Author Topic: To Coast or to Grind?  (Read 7864 times)

jfer_rose

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To Coast or to Grind?
« on: April 16, 2019, 06:41:29 PM »
I have been burned out in my career and am trying to evaluate whether to make a change, or to keep grinding since Iím not currently that far out from FIRE.

Life Situation/Background: 41, unmarried, no dependents. Live alone (renting) but in a relationship with an already-retired Mustachian (whom I shall refer to as Mustachian Honey). Weíve been together nearly 3 years and are considering moving in together this year or next. Itís a challenge sometimes being stuck going to work every day while Mustachian Honey has so much freedom.

Gross Salary/Wages: Min $68,950 per year. Actually higher. Last year I switched to a 30-hour work week which was intended to help me better deal with the stress of the job. The good news is that if I work more than 30 hours, I get paid for each additional hour that I work. The bad news is that I do end up working more than 30 hours more often than I would like and I donít feel that the stress has declined as much as I would have hoped due to the change.

Deductions:
401(k): Maxing each year. $19,000 in 2019, employer match 5 or 6%, canít recall
HSA: Maxing each year. $3,5000 in 2019, however part of this is covered by my employer and part is covered by a health insurance wellness program in which I get HSA deposits in exchange for tracked physical activity.
Health Insurance: About $1,000 per year deducted from my paycheck to contribute toward health insurance.
Term Life: About $30 per year deducted from my paycheck to contribute toward term life insurance

Current expenses: In 2018, I spent $21,400 (tracked via YNAB). Iíve been tracking my spending since 2013 and have been quite consistent and if anything I have been able to reduce spending rather than increase it. If you really want me to post my detailed budget, I can, but I think this is obviously well inside Mustachian territory, so thatís not the area where I feel I could benefit most from feedback.

Future expenses: My main concern is that if I were to leave my job, I would need to account for health insurance in my budget. I feel that the other categories could remain comparable to where they are now, or potentially go down if me and Mustachian Honey shack up.

Savings Rate: Iíve had an extremely high savings rate over the past few years-- 75-80%. However, due to my switch to a 30-hour schedule, I expect that to drop for 2019.

Assets:
Total: $658,000
Taxable investments/savings: $298,000
457(b): $113,000 (whoo hoo: I can access this $ any time without penalty)
Roth IRA: $33,000
Traditional IRA: $79,000
401(k) + 401(a): $126,000
HSA: $9,000

My decision: While I am passionate about the outcomes that my job produces (I think my job helps to make the world a better place), I no longer like the actual work much, plus it leads to a great deal of stress that seems to be harder and harder to deal with each year. Iíve been listening to a lot of FIRE podcasts where already-retired people wish they had slowed down to enjoy the journey more during their savings years and this speaks to me! My reduction in hours at my current job was meant to address this, but has not succeeded.

While a 3.5% withdrawal rate would cover my current spending, it does not account for increased health insurance costs, nor for the additional buffer before I would feel comfortable stopping employment entirely. Iím exploring the idea of coasting-- leaving my job to explore other income-producing interests and letting my assets grow. The idea would be to cover my expenses but not aim to save more.

Ideas for Coasting:

Technical College:
One idea Iím exploring is to take a year off to complete a program at the local technical college (related to carpentry). It seems highly likely I could find work after the fact that pays at a level I feel comfortable with, but what Iím really excited about is an idea I have for starting my own business if I can gain some skillz. Alternatively, do the program part time and keep working. Although that sounds like it would cause way more stress, and stress is the problem Iím trying to solve.

Paid Apprenticeship:
Another idea is I could apply for apprenticeships and if accepted, get paid to learn. One downside of this approach is that the best paying jobs are in commercial carpentry rather than residential, and Iím not as confident I would learn the skills I need for my business idea. This would also likely require me to buy a car. I have never owned a car, and this is part of the reason my spending is so low.

Or a Jumble of Other Ideas:

On the other hand, a number of other jobs also appeal to me. Working retail, doing environmental education, working at a nursery (the plant kind, not the kid kind), buying properties geared toward gaining rental income (oh hello, those carpentry skills would probably come in handy here too!). However, given how low minimum wage is, I worry that it would be difficult to find a job that could easily cover even my minimal expenses and some ideas would also require buying a car and raising my living expenses.

Or Maintain the Status Quo and Retire Sooner:
So the other idea is to just keep grinding because Iím so close to the finish line. On the bright side, my boss and coworkers are absolute gems. I know how lucky I am in that respect. Itís the type of work and sometimes the clients that cause my stress.

Finally, the Questions:

So fellow Mustachians, do you have any wisdom for me as I choose what to do next? Am I missing something I should be considering? What would you do in my situation? Do you have any insights that would help me make my decision(s)?

ysette9

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Re: To Coast or to Grind?
« Reply #1 on: April 16, 2019, 06:52:52 PM »
Is your major hangup figuring out how to cover health insurance? It seems that way. (God, the US sucks in that regard) Have you looked at healthcare.gov or your stateís exchange to see what your options are? Do you live in a state that expanded Medicare? Can you move to one that has if you donít now? I donít know but I suspect with your spending levels you will qualify for very good subsidies and/or Medicare.

MonkeyJenga

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Re: To Coast or to Grind?
« Reply #2 on: April 16, 2019, 06:56:06 PM »
Would your reduced hours help with the stress if you actually stuck to the 30 hours? Or even tried to negotiate fewer hours? If not, and you don't enjoy the work anymore, quit. I don't know exactly how much longer you think you need to grind, but if you're not happy with your life the way it is, you have so much freedom to change it! You could call it a sabbatical and see how things shake out after a year. See what your new expenses are, how your investments did, what's happening with health insurance. Then reassess. You don't need to get a job any time soon, so you can relax!

We are in very similar spending and savings situations, and I consider myself essentially FI, with a big side-eye toward challenges to the ACA. If you're in a Medicaid expansion state, you'll have very low costs, and if not, you can manipulate your income to get significant subsidies on the exchange. How much more of a buffer would you need to call yourself fully FI?

cincystache

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Re: To Coast or to Grind?
« Reply #3 on: April 16, 2019, 07:43:36 PM »
Can you try an extended leave of absence? Some companies allow you to take 3-6 months off unpaid but keep your health insurance. You could decompress for a month, try out a couple hobbies, travel, relax, and reassess without the permanence of cutting ties completely

calimom

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Re: To Coast or to Grind?
« Reply #4 on: April 16, 2019, 08:03:38 PM »
It sounds as though you have a pretty good 'stache built up, and congratulations for that. If one of your Coast FI ideas is to work in a plant nursery, would somewhere like Home Depot or Lowes be an option? Do they offer any sort of health plan? If so, and if the employee contribution for such was high, you might still end up with about $1500 per month from a 25 or 30 hour week job. Keeping in mind many of those hours would be weekends. Would that be an option for a job that would be relatively low stress and mostly pleasant? Health insurance is a bitch in our country.

jfer_rose

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Re: To Coast or to Grind?
« Reply #5 on: April 17, 2019, 04:44:14 AM »
Is your major hangup figuring out how to cover health insurance?

I do think that's a big part of it! Thanks for the push to look at healthcare.gov. It looks like I could get a bronze plan for about $200 per month if I'm okay with a super high deductible. I do have a healthy amount in my HSA already and I've been healthy, so this is something to consider.

Added to my current spending, this would put me at a 3.6% withdrawal rate. Not too bad. But if I earn any income, I probably don't have much to worry about. Given that my budget is so very lean, I do feel I would be most comfortable having more buffer but maybe I should just think of any income I earn as that buffer?

ysette9

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Re: To Coast or to Grind?
« Reply #6 on: April 17, 2019, 01:22:27 PM »
I think that is a good mindset to have. You can work if you want/need buffer, but at at 3.6% withdrawal rate you don't need it unless your budget changes.

When I am thinking about withdrawal rates I run models of my own scenario in tools like cFIREsim. I also find this visualization tool to be really powerful. It is easy to get caught up in worrying about small chances of portfolio failure while losing the context of your ever-increasing chance of dying. For a 3.6% withdrawal rate, for example, you have no chance of going broke but there is that big gray chunk on the graph which is your chance of dying.

https://engaging-data.com/will-money-last-retire-early/

I also like this tool because it shows how being a little flexible in your spending needs in retirement can have a big impact on how successful your portfolio is. You can also model spending flexibility in cFIREsim (and extra income) to show the same thing. I encourage people to just spend time playing around with these tools to get an intuitive feel for where the guard rails and speed limits are on the road to FI.

nyfireguy

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Re: To Coast or to Grind?
« Reply #7 on: April 17, 2019, 01:57:47 PM »
I think that is a good mindset to have. You can work if you want/need buffer, but at at 3.6% withdrawal rate you don't need it unless your budget changes.

When I am thinking about withdrawal rates I run models of my own scenario in tools like cFIREsim. I also find this visualization tool to be really powerful. It is easy to get caught up in worrying about small chances of portfolio failure while losing the context of your ever-increasing chance of dying. For a 3.6% withdrawal rate, for example, you have no chance of going broke but there is that big gray chunk on the graph which is your chance of dying.

https://engaging-data.com/will-money-last-retire-early/

I also like this tool because it shows how being a little flexible in your spending needs in retirement can have a big impact on how successful your portfolio is. You can also model spending flexibility in cFIREsim (and extra income) to show the same thing. I encourage people to just spend time playing around with these tools to get an intuitive feel for where the guard rails and speed limits are on the road to FI.

Great site.. very useful to get the visual thanks

jfer_rose

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Re: To Coast or to Grind?
« Reply #8 on: April 17, 2019, 03:25:14 PM »
I'm so glad I posted the case study. I really appreciate all the input so far!

I haven't been very active on these forums for a couple of years but my memory of it from before was that people seemed to advocate for a lot of caution when it came to lean FIRE. I'm finding the responses so far to be a lot more encouraging of taking risks than I expected!

legalstache

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Re: To Coast or to Grind?
« Reply #9 on: April 17, 2019, 04:49:35 PM »
Seems like you're in good shape. Plus your inclination to pursue income-generating projects after leaving your current job would give you a nice buffer. Your annual spending is impressively low.

waltworks

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Re: To Coast or to Grind?
« Reply #10 on: April 17, 2019, 05:26:17 PM »
I could be wrong but if you were actually only withdrawing $20k or so from investments to cover living expenses (ie, max capital gains income of $10k, and probably less), I think you would (even as a single adult) qualify for Medicaid in many states. So no premiums whatsoever and no deductible either.

If not, some kind of high-deductible plan is super cheap.

I would quit and look for a world-improving part time job or volunteer gig. You don't need to save more money. Sure, you could run into horrible medical expenses. But do you want to be miserable indefinitely in fear of that? Even if you only make $10k a year working fun part-time stuff, you're more than golden.

-W
« Last Edit: April 18, 2019, 08:30:30 AM by waltworks »

spartana

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Re: To Coast or to Grind?
« Reply #11 on: April 18, 2019, 01:37:13 PM »
^I believe the Medicaid cut off for a single person is $16k - $17k MAGI. But the OP could qualify for an ACA Enhanced Silver plan - which is very low cost and low deductibles. Much better deal then a Bronze Plan even if you can get a very low premium Bronze plan (which can be around $1/month but big deductibles).

As for FIRE or Coast FIRE I think the OP can full FIRE now if she can find affordable health coverage and continue to maintain her low expenses. Making sure she can afford housing or rental expenses in FIRE is important too in case the living with BF doesn't work out.

waltworks

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Re: To Coast or to Grind?
« Reply #12 on: April 18, 2019, 01:46:45 PM »
^I believe the Medicaid cut off for a single person is $16k - $17k MAGI. But the OP could qualify for an ACA Enhanced Silver plan - which is very low cost and low deductibles. Much better deal then a Bronze Plan even if you can get a very low premium Bronze plan (which can be around $1/month but big deductibles).

Sure, but if you sell $20k of stock, you're only getting income for tax purposes from the appreciated portion of that sale. If you bought the stock for $10k, then your taxable income for the year is $10k, not $20k.

I have not looked deeply at how to qualify for Medicaid so I might be missing something there (no-asset requirements?) but I'm pretty sure OP is a lock for Medicaid in any expansion state.

-W

spartana

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Re: To Coast or to Grind?
« Reply #13 on: April 18, 2019, 02:01:59 PM »
^I believe the Medicaid cut off for a single person is $16k - $17k MAGI. But the OP could qualify for an ACA Enhanced Silver plan - which is very low cost and low deductibles. Much better deal then a Bronze Plan even if you can get a very low premium Bronze plan (which can be around $1/month but big deductibles).

Sure, but if you sell $20k of stock, you're only getting income for tax purposes from the appreciated portion of that sale. If you bought the stock for $10k, then your taxable income for the year is $10k, not $20k.

I have not looked deeply at how to qualify for Medicaid so I might be missing something there (no-asset requirements?) but I'm pretty sure OP is a lock for Medicaid in any expansion state.

-W
I'm not sure how it works but it is based on MAGI so I'm sure she'd qualify on investment income. @lhamo know's more about it then I do so may she has some input. Assets aren't counted in expanded state either.

The other point for the OP I wanted to bring up is what do you want to do once FIREd? Lots of people just want to quit their jobs but haven't really made plans for what they want to do after that and it seems to cause them a lot of stress and dissatisfaction with RE. Also are you and your partners visions of the FIRE life similar? This can cause some discord if say one wants to travel full time or a lot and the other wants a home based life. Plus you may have added expenses if things like travel or expensive hobbies are part of your FIRE lifestyle. Make sure and account for those in your budget if needed. I FIREd at you age also single with no kids and on a low income. It is very doable long term imho.

jfer_rose

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Re: To Coast or to Grind?
« Reply #14 on: April 18, 2019, 04:17:08 PM »
These are some interesting insights about healthcare costs!

I do not live in a Medicaid expansion state, however I do live in a state that recently got a new governor who has since expressed interest in becoming a Medicaid expansion state. I will be following that saga closely although we have an overwhelmingly conservative state legislature, so I would guess it is by no means a sure thing.

You know, even if I do decide to think of this as actual FIRE as opposed to coast FIRE, I may still sign up for the carpentry program I've been exploring at the local technical college. I would learn great life skills for a Mustachian and the program isn't that expensive. It's funny because I wrote this Case Study based on March's net worth number. In a month, my net worth has increased by about 3X as much as the full year program would cost.

I just returned from a tour of the program and I admit I am a bit smitten! So that might end up being my answer to the question, "What are you retiring to?"

Mustachian Honey and I have talked at great length about our FIRE dreams and we continue to do so. I think we have enough in common that we can figure out something mutually agreeable.

Padonak

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Re: To Coast or to Grind?
« Reply #15 on: April 18, 2019, 07:15:09 PM »
Ptf and to wish best of luck. I'm in a similar situation. For now, I'm still grinding and trying to decide what to do.

BicycleB

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Re: To Coast or to Grind?
« Reply #16 on: April 21, 2019, 10:34:49 PM »
I say go for what you want.

I'm a little biased...FIREd in late 40s, now early 50s, expected income a bit lower, stash a little lower, expenses come out about the same though I have car. Living in a non-Medicaid state, using ACA. Current monthly premium net of subsidy is $13/mo. Theoretically would be $683 without subsidy.

Working at something you are excited by is a good idea. Again, go for it.

YYK

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Re: To Coast or to Grind?
« Reply #17 on: April 22, 2019, 10:09:20 AM »
Quit! With ACA your medical expenses should be rock bottom, so you'll still have a sub 4% withdrawal. On top of that you already have ideas for making income doing things you enjoy, so I think you are beyond bullet-proof. In your shoes I'd be out of there tomorrow. It's time to let yourself enjoy your success.

Much Fishing to Do

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Re: To Coast or to Grind?
« Reply #18 on: April 25, 2019, 06:25:11 AM »
Maybe I'd ask where your investments were SWR-wise on Christmas eve and how did you feel about having enough then?  If whatever drop you experienced in that quick sharp but not too serious downturn were to happen after you quit didnt freak you out I think you're fine to retire.  Given your age and interests in these other various potential income makers not only do I think their sheer possibility is your buffer (so what if you decide you need to work at some point and it takes you 3 years to find the right job, there would be no hurry), but I'll bet you'll just decide to try one of these things at some point even if you don't feel financially pressured to do so.


jfer_rose

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Re: To Coast or to Grind?
« Reply #19 on: January 16, 2020, 11:35:00 AM »
I wanted to post an update in case anyone is interested!

I still can't quite believe that I actually quit my job-- I stopped work in August 2019. I'm now halfway through a one-year community college program learning woodworking (I did not have any previous woodworking experience). I'm having such a fantastic time learning and I really truly love working with my hands, as I suspected I would. I'm really impressed with my capabilities, despite only being halfway done with the program! Being a full-time student isn't exactly a relaxed "retirement" life, but I am enjoying the stress that comes with learning. When I graduate in May, I hope to find a part-time job, possibly doing finish carpentry and I hope that after I get some real-world experience I will be able to open my own business.

I'm fortunate in that the market has been performing so well. My total spending in 2019 (including health care premiums, and tuition) was under 3.5% of my net worth the month I quit. If I keep consistent spending in 2020, I'm WAY under that for my current net worth. I expect the market to drop at some point in the next few years, but hope that any income I earn from part-time jobs/my own business will offset any risk due to market volatility.

ReadyOrNot

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Re: To Coast or to Grind?
« Reply #20 on: January 16, 2020, 01:27:00 PM »
I loved reading the update.  I would like to do something similar in terms of being productive with my hands.  That would be a nice change from a lifetime of office work.  How much did the college program cost, if you don't mind sharing?  I think those of us who are lucky enough to enjoy school after decades at work find it refreshing from when we were young and forced to attend just to be able to earn a living.

scantee

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Re: To Coast or to Grind?
« Reply #21 on: January 16, 2020, 02:20:39 PM »
Great update! I really appreciate hearing these stories about people who donít fully retire or donít have oodles of money when they shift gears. That is more of my situation so itís good to know it is working out well for you.

As someone who has gotten into carpentry in the past year I am envious of your new education and career path. Iíll be interested to know if you still enjoy it once it becomes your work. That is my fear: that an enjoyable hobby will become a grind if it becomes my job. Likely having control over your schedule and what you work on will go a long way to avoiding that outcome.

jfer_rose

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Re: To Coast or to Grind?
« Reply #22 on: January 16, 2020, 03:58:13 PM »
@ReadyOrNot Total costs for the one-year program should come in under $6,000. That includes tuition, the textbook and wood for projects. Conveniently for the way I do my budget, half the expense was in 2019 and half in 2020. If I didn't want to keep the projects I make in the program, I could offset the expense by selling them (some of my classmates are doing that) but so far I can't see giving any of the projects up. I just want to pet them all the time.

@scantee I know what you mean about worries about the enjoyable hobby becoming a grind. I do hope to limit my time working for someone else to both part-time and to no more than a couple of years. Based on what I know of recent graduates, part-time is an option. And then once I work for myself, the amount of income I hope to earn each year is so minimal that I hope it will be enough to keep it from becoming a grind.

BikeFanatic

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Re: To Coast or to Grind?
« Reply #23 on: February 15, 2020, 02:39:43 PM »
So happy for you!!! Great update thanks!

Dare2Dream

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Re: To Coast or to Grind?
« Reply #24 on: May 08, 2020, 10:16:10 AM »
I wanted to post an update in case anyone is interested!

I still can't quite believe that I actually quit my job-- I stopped work in August 2019. I'm now halfway through a one-year community college program learning woodworking (I did not have any previous woodworking experience). I'm having such a fantastic time learning and I really truly love working with my hands, as I suspected I would. I'm really impressed with my capabilities, despite only being halfway done with the program! Being a full-time student isn't exactly a relaxed "retirement" life, but I am enjoying the stress that comes with learning. When I graduate in May, I hope to find a part-time job, possibly doing finish carpentry and I hope that after I get some real-world experience I will be able to open my own business.

I'm fortunate in that the market has been performing so well. My total spending in 2019 (including health care premiums, and tuition) was under 3.5% of my net worth the month I quit. If I keep consistent spending in 2020, I'm WAY under that for my current net worth. I expect the market to drop at some point in the next few years, but hope that any income I earn from part-time jobs/my own business will offset any risk due to market volatility.

Great job !!  I am happy for you.  Life is too short to not be doing what you want.

Jack0Life

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Re: To Coast or to Grind?
« Reply #25 on: May 25, 2020, 12:31:18 PM »
Can we get an update with this pandemic going on ??

jfer_rose

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Re: To Coast or to Grind?
« Reply #26 on: May 26, 2020, 09:21:09 AM »
Can we get an update with this pandemic going on ??

Okay, here's a Pandemic update. March 13 was the last day of the third quarter in my community college program. It was also the last day of in-person classes for the semester (which I did not know at the time). All but one of my fourth quarter classes were cancelled as a result, delaying my graduation. From home, I recently completed the class that did occur , as well as an entrepreneurship program offered by the college to help launch new businesses. My remaining classes are scheduled to start in September now and I look forward to completing the program (fingers crossed that actually happens, although I'm not holding my breath!).

I'm still not 100% sure how I'm spending my time between now and Labor Day. I think I may file my LLC papers soon and launch my business website-- the entrepreneurship program was great and gave me a lot of ideas about how I can operate my business even before I have extra hands on experience making things. In some ways, today feels like the first day of my retirement life! It's the longest stretch of unstructured time I've ever had. I celebrated by getting up and making pancakes for breakfast with my S.O. Not something we typically do on a weekday!

So the TLDR version: The Pandemic changed my plans and may mean I launch my own business sooner than originally planned.