OLY: Contemplating a post-Job life

[McStache]

I'm probably a year out from being more properly FI, but one less year and a leap of faith that it's very unlikely I'll never make money again is tempting me away from my Job. I'm a single 33 year old currently working in software engineering. By all objective measures, my Job is well paid, treats me pretty well and has good colleagues. I enjoy programming, but am a bit worn down on using my powers for the sake of mission-less capitalism and the grind that goes with that. I think I'm somewhere from fat-coast-FI to lean-FI and if I could earn at least $10k-$20k a year then would be more solidly rich (vs dead or broke). I have some leads on part time consulting gigs, though nothing actually solid at this point.

What would I do with my time autonomy you might ask? The things that are top of mind beyond some part-time consulting are increase participation in some athletics endeavors, get involved in local conservation efforts, spend more time with friends and family, take some courses in topics I'm interested in, learn some carpentry for both my own house maintenance needs and to help with affordable housing builds in the area

Questions:

• Am I crazy for leaving the cushiness of solid employment for an itch and a hunch?
• Housing is a very large portion of my expenses, which means I have less flexibility (without moving) - does that make my overall FI-level more fragile?
• If mortgage rates drop, am I simply out of luck on a refinance without a W2 job or solid history of 1099 work?
• I think the most likely worst case is I end up fizzling on the consulting and decide to go find a Job again in a year or two, which doesn't sound so awful. There are definitely possibly worser cases, but those could also happen if I stay at my Job. Is this line of thinking correct?

Income, Taxes, Savings:	Monthly	Annual
Paycheck income	$16,667	$200,000
Investment income	$792	$9,500
Income taxes	$3,909	$46,912
After-tax income	$13,549	$162,588
401k	$3,625	$43,500	Including match
HSA	$358	$4,300
After-tax investable	$6,466	$77,587
Monthly Average Expenses
Mortgage	$3,176	$38,111
Property Tax	$180	$2,160
Home Insurance	$130	$1,560
Gas/Oil for heating	$100	$1,200
Household; Maintenance	$210	$2,520
Phone/Internet	$35	$420
Electricity	$60	$720
Housing total	$3,891	$46,691
--
Car Insurance	$50	$600
Car Maintenance, Registration, etc.	$30	$360
Fuel/Public Transport	$40	$480
Car total	$120	$1,440
--
Groceries	$200	$2,400
Dining (Lunch/Dinner/Etc.)	$200	$2,400
Food total	$400	$4,800
--
Hair Care	$25	$300
Medical & Dentist	$60	$720
Self care total	$85	$1,020
--
Charitable contributions	$50	$600
Christmas/Holidays	$20	$240
Clothing/Shoes	$20	$240
Entertainment	$50	$600
Travel/Vacation	$100	$1,200	Stretched far with CC points
Other total	$240	$2,880
--
Non-mortgage total	$1,590	$19,080
Total Expense	$4,766	$57,191

Notes:

• Without a Job, I guesstimate that expenses would increase about $5,000 per year to cover health insurance (assuming $4,320 in premiums, higher deductibles, and no ACA tax credits)
• Categorization is a little bit guessed at, however, I have tracked my overall spending for years and this is a conservative, but realistic overall number
• Large/lumpy capital expenses (car primarily) not accounted for here - about $20k every 10 years for this

Assets
Cash Equivalents	$46k
Taxable	$377k
HSA	$39k
Trad. 401k	$364k
Trad. IRA	$71k
Roth 401k	$26k
Roth IRA	$109k
House	$620k
Total	$1,652k
Liabilities
Mortgage	$493k @6.625%

Safety Nets:

• SS if I never earn anything ever again would be about $1,800 a month at FRA
• Supportive family that is financially solid (including a non-trivial inheritance in 20-30 years)
• A good network and community
• A strong skillset and am at the level of seniority where I have solid experience that is valued, but not so senior that I'm pigeon-holed into only doing leadership roles

[reeshau]

Just picking at a couple things, as a start:

• If mortgage rates drop, am I simply out of luck on a refinance without a W2 job or solid history of 1099 work?

Yeah, if not impossible, it is going to be much tougher.  No loan officer is going to imagine someone in their 30's accessing an IRA.  And even with your taxable account, the amount they will discount because of the years ahead of you will be significant.

I FIRE'd at 48, and couldn't get an asset-backed mortgage in 2020.  Had to buy the house for cash. (I was coming back from overseas)

• Without a Job, I guesstimate that expenses would increase about $5,000 per year to cover health insurance (assuming $4,320 in premiums, higher deductibles, and no ACA tax credits)

I wouldn't discount ACA subsidies.   To the extent you use a taxable account, your income != your withdrawal,  but just the gains on your withdrawal.  If you balance withdrawals from your IRA and taxable, you should be able to engineer being under 400% of the poverty level.

But...

I see you also include your house in your asset total.  If you are doing rich, dead, or broke with that in, you are implying selling it as some point.  If you want to stay where you are, consider your assets without the house, and live off of those.  Also, your house is going to have lumpy expenses, too: roof, mechanicals, etc.

[McStache]

Just picking at a couple things, as a start:

• If mortgage rates drop, am I simply out of luck on a refinance without a W2 job or solid history of 1099 work?

Yeah, if not impossible, it is going to be much tougher.  No loan officer is going to imagine someone in their 30's accessing an IRA.  And even with your taxable account, the amount they will discount because of the years ahead of you will be significant.

I FIRE'd at 48, and couldn't get an asset-backed mortgage in 2020.  Had to buy the house for cash. (I was coming back from overseas)

Somewhat expected, but bummer. Did you look into finding someone who would/could cosign for you?

• Without a Job, I guesstimate that expenses would increase about $5,000 per year to cover health insurance (assuming $4,320 in premiums, higher deductibles, and no ACA tax credits)

I wouldn't discount ACA subsidies.   To the extent you use a taxable account, your income != your withdrawal,  but just the gains on your withdrawal.  If you balance withdrawals from your IRA and taxable, you should be able to engineer being under 400% of the poverty level.

I'm ignoring subsidies mostly because I don't want to rely on them for my projections and they'd be bonus.  Then the other thing I've been looking at is taking advantage of the almost certainly lower income to do roth conversions as well as perhaps capital gain harvesting. Because of my mortgage, even without much income, I'll have 30k+ of deductions for the coming years. It seems like it might be worth creating more income (at the expense of ACA subsidies) to actually get to use up all my deduction and credits and a bit of the lower tax brackets. I haven't done deep analysis here and I know the ACA cutoffs can have some wonky effects on marginal tax rates

If I work even a couple more months this year, the ACA subsidies are already near-zero assuming no other income :(

But...

I see you also include your house in your asset total.  If you are doing rich, dead, or broke with that in, you are implying selling it as some point.  If you want to stay where you are, consider your assets without the house, and live off of those.  Also, your house is going to have lumpy expenses, too: roof, mechanicals, etc.

Rich/broke/dead is with only liquid assets. I could sell the house if needed, so I consider it an asset, but that's definitely not plan A (or probably B - roommates would come first). More of a safety net than a true part of the plan

I did include the maintenance cost to be a bit more of sinking fund, but that will for sure be very lumpy in practice and I may be under estimating a bit there. I'm pretty handy, so can do lots of things myself, but some things will be outside my scope and just plain expensive even for materials only

[reeshau]

Just picking at a couple things, as a start:

• If mortgage rates drop, am I simply out of luck on a refinance without a W2 job or solid history of 1099 work?

Yeah, if not impossible, it is going to be much tougher.  No loan officer is going to imagine someone in their 30's accessing an IRA.  And even with your taxable account, the amount they will discount because of the years ahead of you will be significant.

I FIRE'd at 48, and couldn't get an asset-backed mortgage in 2020.  Had to buy the house for cash. (I was coming back from overseas)

Somewhat expected, but bummer. Did you look into finding someone who would/could cosign for you?

No, I didn't.  I'm not in a needy position, so did not want to involve my parents. (Who are, of course, retired themselves)  It was an inconvenience to me; a loss of a low interest rate, with capital to put in the market.  Only that.

 Many people attributed the reluctance to the pandemic, as it was still unfolding.  But I asked several people to follow up with me after the "all clear," and nobody did.  I did a couple follow-ups myself in 2021, and I got crickets.

Part of it may be where I am.  It is much more common in LA, as people work on Hollywood or music projects.

[Bee21]

I think you are in good shape financially,  but your mortgage is too much, the interest rate is too high...

You can definitely do a sabbatical if you want.

[McStache]

I think you are in good shape financially,  but your mortgage is too much, the interest rate is too high...

You can definitely do a sabbatical if you want.

Thanks! What asset level or mortgage level (assuming I can flex one, but not both) do you think would make this more reasonable?

[LifeHappens]

Yeah, without including the house as an asset you are at $1 million liquid with a projected spend just over $60,000. That's not going to work. You could certainly afford to give yourself a year or two to try consulting, or go for a Coast-FIRE job that covers your expenses, but you are more than 1 year away from full FIRE.

[Malum Prohibitum]

Perhaps consider grinding it out for crushing capitalism a little while longer while you build up your invested assets (minus house) to 25 times your anticipated annual expenses and pay off your house.  With maxing out your 401(k) and HSA and another $6466 to invest after that (it looks like part of this is going to a Roth IRA), you may find that you get there a lot more quickly than you anticipate.  With 7 figures already invested, returns will help do a lot of the work.

[SweatingInAR]

Yeah, without including the house as an asset you are at $1 million liquid with a projected spend just over $60,000. That's not going to work. You could certainly afford to give yourself a year or two to try consulting, or go for a Coast-FIRE job that covers your expenses, but you are more than 1 year away from full FIRE.

I agree with this completely. $1M invested is not even enough to cover your $47k housing total. Are you planning to downsize or move somewhere cheaper? Can you rent out part of the house?

Your earning potential is so awesome right now that it would be a shame to give it up. 2-3 more years at this rate with some typical stock market gains and you should be at $1.5M invested, which can cover $60k expenses indefinitely.

Here are some big picture options that might improve things:

• Ask for a few months of sabbatical at your current job
• Ask for some sort of reduced work arrangement at your current job
• Find a job at a different company that pays the same (or better!) and give yourself a month or two break between jobs. Do that job for 2 years and you might be done. Or, jump ship again to give yourself another nice break.
• Sell your current house, buy a $200k house somewhere (with or without a mortgage) and be done
• Sell your current house, find somewhere to rent for $1500/month (including utilities) and be done
• Stay where you are and try to get at least $60k/year of consulting work to cover your expenses. Do this for ~6 years until your stash grows to $1.5M and can cover it

[Bartlebooth]

I think you are in good shape financially,  but your mortgage is too much, the interest rate is too high...

You can definitely do a sabbatical if you want.

Thanks! What asset level or mortgage level (assuming I can flex one, but not both) do you think would make this more reasonable?

Reasonable asset level to cover expenses including mortgage: 25 x 57k = 1.4 million invested

Reasonable mortgage level to be covered by your non-house assets of 1.0 million: 1000k / 25 = 40k annual spendable.  Minus $20k for current non-mortgage expenses leaves $20k for a mortgage.  Adjust that downwards though--realistically your expenses are going to be more like 25-30k including car fund and home maintenance.

You are on the right path and close, but high on my mind would be popular upcoming life changes for people in their early 30s: dating, travel with significant other, wedding, kids, etc.  You may be immune to those for some reason?  Or very disciplined and will fit them into your existing spending.

[Laura33]

First question is are you tracking your spending?  Many of those numbers look suspiciously rounded.  If your projections are based on the assumption that you need to spend only $200/mo on groceries/basic household items like TP and only $200/mo. going out, then you first need to validate that assumption. 

You and the other posters are correct:  you are FI without the house; you are not FI with the house.  Yes, that house is getting between you and never having to work again.  So the real question:  is the house worth it?  Note not just this particular house, but that whole lifestyle -- being able to own a nice house in a nice neighborhood, or a decent condo that's walkable to where you want to be, after a bunch of years having a bunch of equity that you know you can draw on if needed as a safety net?  Is there somewhere you would consider moving to -- either a cheaper apartment locally, or another part of the country -- where you could happily live on $20K/yr expenses and $20K/yr or less housing costs?  What about moving somewhere where you don't even need a car?  There's no right or wrong answer -- only the answer that best suits what you want out of your life.

The nice thing about a house is that mortgages do eventually get paid off, at which point your expenses drop.  The problem in your case is that you are very early in that payoff period, so your mortgage likely won't get paid off until right around the time you're eligible for SS (and thus have more cash coming in to support that mortgage payment you no longer need). 

FWIW, you have done an excellent job so far at saving and not living up to your income.  If you want to take a break from work, you can absolutely do so.  Just don't plan for that to be permanent, and keep in mind all of your various options for after your break, i.e., get another high-paying job for a couple of years, get a BaristaFIRE job you can happily keep for years, sell the house and be FI, etc.  The really nice thing your 'stache can buy you is a metric shit-ton of options. 

[McStache]

Thanks for all the feedback! I know that on the face of things, I can't stop work now and never make money again (unless I get absurdly lucky, which is extremely unlikely with the markets at the point they are in the business cycle). But it does sound like it might not be insane to pursue coast FI?

First question is are you tracking your spending?  Many of those numbers look suspiciously rounded.  If your projections are based on the assumption that you need to spend only $200/mo on groceries/basic household items like TP and only $200/mo. going out, then you first need to validate that assumption.

Yup! I've been tracking my spending for over a decade, just not at the category level. They look suspiciously rounded because they are (in the upward direction on average). However, I've never spent this much on non-housing at any point in the last decade (most years, I've spent less than $20k including housing)

is the house worth it?

Are you planning to downsize or move somewhere cheaper? Can you rent out part of the house?

Sell your current house, buy a $200k house somewhere (with or without a mortgage) and be done
Sell your current house, find somewhere to rent for $1500/month (including utilities) and be done

Ideally, I'd stay where I am long term. This is a community I have deep roots in and that community is also what gives me some confidence I could make coastFI-ish-part-time-consulting maybe actually work.

The house I'm in is in one of the cheapest areas of town and is not large. It's just that this area is quite pricey. Even in this neighborhood, the land part of my appraisal is higher than the building.

I do have a spare bedroom that I could rent if need be. Or get out of dodge for a few weeks to allow a whole-house vacation rental during the tourist season.

Could I be happy elsewhere? Yes. I have been at various points. But the siren song always brings me back here and it's where I feel Home. Having the house/mortgage here gives me some of the confidence to be a bit more adventurous in how I earn money as now I know I just need to make some money, but I'll have a stable house. Rentals are really hard to come by in these parts

You are on the right path and close, but high on my mind would be popular upcoming life changes for people in their early 30s: dating, travel with significant other, wedding, kids, etc.  You may be immune to those for some reason?

Not planning on kids. The others could be on the table depending on how the journey goes. I have travelled a lot and have no plans to curtail that, but the travel I've enjoyed (to date), I'm usually able to pull off at a pretty decent price

responses in bold
Ask for a few months of sabbatical at your current job
Current job has a no sabbatical policy (I asked when I was negotiating the offer and they were unfortunately very clear on this - I don't take that to mean it's not worth trying, but it's probably a no)
Ask for some sort of reduced work arrangement at your current job
I might give this a go!
Find a job at a different company that pays the same (or better!) and give yourself a month or two break between jobs. Do that job for 2 years and you might be done. Or, jump ship again to give yourself another nice break.
I've done this a couple times over the past few years and it's part of the reason I feel so ready to leap. I know how nice the non-working time is (and also that I don't squander it). I was kinda hoping this job would be "that job for 2 years and you might be done" :)
Stay where you are and try to get at least $60k/year of consulting work to cover your expenses. Do this for ~6 years until your stash grows to $1.5M and can cover it
I think this is in the realm of possibility. Just not sure how quickly I'd ramp up to $60k (could be super fast, could be never - hard to say without trying)

[Much Fishing to Do]

I totally understand not wanting to move, and frankly living where you want to live is a critical part of enjoying FIRE IMO.

"I do have a spare bedroom that I could rent if need be. Or get out of dodge for a few weeks to allow a whole-house vacation rental during the tourist season."

So this seems like the simplest/safest move to make and then reevaluate income/costs?  Sounds like you live in an expensive area (as opposed to having an expensive house for the area) and so would think the income from either of these could be game-changing?  I have friends that live in a college town and make their mortgage just renting out their place for the 6 football weekends/year, which sounds crazy amazing to me.

If you hated your job/it was killing you I'd say leave it, you're too rich for that crap.  But given your words re: the job, your age, and the amount of progress you're making with it each year, I think striving to hit 25x your spend with your non-house investments before making the consulting move is gonna pay dividends (you'd have, what, a have century of complete flexibility, as opposed to an income need).  You say you could always go back to work, but I'm down to ~15 hrs/wk now and I am WAY too spoiled now to even imagine going back to 40 (or to go into an office at all), but I'm quite a bit older.  Again, I only lean to you sticking it out to complete FI because you seem so very close, are so very young, and the job doesn't seem to be beating on you.

[McStache]

I totally understand not wanting to move, and frankly living where you want to live is a critical part of enjoying FIRE IMO.

"I do have a spare bedroom that I could rent if need be. Or get out of dodge for a few weeks to allow a whole-house vacation rental during the tourist season."

So this seems like the simplest/safest move to make and then reevaluate income/costs?  Sounds like you live in an expensive area (as opposed to having an expensive house for the area) and so would think the income from either of these could be game-changing?  I have friends that live in a college town and make their mortgage just renting out their place for the 6 football weekends/year, which sounds crazy amazing to me.

Probably not cover the whole mortgage money, but solid dent money. I have some things I need to fix up (more labor/time than money) before that's truly viable, but it's not that far in the future

If you hated your job/it was killing you I'd say leave it, you're too rich for that crap.  But given your words re: the job, your age, and the amount of progress you're making with it each year, I think striving to hit 25x your spend with your non-house investments before making the consulting move is gonna pay dividends (you'd have, what, a have century of complete flexibility, as opposed to an income need).  You say you could always go back to work, but I'm down to ~15 hrs/wk now and I am WAY too spoiled now to even imagine going back to 40 (or to go into an office at all), but I'm quite a bit older.  Again, I only lean to you sticking it out to complete FI because you seem so very close, are so very young, and the job doesn't seem to be beating on you.

My brain says the job should be fine and in the grand scheme of the world it's cushy AF. The company generally seems good, but the team I'm currently on is just not set up for success, which is very frustrating. Some of the key things I came to this job for are just not possible on this team. There might be an opportunity to change in two months, but I could also get laid off at that point or continue where I am (at which point, I'm very tempted to just lay myself off).

I do worry that downshifting will spoil me and it would be mentally very hard to go back to full time employment :)

[SweatingInAR]

My brain says the job should be fine and in the grand scheme of the world it's cushy AF. The company generally seems good, but the team I'm currently on is just not set up for success, which is very frustrating. Some of the key things I came to this job for are just not possible on this team. There might be an opportunity to change in two months, but I could also get laid off at that point or continue where I am (at which point, I'm very tempted to just lay myself off).

I do worry that downshifting will spoil me and it would be mentally very hard to go back to full time employment :)

It sounds like you're ready to exercise your "FU money"
https://jlcollinsnh.com/2011/06/06/why-you-need-f-you-money/
https://forum.mrmoneymustache.com/welcome-to-the-forum/how-much-money-is-fu-money/
https://forum.mrmoneymustache.com/welcome-to-the-forum/epic-fu-money-stories/

I agree about downshifting. I went down to 32-hour weeks about a month ago and already can't imagine going back up to 40 regularly!

[Laura33]

FWIW, I think it's great that you like your area and want to stay there and that your house is a really good financial option given local prices.  The point of FIRE isn't just to become FI as fast as possible -- it is to become FI living the life that you want to live.  So if you are clear that staying in the area is a priority, that helps set the parameters your working in.  I mean, sure, you can always sell and be FIRE somewhere else, but what's the point if doing that would be living someone else's dream life instead of yours?  It's also great that you've managed to stick to such low non-housing expenses in a HCOL area.  Basically, you have your priorities straight, and you have frugality skills to optimize whatever you end up doing.  You are completely set up for success regardless of what you choose now. 

So with all that going on for you, you're not happy in your current job.  You have multiple pathways available, and a huge amount of FU money to do whatever you want with those paths.  Your current job is not satisfying.  OK, you need some job, but you don't need this job.  Would you rather find another comparable job that you bust it at for another couple of years, until you know you can quit forever if you want?  Would you rather take a BaristaFIRE job for maybe 5-10 years for your 'stache to grow to the amount you need to quit permanently?  Or would you rather quit entirely and try consulting?  Which sounds most appealing to you?  Investigate those options, figure out what best suits your goals, skills, and personality.

FWIW, I would not recommend part-time at your current job.  Part-time works well when you enjoy the job but just don't want to dedicate so much of your life energy to it.  I've been part-time for years and cannot imagine going back to full-time (I'm also FI, so it's great knowing that I never have to!).  But if your job itself is annoying and frustrating, just doing less of it will not solve those problems; you'll still be annoyed and frustrated by those same things, and you'll still resent taking time away from your life to deal with those annoying and frustrating things.  Unless you have a serious personal need to be part-time right now, you will very likely be happier if focusing on finding a different role that satisfies those itches that the current job isn't, vs. seeing if your life is better if you can just spend less time doing annoying things.

As with most things in life, you get what you settle for.  The work you have put in so far to develop your skills, save a shit-ton of money, and build those frugality muscles means you don't have to settle for jack shit.  So don't.  Go after what you want.  You may not ultimately get exactly what you want -- but you absolutely won't if you don't at least try for it. 

[McStache]

Thanks @SweatingInAR @Laura33 ! I've been contemplating what excites me and what I want to be doing with my FU money and am feeling increasingly good about taking the leap in a couple months to try to make part time consulting work. I'm a bit tempted to just leave now, but I think I'll feel better and have more options if I don't burn a bridge here. The team I've ended up on is unfortunate, but seems to not be the norm, so I could see a world where I work with this company (or some of the folks at it) again in the future

I've been pursuing one of my leads and it's getting more solid (but trying not to count my chickens before they hatch)

I'll keep you all posted on how this unfolds

[swashbucklinstache]

FWIW cfiresims default 75/25 allocation gives a 6% WR a 56% chance of lasting 30 years. That's not too bad.

I always recommend planning out individual years through at least SS as a learning exercise. First, on the expenses side, using healthcare as an example. Is your ACA and utilization estimate for your current age? What about at age 60? Secondly, will you not be living your best life if your stache is at 600k in a decade? That kind of thing happens a few times even in years that pass at 4%. I recommend steeling yourself lest you sell a house when in hindsight you needn't.

You might consider that Roth earnings will be penalized if withdrawn before you come of age. It's not a huge amount but in cases where you're close it can make a difference. One more good reason to model out actual expenses and balances to SS. You can DIY that or bogleheads has good starter spreadsheets.

[2Birds1Stone]

I wouldn't do it. Your fixed costs are WAY to high and a mortgage is the floor of what your housing will cost. A bad year of mishaps like a major leak or a roof replacement and you're SOL if SORR if bad.

This is coming from someone who leanFIRE'd just after their 36th birthday, but whose "fixed" costs made up less than 50% of budget.