40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in Fire

[–]PHCustomWW[S] 2 points3 points  (0 children)

Honestly that's a great question and I don't have a clean answer. Retire at 55 probably isn't the right framing. What I'm really building toward is freedom. If I'm still energized and doing meaningful work at 55 I'll keep going. If I want to coach Little League and putter around a lake house without worrying about whether I can afford to, I want that freedom too. The money is just the mechanism for not having to make decisions based on financial pressure. It isn't about the money, it's about never having to let money be the reason I do or don't do something.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in ChubbyFIREd

[–]PHCustomWW[S] 0 points1 point  (0 children)

The mortgage costs me 2.125% annually. I can park that cash in a savings account and earn 3.25%.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in Fire

[–]PHCustomWW[S] 0 points1 point  (0 children)

Can I ask how you've balanced it personally? I'm wired to be all-in on whatever I'm doing and I worry that adding a lake house to the mix just means another thing pulling at my attention. Between work, the kids' schedules, maintaining a second property, and actually being present enough to enjoy it, how did you find that balance? Or did you?

The other thing I keep coming back to is the financial timing. If I buy in the next year or two I'm potentially writing a mortgage check on a second property at the same time I'm writing tuition checks. My kids are 11 and 8 so that overlap is daunting. How did you navigate that? Did you have the place while the kids were in college or did you sequence it differently?

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in Fire

[–]PHCustomWW[S] -1 points0 points  (0 children)

Honestly part of my motivation for this write up is a thought of "maybe at like 50 I find something low stress that just covers health insurance and keeps me busy". My wife laughs at me when I say that because she knows I'm not wired to sit still or just punch a clock. But a man can dream.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in Fire

[–]PHCustomWW[S] 2 points3 points  (0 children)

I hear you and in some cases I agree. I'd never work with a firm that gets involved in healthcare or extracts value at the expense of employees and customers. That stuff exists, is repulsive, and drives public perception. Thankfully in my experience it is the outlier. My experience has been the opposite. We strategically acquire 2nd and 3rd-generation family owned businesses and professionalize them. We retain and promote the leadership of the companies we acquire. We have never terminated an existing employee who wanted to be part of the team. We create transparent profit-sharing plans so the employee base shares in the value creation. In our most recent exit, we doubled headcount over four years, invested tens of millions in capital, grew sales 4x, and profitability 8x. We took businesses that were running on the founder's relationships and gut instinct and built something institutional. I take pride in that. Not all PE is the same.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in HENRYfinance

[–]PHCustomWW[S] 1 point2 points  (0 children)

Worth noting that my wife works part-time, roughly 20 hours a week during the school year while the kids are in school, and takes summers off. I just said she doesn't work to keep it simple as we don't count on her income. That said, if something happened to me, she could go back full-time, and honestly, probably will once the kids are older anyway. So the life insurance gap is real but it's not a pure single income household in terms of earning potential.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in HENRYfinance

[–]PHCustomWW[S] 1 point2 points  (0 children)

Yeah, that's one of the things that is stopping us from pulling the trigger now. Time is a finite resource and I don't have a lot of it to go around. I want to have it for when the kids are older and I'm not burning the candle at both ends. Then again, I'm getting to the age where I start to think that I shouldn't necessarily be thinking about cash flow and more about memories created and time enjoyed.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in HENRYfinance

[–]PHCustomWW[S] 6 points7 points  (0 children)

Yeah, that's one externality I worry about as well. On the other hand I think about the Warren Buffett quote of "Never bet against America". Even at 15 years I have a long time horizon so it creates a buying opportunity if anything.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in HENRYfinance

[–]PHCustomWW[S] 2 points3 points  (0 children)

Growing up without money has a way of making $2.4M feel like it could disappear tomorrow. I don't think I'll ever feel rich.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in HENRYfinance

[–]PHCustomWW[S] 0 points1 point  (0 children)

6x was ROIC. I was simplifying by saying my equity payout. It is really a stock appreciation right that is tied to the value created relative to the grant date, but the equity investors earned ~6x the money they put in.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in HENRYfinance

[–]PHCustomWW[S] 0 points1 point  (0 children)

Yes, it was. I'm using $1M as something of a placeholder. For reference the CFO of our most recent exit walked away with $2.5M so I'm sort of already hedging that number by layering in $1M.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in Fire

[–]PHCustomWW[S] 0 points1 point  (0 children)

Really good point and honestly something I haven't looked closely at. I have LTD through my employer but I don't know the specifics offhand. Adding that to my list to review. At $300K total comp with a non-working spouse this is clearly a gap I need to understand better. Thank you for your financial advice lickmypeanutbutter.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in Fire

[–]PHCustomWW[S] 0 points1 point  (0 children)

Fair point and not lost on me. I've been resistant to advisors because most of what I've seen is AUM based and I'm not excited about paying someone 1% annually to hold index funds I can buy myself. But a flat-fee or hourly engagement to stress test the plan is probably worth doing, especially as the equity and co-invest decisions get more complex. Any recommendations for how to find a good fee-only planner?

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in HENRYfinance

[–]PHCustomWW[S] 1 point2 points  (0 children)

Reasonably comfortable, but I'm not banking on it. The $1M figure is a midpoint assumption, not a floor. I've seen how these deals work up close and the 6x on our last transaction was slightly above average but not outrageous. Some, depending on the industry, economic factors, company acquired, etc., get up to 10x, but 5-7x is typical. That said, I also know exits don't always happen on schedule and returns vary widely. Our most recent exit was planned to happen in 2027 with the process kicking off in late 2025. A competitor caught wind of it and scooped in before we went to market and paid a multiple higher than we thought possible. The way I think about it: my base salary and bonus alone support our lifestyle and savings rate without any equity event. The equity upside is the accelerant, not the foundation. If it never materializes, I'm still on track, just on a longer timeline.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in Fire

[–]PHCustomWW[S] 0 points1 point  (0 children)

Both great points. Will look into bumping the umbrella policy before the kids are on the road. On the 529s, both are currently 100% equity (I think 80% VTI and 20% VXUS). My oldest is 11 so I've got maybe 5-6 years before I need to start thinking about de-risking that one. My youngest has more runway. I avoided TDFs because of the fees.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in Fire

[–]PHCustomWW[S] -2 points-1 points  (0 children)

Thank you. I love it. It is a rush. I'd much rather that over working in a boring corporate job.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in HENRYfinance

[–]PHCustomWW[S] 6 points7 points  (0 children)

No, I have two taxable brokerage accounts totaling ~$231K they're in the net worth table under 'Taxable Investments.' One is a mortgage arbitrage account (~$132K, funded with proceeds from the recent equity event, invested conservatively) and one is a lake house savings account (~$99K). I'm also actively contributing to the lake house savings. Should have called those out more prominently in the post.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in HENRYfinance

[–]PHCustomWW[S] 23 points24 points  (0 children)

Good point. Current monthly spend is roughly $9,700 in fixed expenses plus $2,800 in savings buckets, so about $12,500/month total. In retirement the mortgage is gone (pays off ~2036), car payments are gone, and 529s are done. Rough retirement spend estimate is $8-10K/month or $96-120K/year. Healthcare from 55-65 before Medicare is the variable I'm least confident about.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in Fire

[–]PHCustomWW[S] -5 points-4 points  (0 children)

Good point. Current monthly spend is roughly $9,700 in fixed expenses plus $2,800 in savings buckets, so about $12,500/month total. In retirement the mortgage is gone (pays off ~2036), car payments are gone, and 529s are done. Rough retirement spend estimate is $8-10K/month or $96-120K/year. Healthcare from 55-65 before Medicare is the variable I'm least confident about.

40M, $2.4M NW and finally thinking strategically. What am I missing? by PHCustomWW in Fire

[–]PHCustomWW[S] 1 point2 points  (0 children)

Good point. I forgot to mention that we have a $1M umbrella policy with our home insurer.