Learning, Sharing, and Teaching > Case Studies
Reader Case Study - Need an outside perspective please
GettingClosertoFIDayByDay:
Life Situation: Early 40s couple; Married filing jointly. 2 young kids (0 & 3). 2 dogs....woof! High COLA (NYC Suburbs).
Gross Salary/Wages: Me ($200k including bonuses) Spouse ($400k including bonuses)
Individual amounts of each Pre-tax deductions: Fully funded 401ks and 2-backdoor IRAs
Rental Income: $2850 in net rental property income
Pension Income: ~$2000/mo starting at 55 from previous job.
Current expenses: ~$11,000k/month total including $3k in mortgage, $1300 in property tax (ouch), $500 in health insurance/medical costs, $300 in misc home/life/umbrella insurance policies, $1200 in childcare (soon to almost double), $800 in cars/insurance/maint/fuel, $400 in public transport, $1500 in food/dining, $1,000 in travel reserve (our passion), and $1k in misc expenses (donations/shopping/repairs/etc).
Assets: Amount & description –
401k & IRAs $1.1MM in index funds
Cash/Emergency Fund: $100k in high yield savingss
College Savings: $120k (weighing best way to put this into action (Roth/529/etc)
Home Equity (Primary): $300,000
Home Equity (Rentals): $680,000
Misc Assets: 40,000
Total Net Worth: $2,340,000
Liabilities: No other debt beyond mortgage
Thanks for taking the time to read this. Here's what I need perspective on. I am getting to the point where I really stand can't working anymore. I switched jobs within my industry to see if it would help and within 3 months I am already feeling the same way I was in my previous job of 14 years (trapped and completely unmotivated). The money is good but I hate trading my time for it and would much rather be traveling, spending quality time with my kids, enjoying life with my spouse and aging parents, volunteering, and working on self-improvement.
The easiest thing to do would be to sell the house and move to a low cost of living area– we really like NC, SC, and GA (and international destinations like Portugal, South America, etc). However, family is really important to us, so we really hesitate to move away from our parents which are all 75-80 years old since we know we don't have that many healthy years remaining with them. Though they would likely be willing to move with us, we don't want to move them away from their network of friends/family by moving them away from the NYC area with us.
My wife still loves her job and is willing to continue to work even if I retire soon. However, the long commute is wearing on her so part of her would like to find a house that's closer to Manhattan..(though the other part of her absolutely loves our house which we completely renovated to our exact needs and is willing to put up with the terrible commute). Our current house is wonderful – a very in-demand town with great schools/low crime but I'd love to get rid of (or reduce) the mortgage and property tax liabilities. I also get the sense that our property taxes are actually about $500/mo less than similarly valued properties and it's just a matter before the tax man cometh. If we move closer to NYC to reduce her commute, we'll likely have to downsize and won't likely save much $$$ given real estate and rental prices in the close suburbs (particularly the ones with good elementary schools).
So, in terms of questions:
What would you do in my situation in terms of my job? Quit now or hang in there for some specific time period?
Any thoughts regarding how we should make the move/stay in our house decision?
Any downsides to putting the $120k for the college fund in two 529 plans for my kids? Our current state does not allow for any type of deduction on the contribution. I had used a college savings calculator and determined that the $120k investment should fully fund a high quality public school for my daughters so I'm not really planning on future investments.
Other thoughts/ideas?
pbkmaine:
So you’d be putting away a boatload of money even if you quit? Is your wife supportive of you quitting? Are you willing to do the lion’s share of the housework and take on chores you are currently paying others to do? If so, go for it, and stay or move based on the kids and what’s most convenient for your wife’s commute.
GettingClosertoFIDayByDay:
--- Quote from: pbkmaine on October 15, 2017, 01:41:59 PM ---So you’d be putting away a boatload of money even if you quit? Is your wife supportive of you quitting? Are you willing to do the lion’s share of the housework and take on chores you are currently paying others to do? If so, go for it, and stay or move based on the kids and what’s most convenient for your wife’s commute.
--- End quote ---
Hi. Yes, we would certainly still be able to continue to save money if I quit, just not at the same pace as we are able to today My wife is supportive, I think she'd be ok with me staying home though I think her preference would be that i start a business and/or side-gig. I have really struggled to identify a business idea or side gig that gets me really excited though. I just know that I do not want to work in a corporate setting with typical office politics, i need a break from that. I also don't want to start anything that is going to lock me into this area of the country since I really hope we'll be able to move elsewhere at some point.
Because of her commute, i already do about 60-70% of the housework and chores, I'd be able to take on a bit more but I wouldn't want it to encroach on my ability to fulfill my other ERE goals.
Laura33:
I don't follow - you list about $130k+/- expenses, so even grossing that up to maybe $200k on a gross income basis, that is still far, far less than what your wife makes. So unless you are missing some serious expenses, this really isn't a financial question at all.
You are in the middle of the suck right now -- two very young kids + two demanding jobs + long commutes. If you want to change things around, you have two basic options:
1. Quit and find a new job with better work-life balance; or
2. Become a SAHD. You wouldn't bring in an income, but you could drop the daycare costs, cut the grocery bill, and otherwise run a much more efficient household.
What I would not advise, under any circumstances, is for you to quit to "work on self-improvement" and still expect your wife to manage her current share of the childcare/household chores. You can "retire" from paid employment, but you can't "retire" from childcare and housekeeping obligations, which are absolutely massive at your kids' ages. You can satisfy those obligations either by earning money to help pay for someone else to do them, or by spending your own time getting them done. Dropping your financial contributions, without offsetting that with a lot of your newly-found free time, is guaranteed to breed resentment.
Tl;dr: You can absolutely afford to quit if you want. But I wouldn't do it unless you see that option as "becoming a stay-at-home parent" and not as "early retirement so I can have lots more free time to devote to unpaid personal goals."
pbkmaine:
Laura’s right. The life you seem to envision for yourself places the entire financial burden for the family on your wife but brings her few benefits. My husband and I have a great relationship, but neither one of us would buy into this arrangement. What’s in it for your wife?
Navigation
[0] Message Index
[#] Next page
Go to full version