So, I am going to quit my job, I just need some help deciding when and how.
I’m 31, and we welcomed our first child 3 months ago. It has been even more amazing, and trying, than I ever could have imagined. This incredible life change has also become the impetus for additional major life change.
A colleague and I are proceeding towards starting our own engineering design firm. This is happening!
The main question is when. Here is a bit of background on my current life status/financials.
Income (all #’s are gross (gross like financially speaking, not gross like boogers. I love numbers!))
Me: I currently earn ~90k.
Transition into consulting may take a few years, but earning potential in my industry is significantly higher once we are up to speed. For the sake of this discussion let's just assume that once I've transitioned into consulting it will be a successful endeavor.
Wife: SAHM for now, and she will return to work 3 days a week starting in Sept. At PT she will earn approximately 32k.
Other: We have a cool little house that will be on Airbnb for ½ of each calendar year, starting 5/1 (see my sig). I anticipate 3-4k/mo over this time period.
From 8/1 on, I will be a property manager for a friend/neighbors Airbnb. I anticipate 600-800/mo from this.
Assets:
I have ~$250k equity in our “home”, because this includes the baby house. I anticipate opening a HELOC while I’m still employed and I assume I’ll have access to ~120k.
Otherwise about 80k in retirement accts and 20k taxable short term investments (currently in betterment at 90/10).
Our expenses are relatively high monthly because 1.5 years ago we did a re-fi to a 15y mortgage at 3.75%. So our PITI is $3k/mo.
No other debt outside of mortgage.
Total monthly expenses are ~$5000-5500. We haven’t finished our Q1 review yet and having a baby has messed things up a bit. (New gear, relatives visiting, etc.)
Anyway, I didn’t intend this to be a full case study, but I wanted to supply enough financials to warrant advice. I can provide more if it’s relevant.
I’m tired (no surprise) but more importantly I’m unhappy with how little time I’m spending with my son. I see him for 1-1.5 hrs a day on weekdays. This is making me sad! I’m also just very ready for a change. I’ve been at the same place for 6 years, and unfortunately it’s just changing in all the wrong ways. There is nothing particularly toxic or dire, just a manager that doesn’t appreciate me, and a culture that supports complacency.
The only work-related reason I don’t want to quit right now is that I’ve been leading the same project for over 2 years, and it launches ~7/1. I design orthopedic implants, so my only opportunity to actually attend live surgery and see my work in use will be if I’m still employed here. Otherwise I will miss that chance. So on that I’m torn.
Here are my options as I see them, and here’s where I’m looking for input!
1) Quit right now.
Pros: Immediate time at home. Time to go camping. Time to focus on starting new business. Time. Recharge. Go to my brothers’ wedding in June and stay as long as I want!
Cons: Cash flow will be negative until wife starts back to work in August, so we’ll eat in to savings. With 120k in heloc it’s not a real concern because I’ll easily be able to earn and pay it back, but it’s just a step backwards towards FIRE.
2) Quit in August.
Pros: No negative cash flow, anticipated additional 6-8k go in to savings between now and then.
Cons: Trip for brothers’ wedding has to be short, because babytime took all my PTO. I am stressed and exhausted and I’d have to ride this for another few months. Not so sure I can. Less time to focus on starting the business until then.
3) Quit only once the new business is completely ready to go, and potential clients are lined up.
Pros: Most financially responsible, as of august I can anticipate 4-5k in to savings per month. Least likelihood of significant gap in stable income. Also, I’m currently 80% vested in my 401k and on 10/12/15 that goes to 100%. I think the difference is roughly 8k.
Cons: Feels like an eternity from now. I’m having a hard time making real progress on the business while working, because I spend free time either with lil man, or catching up on house stuff, or sleeping.
Regarding PTO, intermittent or full FMLA leave: Unfortunately I've already exhausted all my PTO when he was first born, and intermittent leave is not covered under FMLA, and this isn't an option with my role. I've already asked. As for taking full FMLA leave, I have considered this, but I feel that since I know I am quitting imminently, it would be disingenuous to take FMLA leave now as "parental leave" but knowing I would be focusing on starting a business, and leaving soon after I returned. Also, my employer is potential future client once I'm consulting so I want to maintain the relationship as best as possible.
As for gaps in employment. If I have a hard time getting that first client, or things are slow, I have plenty of other ways of earning income, and I am a resourceful bugger. I’ve already talked to a family friend contractor who would be glad to have me anytime.
Also, health insurance. We’re on mine now, so if we quit before my wife is working we have to figure something out. Even once she’s back, we may not be able to count on hers. As part time her coverage is free but adding son and I is stupidly expensive ($740/mo).
So I’m asking for input, advice, questions, facepunches, whatever. I value the input this community has to offer.
What I’m feeling is that I have plenty of savings for my age, and I believe I have more than enough earning potential for my financial goals. We are shooting for FIRE on or before turning 45, but the likelihood of my post-fire enterprises providing income are ~100%. The HELOC gives us a short term safety net. My wife is the most incredible human and will welcome whatever I choose with grace and style. She has done an incredible job of pre-emptively focusing on optimizing our spending all on her own and is happy doing it.
I want to quit now, but it seems irrational. I’m good at rationalizing impulsive decisions so I’m looking for impartial assessment.
Man, that was a lot. I hope someone cares (or is bored) enough to respond.
Cheers!
James