference.  There are also different legal rights. Ask any gay couple who have children, (but are denied the right to marry).  They don't have the same rights to make medical decisions for their children in emergencies for example.  Usually one partner has be be the primary parent.  The other partner is denied the equal right.  Thankfully these things are changing.

[BPA]

Regarding marriage, at least in the states, in my life experience, children and mothers tend to be more financially stable when the parents are married.  FWIW.  Maybe a cultural difference.  There are also different legal rights. Ask any gay couple who have adopted children, but are not able marry legally.  They don't have the same rights to make medical decisions for their children in emergencies for example.  Usually one partner has be be the primary parent.  The other partner is denied the equal right.  Luckily these things are changing.

Interesting.  I don't recall any similar laws here for parents in a relationship who have a child.  When my ex and I split (and we weren't married), the only difference legally was that he was not entitled to my pension and that either of us could get married to someone else right away (instead of waiting a year to get divorced).  In every other way because we were common law, we were recognized as married.

We made within $2K of each other and so there was no alimony, but he paid child support and we did shared custody.  Kids lived with me, but we both made decisions about their care.  It's worked for us.

[Cromacster]

I don't want advice on how to save more, I have already identified many items that I need to work on (I am cutting cable and home phone at the end of this month!) .  I have been driving the same car for 7 years and plan to drive it another 5 at least.

If you're spending 80k/year cable and cell phone are probably small fish....but a start.

Honestly in your situation, I would try to arrange your finances where you could earn what you need during tax season.  Which sounds like that amount is between 60-80k.  If you truly want FI and value time with your son, I would try to organize my life in such a way that I could live and save from tax season earnings.  That way you could reduce the amount of time you work as a consultant.  Then even beyond the point you reach FI choosing the amount you do doing tax season just becomes a bonus.

[Gray Matter]

We've been grappling with a similar dilemma, though our kids are older (8,9, and 12).  If we kept our noses to the grindstone, we'd be FIRE in 5-7 years.  But in 5-7 years, my kids will be heading off to college or teenagers who would rather hang with their friends than their parents, so we have made the conscious choice to slow things down, under the assumption that time right now is more precious than time in the future will be where the kids are concerned.

I wouldn't be making this decision if I didn't already have good savings, and confidence that we can live on less income.  It sounds like you have decent savings, and are doing what you can to reduce expenses.  I recently went to a reduced workweek (75%), resulting in about $1200 less in take-home pay each month.  I have cut monthly expenses by $2600 and, if we can live this way for six months, then I will feel comfortable cutting hours further.

Good luck with this decision!

[Adam Zapple]

What about just taking a 3 or 4 week break in the summer when he will be home from school?

[soccerluvof4]

As a person that has 3 sons and a daughter 14,13,9 and 8. I can say this. The next 7 years that you would be hammering to stash cash are some of the most impressionable years of his young life. I would figure out away to get some balance because if he ends up playing sports or? your going to want to be there. I don't have the answer in how to make up that difference but your doing well so I would put my son first always! and that's the practice i do now with all my kids.

[Eric]

I know you said you don't want advice on how to save more, but I just wanted to make sure that you realized how powerful it is and that you can cut that 7 year number down by increasing your savings rate.

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

The most important thing to note is that cutting your spending rate is much more powerful than increasing your income. The reason is that every permanent drop in your spending has a double effect:

    1. it increases the amount of money you have left over to save each month
    2. and it permanently decreases the amount you’ll need every month for the rest of your life

[GettingThere]

Thanks all for your replies, I really appreciate it! Sometimes life throws at you the answers you are looking for and i'll see how it goes. My girlfriend works part time already to spend more time with our son, so maybe it's my turn to scale back!

My biggest hurdle to FI is a non-mustachian gf, but we are getting there (hence the nickname)! I even presented her last week my own FI workshop with details of our spending and what it would mean for us if we can reduce it... I think she is on board (but it's only been a week, so who knows!). She was proud this week for 3 days straight she came back home and proclaimed she did not spend a penny! That made me happy!