Author Topic: What would you do ?  (Read 22633 times)

Peter Gibbons

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What would you do ?
« on: April 30, 2016, 08:40:32 AM »
Would appreciate some advice....  I'm in mid 40's, married with 3 kids ages 8-15.   Been saving for FI for several years with goals to be able to RE and also fund 80% of 4 years of kids' college.  We live in the midwest. 

Stash is ~$1.4M in mutual funds plus ~$250k in home equity.  Current spending rate is about $5.5k/ month plus discretionary charitable giving and $2k mortgage payment @2.9% (mortgage balance ~$150k), but there are several things that could be trimmed back (but would need to add health insurance expense).  My wife works part time and earns about $1k /month at a job she enjoys.  My employer is looking to reduce costs and is offering me a buyout / severance package worth about $125k after taxes.  Can I afford to take the buyout and RE ?

I would like to RE, but am concerned that if I take some years off and want to return to work later that it would be difficult to get back into my engineering profession with good earning power like I have today.  What would you do ?


Financial.Velociraptor

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Re: What would you do ?
« Reply #1 on: April 30, 2016, 08:50:37 AM »
Is your spending rate a typo?  66k/yr before mortgage would be living pretty high.

Peter Gibbons

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Re: What would you do ?
« Reply #2 on: April 30, 2016, 09:02:52 AM »
Yes, pretty high living.  I currently have a pretty demanding job and we spend a lot of money on convenience items that I can eliminate (frequent dining out, dry cleaning, gym membership, high end cable package, premium groceries, etc).  Just double checked and spending rate is more like 4.7k/month today before mortgage.  I estimated 5.5k per month when adding another $800 per month for self-funded health care for a family of 5.

Financial.Velociraptor

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Re: What would you do ?
« Reply #3 on: April 30, 2016, 09:56:01 AM »
Well, I'll do the arithmetic for you.  Four percent withdrawal of 1.4M is 1,400,000 * .04 = 56,000.  You can't FIRE on the conventional plan if your spending is 66k plus more for mortgage.  I manage my portfolio to withdraw more (check my blog if you want to see if learning how is for you - for most people it isn't).  You'll have to be prepared to cut back, else save a lot more first.

66k (lifestyle) + 24k (mortgage) will require (66000 +24000) / .04 = 2.25M saved for traditional FIRE.

Financial.Velociraptor

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Re: What would you do ?
« Reply #4 on: April 30, 2016, 10:12:29 AM »
Let me try that math again since you adjusted spending down:

(4700 * 12 + 24000) / .04 = 2.01MM stash needed to retire on standard 4 percent withdrawal rate...

Peter Gibbons

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Re: What would you do ?
« Reply #5 on: April 30, 2016, 10:24:03 AM »
I've looked at the math as follows:

1.4M+0.125M-0.150M = 1.375M  based on stash +severance - mortgage balance  (I could pay off the mortgage and have this stash left)

1.375M x 4.5% withdrawal rate / 12 = $5156 / month + $850 wifes part time job = ~$6000 per month to live on

I think this is very do-able.  But then I think about kids college expenses and other unforeseen things that could arise and get a bit nervous about pulling the trigger on RE.


SailorGirl

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Re: What would you do ?
« Reply #6 on: April 30, 2016, 10:40:15 AM »
Explore the numbers if you take the buyout, get rid of all the "convenience" spending and get some fun part time job that you enjoy (or creative side hustle, or turning a hobby into something that brings in a little cash, etc.).

You have many more options than just work/no work.

Dicey

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Re: What would you do ?
« Reply #7 on: April 30, 2016, 11:36:43 AM »
Lots of thoughts, in  no particular order:
1. Whatever you do, do not pay off a 2.9% mortgage early. The more you keep investments, the more likelihood your investments will grow well in excess of that puny amount of mortgage interest.

2. Lots of low hanging fruit to be harvested to reduce your monthly outflow. Do you also have spendy cars that you could economize on? A lot of savings are realized just by not working.

3. Perhaps if you were home to pick up the care of the home and family, your wife could do something that pays a little better? Could she get healthcare coverage through her job? I personally think you don't need her income either, but healthcare could be really helpful.

4. Can you get the family on board to reduce their spending? I think kids would love to have time with their parents over more shiny stuff. If you gave them a choice, they might surprise you.

5. Would you be happy without a job to define you and shape your days? A few who FIRE on short notice have grappled with this on other threads.

6. One way to trim college costs is for the parent to seek employment at the school of choice. Typically, the tuition breaks are quite lucrative. Aslo, with lower income, your kids might qualify for more aid.

My vote is HELL YES, DO IT NOW! But you will have to think through your own decision...

Edit: Typos, sigh.
« Last Edit: June 01, 2016, 12:13:35 PM by Diane C »

Dee18

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Re: What would you do ?
« Reply #8 on: April 30, 2016, 11:50:54 AM »
Have you verified that health care cost?  Have you actually identified where you will save the money? Are you planning to assist with college from the 1.4 stash?  You are two years away from the oldest child's college applications.  What are the expectations there?  I think if you take the buyout you should go ahead and get another job while you do the cost cutting. Go ahead and make the cost cutting changes now...and let everyone adjust.  Also, make a serious plan for college.  Working for a college is a great idea.  My university lets dependants go for free after parent has worked three years full time. 

LAGuy

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Re: What would you do ?
« Reply #9 on: April 30, 2016, 07:41:21 PM »
Right now I'm exploring selling my place with idea to FIRE, or at least part time fire. Like you, I worried about my ability to reenter the workforce. Finally, I decided that's a bunch of horseshit. If you've got a reasonably in demand skill set, you'll be able to find another stupid job if you need to. Yeah, it may not be top dollar like you're currently getting, but it'll be in the ballpark. And once you're even semi-FIREd you probably won't much care anyways since you won't be planning to stay at the new job all that long. It'll be more of a retirement account top off job, and then you'll be out just as quick as you got back in.

Peter Gibbons

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Re: What would you do ?
« Reply #10 on: May 01, 2016, 05:49:28 AM »
Lots of thoughts, in  no particular order:
1. Whatever you do, do not pay off a 2.9% mortgage early. The more you keep in in nvestments, the more likelihood your investments will grow well in excess of that puny amount of mortgage interest.

2. Lots of low hanging fruit to be harvested to reduce your monthly outflow. Do you also have spendy cars that you could economize on? A lot of savings are realized just by not working.

3. Perhaps if you were home to pick up the care of the home and family, your wife could do something that pays a little better? Could she get healthcare coverage through her job? I personally think you don't need her income either, but healthcare could be really helpful.

4. Can you get the family on board to reduce their spending? I think kids would love to have time with their parents over more shiny stuff. If you gave them a choice, they might surprise you.

5. Would you be happy without a job to define you and shape your days? A few who FIRE on short notice have grappled with this on other threads.

6. One way to trim college costs is for the parent to seek employment at the school of choice. Typically, the tuition breaks are quite lucrative. Aslo, with lower income, your kids might qualify for more aid.

My vote is HELL YES, DO IT NOW! But you will have to think through your own decision...

Diane C, thanks for great response.  Here are my thoughts on your comments:
1.  Agree with not paying the mortgage off.  I show the numbers that way though to calculate a 4.5 % withdrawal rate as if I did.
2.  We currently have 2 cars that are fully paid for.  They were newer models, bought used.  Currently worth about $18k each.
3.  I am sure my wife could earn more money, but she works at our church 20 hours per week and finds it very rewarding doing something that helps others, so we don't want to change that.
4.  Yes, I think the family will be on board with reducing spending a bit as long as its not too extreme.
5.  I think I will be happy with RE.  I suspect that after several weeks off, I will get re-energized and look for a new challenge.
6.  Love the idea of seeking work at a university.  I would feel wrong about seeking low income based financial aid if I am capable of working and simply choose not to.

Peter Gibbons

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Re: What would you do ?
« Reply #11 on: May 01, 2016, 05:56:24 AM »
Have you verified that health care cost?  Have you actually identified where you will save the money? Are you planning to assist with college from the 1.4 stash?  You are two years away from the oldest child's college applications.  What are the expectations there?  I think if you take the buyout you should go ahead and get another job while you do the cost cutting. Go ahead and make the cost cutting changes now...and let everyone adjust.  Also, make a serious plan for college.  Working for a college is a great idea.  My university lets dependants go for free after parent has worked three years full time.

Dee18, thanks for the response.  I have not yet verified the health care cost; agree that is a top priority.  We can save significant money on restaurant expenses and groceries and discretionary spending just by spending more time on bargain hunting and cooking for ourselves.  Yes, I am planning to assist with college from the 1.4 stash.  I could potentially get another job that is less demanding and still pays a good salary and provides health insurance as you suggest.


Peter Gibbons

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Re: What would you do ?
« Reply #12 on: May 01, 2016, 05:59:48 AM »
Right now I'm exploring selling my place with idea to FIRE, or at least part time fire. Like you, I worried about my ability to reenter the workforce. Finally, I decided that's a bunch of horseshit. If you've got a reasonably in demand skill set, you'll be able to find another stupid job if you need to. Yeah, it may not be top dollar like you're currently getting, but it'll be in the ballpark. And once you're even semi-FIREd you probably won't much care anyways since you won't be planning to stay at the new job all that long. It'll be more of a retirement account top off job, and then you'll be out just as quick as you got back in.

LAGuy, thanks for the response.  Great point !  The job market in my area is pretty hot right now, but its also pretty cyclical.  Despite that, I think you are right that I could get something in the future on a short term basis to work for some months or even just a couple of years if I needed to "top off" the stash.

soccerluvof4

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Re: What would you do ?
« Reply #13 on: May 02, 2016, 12:28:05 PM »
Take the package and test the waters. You could be more than fine and if it works out then great. If not as you said in your last post you could easily find a job of lesser pay that would more than put you in a great place, cover the gap is costs and take care of Health Insurance.

SunnyMoney

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Re: What would you do ?
« Reply #14 on: May 02, 2016, 08:39:55 PM »
ER is not a one-way decision.  Try it for 6 - 24 months.  If you don't like it or the budget is too tight you can always go back and look for paid employment again.  Anytime within about 24 months your resume won't look that stale.  I ER'd for 18 months and then decided to go back to work - it was easy getting another job. 

BTW, I stayed at that position for about 2 years.  When the 'great recession' looked like it was finished I ER'd again.  That's the great thing about FI - you can choose when / if / how long you want to work for pay.


zolotiyeruki

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Re: What would you do ?
« Reply #15 on: May 03, 2016, 10:18:18 AM »
You might want to take a closer look at your eating-out habits.  There are *lots* of great recipes that can either be prepared very quickly or that can be mostly prepared ahead of time.  Get a rice cooker with a timer function (i.e. set it to have the rice done X hours from now), learn how to use Time Bake on your oven (same thing), get some crock pot recipes.  Learn to fry up stuff in a skillet (it's faster than you think).  Cook stuff ahead of time and warm it up for meals.  Turn meal prep into a family activity--your kids are old enough that they can help or even lead the effort.

You didn't mention specific numbers, but it's important to quantify exactly how much you're spending as a direct consequence of having a job--increased eating out, car expenses, wardrobe, etc.  Then quantify how much those expenses would decrease (and others increase) if you retired.  In other words, "we eat out 10 times per month and it costs us $500.  If I retire, we'll eat out once per month, so we'll save $450/month.  But I'm planning on taking up a new hobby of underwater basket weaving, and the club costs for that will run $50/month."

Quantify all of it.  Write it down.  Run the numbers.  Then decide.

If I had $1.4 million, I'd probably be retired already.

MonkeyJenga

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Re: What would you do ?
« Reply #16 on: May 03, 2016, 10:59:59 AM »
What would I do, Peter Gibbons?

Two chicks at the same time, man.

pbkmaine

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Re: What would you do ?
« Reply #17 on: May 03, 2016, 11:15:34 AM »
Not me, MJ. The cats would eat the chickens. Anyway, Peter, why not take the buyout and call it a sabbatical? See if you can get your expenses way down, look around to see if there's something else that interests you, explore. You don't really need to earn a lot to fill the gap, if there is one.

BFGirl

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Re: What would you do ?
« Reply #18 on: May 04, 2016, 10:21:06 AM »
If I had 1.4 mil in investments, I'd retire and look for freelance and/or part time employment if the market/economy takes a tumble.

Peter Gibbons

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Re: What would you do ?
« Reply #19 on: May 05, 2016, 04:18:14 PM »
What would I do, Peter Gibbons?

Two chicks at the same time, man.

Ha ha.  Good one,  Lawrence (MonkeyJenga).  I didn't realize that I was in fact asking this same question to this board. 
Here's the full text from the Office Space scene you are referencing .....

Peter Gibbons: What would you do if you had a million dollars?
Lawrence: I'll tell you what I'd do, man: two chicks at the same time, man.
Peter Gibbons: That's it? If you had a million dollars, you'd do two chicks at the same time?
Lawrence: Damn straight. I always wanted to do that, man. And I think if I were a millionaire I could hook that up, too; 'cause chicks dig dudes with money.
Peter Gibbons: Well, not all chicks.
Lawrence: Well, the type of chicks that'd double up on a dude like me do.
Peter Gibbons: Good point.
Lawrence: Well, what about you now? What would you do?
Peter Gibbons: Besides two chicks at the same time?
Lawrence: Well, yeah.
Peter Gibbons: Nothing.
Lawrence: Nothing, huh?
Peter Gibbons: I would relax... I would sit on my ass all day... I would do nothing.
Lawrence: Well, you don't need a million dollars to do nothing, man. Take a look at my cousin: he's broke, don't do shit.




Peter Gibbons

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Re: What would you do ?
« Reply #20 on: May 05, 2016, 04:22:45 PM »
ER is not a one-way decision.  Try it for 6 - 24 months.  If you don't like it or the budget is too tight you can always go back and look for paid employment again.  Anytime within about 24 months your resume won't look that stale.  I ER'd for 18 months and then decided to go back to work - it was easy getting another job. 

BTW, I stayed at that position for about 2 years.  When the 'great recession' looked like it was finished I ER'd again.  That's the great thing about FI - you can choose when / if / how long you want to work for pay.

SonnyMoney -- thanks for that reply.   You are right, I was falling into a wrong thought paradigm that starting down the ER road is pretty much a one-way street. 

MidWestLove

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Re: What would you do ?
« Reply #21 on: May 05, 2016, 06:33:03 PM »
"


Diane C, thanks for great response.  Here are my thoughts on your comments:
1.  Agree with not paying the mortgage off.  I show the numbers that way though to calculate a 4.5 % withdrawal rate as if I did.
2.  We currently have 2 cars that are fully paid for.  They were newer models, bought used.  Currently worth about $18k each.
3.  I am sure my wife could earn more money, but she works at our church 20 hours per week and finds it very rewarding doing something that helps others, so we don't want to change that.
4.  Yes, I think the family will be on board with reducing spending a bit as long as its not too extreme.
5.  I think I will be happy with RE.  I suspect that after several weeks off, I will get re-energized and look for a new challenge.
6.  Love the idea of seeking work at a university.  I would feel wrong about seeking low income based financial aid if I am capable of working and simply choose not to.
"

I think that may be your biggest challenge - getting your family on-board. and frankly , right now you are carrying all of the load and obviously want out of high pressure, high stress type environment. 
the assumptions that make no sense to me
a) kids are entitled to their luxury and somehow you need their buy in for any cuts in spending. if they want luxuries , they can work for it.
b) wife is entitled to her church hobby job.

now, you may _chose_ to offer and support it, but only if it does not go against your dreams, destroy your heath, and otherwise does not kill you. for anything else, wife needs to step up in the partnership, and kids will and can adjust easily.

from a first gen immigrant growing up in a family of 5 in 350 fq feet apartment and leaving on less then a dollar a day for a while...


Peter Gibbons

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Re: What would you do ?
« Reply #22 on: May 28, 2016, 08:12:21 AM »
Update:  I'm going for it !  Taking the severance and not rushing into finding another job.  Planning to try RE for about 6 months before jumping into anything new.  Very excited

Brokenreign

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Re: What would you do ?
« Reply #23 on: May 28, 2016, 08:18:36 AM »
Update:  I'm going for it !  Taking the severance and not rushing into finding another job.  Planning to try RE for about 6 months before jumping into anything new.  Very excited

Congratulations! It's super encouraging to see all these people with the confidence to take the plunge a little early. The real beauty of being FI is the ability to do things like this.

I'm sure you'll find the 6 months far more rewarding than two chicks at the same time.

Exflyboy

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Re: What would you do ?
« Reply #24 on: May 28, 2016, 06:51:09 PM »
Yes personally I'd be a little shy of a 4.5% spend rate.. It may be sustainable.. but if the market makes a major correction it might not.

I think you might find there are all kinds of ways to cut spending.. I slashed 2/3rds of my insurance spending simply by shopping around. Republic wireless, I also have a $5/month low use cell plan.

I suspect you have not had time to shop around yet.

Also you get max subsidies if you can limit your income to about $24k/year.. if you have intend to live on after tax savings, simply do 401k to Roth IRA conversions to get up to $24k.

As a P.E. I have employers tripping over themselves to give me work.. Really has not been an issue.

elaine amj

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Re: What would you do ?
« Reply #25 on: May 28, 2016, 10:23:53 PM »
Congrats!!!


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woopwoop

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Re: What would you do ?
« Reply #26 on: May 28, 2016, 11:08:37 PM »
Update:  I'm going for it !  Taking the severance and not rushing into finding another job.  Planning to try RE for about 6 months before jumping into anything new.  Very excited
Yay! I think you'll be fine, and honestly you will have no trouble finding work if you need it - it may not be quite as lucrative, but the upside here is too good to pass up imo. Good luck with it all!

Goldielocks

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Re: What would you do ?
« Reply #27 on: May 29, 2016, 10:58:23 AM »
What was your wife's response?   I just did something similar (but a LOA) and the DH response was not ideal, although we are working through it now.

Peter Gibbons

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Re: What would you do ?
« Reply #28 on: May 30, 2016, 11:03:54 AM »
My wife is supporting the decision.  Initially she was a bit insulted that the company would consider eliminating my position after my years of devotion to hard work, but after a couple weeks she has gotten past that emotion and realizes now that it's a blessing in disguise that has accelerated our journey to FI/RE.
She doesn't study the numbers as much as I do, so one thing that helped was that I put together a little financial summary for her to help her understand that we will be able to live comfortably off of our nest egg.

Exflyboy

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Re: What would you do ?
« Reply #29 on: May 30, 2016, 11:15:45 AM »
Awesome.. yeah $125k after taxes is tood of a deal to pass up.

That will take you to over $1.5M of liquid assets.. You'll be fine.. Give it 6 months, maybe do some part time consultancy. There are lots of jobs for engineers out there.

whiskeyjack

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Re: What would you do ?
« Reply #30 on: June 01, 2016, 11:26:57 AM »
I'm posting to follow any updates because we are in the same position with nearly identical numbers:  3 kids (similar ages), 1.4 mil, annual spending $66 including mortgage, but the mortgage is only $35k.  $55k without.

DH will give notice in a week.   The plan is to take 6-12 months off and then decide if he needs to look for a temporary consulting gig to boost us.  We are planning to partially fund college for all 3.

FYI - When I started paying attention to the grocery bill it dropped from $1400/month to about $800/month and I couldn't even tell you what changed because to my mind we are eating exactly the same.    You might have lots of easy ways to cut spending that will be painless as soon as you have the energy to devote to the task.

Dicey

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Re: What would you do ?
« Reply #31 on: June 01, 2016, 12:24:38 PM »
I love it when a plan comes together! You will not regret this bonus time spent with your family. Should you ever get bored, grab a kid or three, go somewhere with them and do...anything. One of my friend's mom calls it a "Random Scoot". Guaranteed to cure all types of boredom. Don't hesitate, even if it means pulling them out of school for a day or even part of one. Since summer's upon us, the school part won't be an issue, hee, hee, but how many kids can say they got to play hooky with their dad?

soccerluvof4

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Re: What would you do ?
« Reply #32 on: June 01, 2016, 03:30:20 PM »
Awesome! Congrats...
Sure it will be the right decision!

Choices

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Re: What would you do ?
« Reply #33 on: June 01, 2016, 03:51:41 PM »
Congrats on your decision!
Cutting back on convenience items should lower your monthly costs, though I respectfully disagree regarding paying off your mortgage early. How nice and peaceful would it be to not have that expense?

Can you find part-time work doing something you enjoy and put all the money toward your mortgage, then re-evaluate when you own your house free and clear? Or are you open to downsizing? Or, do you have enough life insurance to pay off your house and pay for your kids' college if something happened to you?

If you were in your wife's shoes, would you feel better with a paid-for house?


chrisgermany

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Re: What would you do ?
« Reply #34 on: June 02, 2016, 02:46:16 AM »
I'd use the next 6 months to track spending in detail, to try to reduce convenience cost and to avoid all "rewards" spending.
Then I'd be in a much better position to guestimate if ready to ER or better look for another job.

But also make sure that you enjoy the summer with the kids and DW.
If you consider vacation, do it the same style as you would do in permanent ER.
Enjoy!


My background: I ERed with DH almost 1000 days ago. Gave up very lucrative job. Years of detailed tracking expenses gave us the confidence that we could keep our life style on DH's pension and income from savings. Extremely happy with the decision.

« Last Edit: June 02, 2016, 02:50:01 AM by chrisgermany »

Peter Gibbons

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Re: What would you do ?
« Reply #35 on: June 02, 2016, 03:22:47 PM »
Congrats on your decision!
Cutting back on convenience items should lower your monthly costs, though I respectfully disagree regarding paying off your mortgage early. How nice and peaceful would it be to not have that expense?

Can you find part-time work doing something you enjoy and put all the money toward your mortgage, then re-evaluate when you own your house free and clear? Or are you open to downsizing? Or, do you have enough life insurance to pay off your house and pay for your kids' college if something happened to you?

If you were in your wife's shoes, would you feel better with a paid-for house?


Thanks for all the replies and encouragement..

Julie, I have two reasons to not want to pay off my $150k mortgage balance @2.9%:
1.  Currently have only about 150k of the stash in after tax accounts (will be 275k after receipt of the severance).  All the rest is in Roth IRA or 401(k).  If I paid off the balance now, there is a more significant chance that I would need to dip into tax sheltered accounts (and pay a 10% penalty) before year 5 of implementing a roth ladder strategy to build up more access to tax sheltered money.
2. I believe that the odds are very good that I can net better than 2.9% return in bond investments.

If I were to pass away suddenly, I think my wife would feel better with 275k in the bank and a 2k/month house payment than she would feel with 125k in the bank and no house payment.

Choices

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Re: What would you do ?
« Reply #36 on: June 04, 2016, 10:38:27 PM »
Congrats on your decision!
Cutting back on convenience items should lower your monthly costs, though I respectfully disagree regarding paying off your mortgage early. How nice and peaceful would it be to not have that expense?

Can you find part-time work doing something you enjoy and put all the money toward your mortgage, then re-evaluate when you own your house free and clear? Or are you open to downsizing? Or, do you have enough life insurance to pay off your house and pay for your kids' college if something happened to you?

If you were in your wife's shoes, would you feel better with a paid-for house?


Thanks for all the replies and encouragement..

Julie, I have two reasons to not want to pay off my $150k mortgage balance @2.9%:
1.  Currently have only about 150k of the stash in after tax accounts (will be 275k after receipt of the severance).  All the rest is in Roth IRA or 401(k).  If I paid off the balance now, there is a more significant chance that I would need to dip into tax sheltered accounts (and pay a 10% penalty) before year 5 of implementing a roth ladder strategy to build up more access to tax sheltered money.
2. I believe that the odds are very good that I can net better than 2.9% return in bond investments.

If I were to pass away suddenly, I think my wife would feel better with 275k in the bank and a 2k/month house payment than she would feel with 125k in the bank and no house payment.

Of course it's your decision. To play devil's advocate, if your house were paid off, would you borrow against it to have cash in the bank?

Cannot Wait!

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Re: What would you do ?
« Reply #37 on: June 04, 2016, 10:41:45 PM »
Congrats and good luck!  I hope you keep posting on here to update us!

ender

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Re: What would you do ?
« Reply #38 on: June 13, 2016, 06:44:50 AM »
If I were to pass away suddenly, I think my wife would feel better with 275k in the bank and a 2k/month house payment than she would feel with 125k in the bank and no house payment.

Don't forget that if you do, your wife will get a fair bit of survivors insurance from social security until your kids turn 18.

boarder42

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Re: What would you do ?
« Reply #39 on: June 13, 2016, 07:09:14 AM »
Congrats on your decision!
Cutting back on convenience items should lower your monthly costs, though I respectfully disagree regarding paying off your mortgage early. How nice and peaceful would it be to not have that expense?

Can you find part-time work doing something you enjoy and put all the money toward your mortgage, then re-evaluate when you own your house free and clear? Or are you open to downsizing? Or, do you have enough life insurance to pay off your house and pay for your kids' college if something happened to you?

If you were in your wife's shoes, would you feel better with a paid-for house?


Thanks for all the replies and encouragement..

Julie, I have two reasons to not want to pay off my $150k mortgage balance @2.9%:
1.  Currently have only about 150k of the stash in after tax accounts (will be 275k after receipt of the severance).  All the rest is in Roth IRA or 401(k).  If I paid off the balance now, there is a more significant chance that I would need to dip into tax sheltered accounts (and pay a 10% penalty) before year 5 of implementing a roth ladder strategy to build up more access to tax sheltered money.
2. I believe that the odds are very good that I can net better than 2.9% return in bond investments.

If I were to pass away suddenly, I think my wife would feel better with 275k in the bank and a 2k/month house payment than she would feel with 125k in the bank and no house payment.

Of course it's your decision. To play devil's advocate, if your house were paid off, would you borrow against it to have cash in the bank?

yes i would and everyone here should.  a mortgage is a giant inflation hedge.  having a mortgage in FIRE is a giant safety net vs not having one. 

also OP you need to look at the roth IRA ladder and may wnat to start some of that transition now.  not sure how old you are but this eliminates your 10% penalty on with drawals.  but you should also enter all your information into CFIREsim.  it will show you how much safer you actually are with your mortgage vs without.

woopwoop

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Re: What would you do ?
« Reply #40 on: June 13, 2016, 09:39:11 PM »
yes i would and everyone here should.  a mortgage is a giant inflation hedge.  having a mortgage in FIRE is a giant safety net vs not having one.
While I agree with you, I would also stipulate that it's only true in lending environments like we have right now, with low interest rates. If you had a mortgage with a double digit interest rate, that would be a different story. But 2.9% fixed over 30 years? Hell yes, I would take out a million bazillion dollars at that rate if I could!

I paid for my house in cash and immediately took out as much of a mortgage as I could. It was the right mathematical decision, no matter how emotionally comforting a paid off house seems to be to a lot of people. I feel like mortgages are one of the things that draw out the irrational side of MMM peeps.

Peter Gibbons

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Re: What would you do ?
« Reply #41 on: June 18, 2016, 01:04:24 PM »
UPDATE:  Walked out of the office yesterday for the last time after almost 20 years with the same company.  Feels great. 

Created a new Avatar for this forum.  I used that same Swingline stapler since my first day.

Only issue I'm having so far is that I'm uncomfortable with telling people that I am retiring.  Instead, I've been telling people that I am going to take a minimum of 3 months off to enjoy the summer and think about what I want to do after that.

Exflyboy

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Re: What would you do ?
« Reply #42 on: June 18, 2016, 02:48:51 PM »
Awesome.. Good for you...:)

Ladychips

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Re: What would you do ?
« Reply #43 on: June 18, 2016, 03:59:45 PM »
Congratulations!  Your answer sounds right on target...leaves your options open.  But here's hoping you play rather than work the rest of your days.  Please keep us posted.  I LOVE hearing FIRE stories!!

MonkeyJenga

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Re: What would you do ?
« Reply #44 on: June 18, 2016, 04:42:11 PM »
Congrats! I second the request for future updates.

Dicey

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Re: What would you do ?
« Reply #45 on: June 18, 2016, 06:16:50 PM »
Buh-buh-but that stapler's not red.

Thanks for the update. Don't be such a stranger. We like details such as your boss' and coworker's reaction, plus family, friends, neighbors. We want dirt, even if it's clean fill dirt. And we don't give a fig about your future plans, we're just happy you pulled the trigger.

FIREby35

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Re: What would you do ?
« Reply #46 on: June 18, 2016, 09:38:39 PM »
Congratulations.

wynr

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Re: What would you do ?
« Reply #47 on: June 19, 2016, 01:23:22 AM »
Congrats's PG!

Friday June 17th was my last day at work. I'm 54,but still got a lot of "you're too young to retire" type comments.

wynr

Jim2001

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Re: What would you do ?
« Reply #48 on: June 19, 2016, 10:40:57 AM »
PG,
  Congratulations!  Keep us posted, including the play days with the kids.


Financial.Velociraptor

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Re: What would you do ?
« Reply #49 on: June 19, 2016, 01:18:51 PM »
w00t!  Swingline IS better!

 

Wow, a phone plan for fifteen bucks!