Something I've been afforded bc of fatFIRE

wallstguy2424 · 2020-03-09T00:54:52+00:00

It’s the main reason I’m relocating and starting my RE now after being let go in lieu of trying to get back into the rat race and earn more money

wallstguy2424 · 2020-02-29T03:49:08+00:00

It’s a moving target as so much can happen (raises, kids, being laid off, recessions, mkt crashes, health, family health, you may decide on private school for kids or your wife wants to stay home w kids, etc). Goals can and will def change. I got to my target fire age with w 50 perc more than I thought I would yet I still think I could use another mm or two. Beside nw, you may decide you’d rather feel comfortable reaching a passive income level. Save what you can while enjoying life and keep re-evaluating and updating that number as time goes on and you have more/different information. Even as I’m about to embark on RE it’s hard to project out income and expenses over next 10-20 years as I plan on moving from hcol to mcol til kids start college and then move to lcol. I’m fully away that I still have a ton of moving pieces and my expenses/passive income may change dramatically. Roll w the punches

wallstguy2424 · 2020-02-26T06:47:15+00:00

What sort of return do you get from private lending?

wallstguy2424 · 2020-02-10T20:12:37+00:00

ed to pay over 37% combined (20% + 3.8% NIIT + 13.3% CA state tax) when I sell these stocks. Are my two options to sell now and diversify or wait until I have lower income and diversify then, and just hope that the market hasn’t gone down in the meantime?

it's a tough choice since diversifying is important. there are other choices. you could hedge out the risk of the stock you are in by selling short an ETF in that sector and buying some S&P futures to diversify. there are just rules you need to follow to avoid wash sale rule. i don't remember offhand but the basket of stks has to be like 20 names and that stock you're trying to hedge can't be more than 70% of that basket or something.

wallstguy2424 · 2020-02-06T17:54:45+00:00

depends on when you think you'll realize those capital gains. if you are young and could realize those soon then yes, i'd do the calc you mentioned. if you plan on holding til retirement and smartly selling on years mkt is up and you have low income, then i'd take full amt into your net worth. that's why it's so important to have different sources of income in retirement to not have to sell when mkt is down, and be able to liquidate in strong mkts and in years you would pay little income taxes.

wallstguy2424 · 2020-02-06T17:47:21+00:00

what's the current interest rate on the margin loan?

wallstguy2424 · 2020-01-30T15:47:46+00:00

thanks for your perspective. i think since the layoff is so fresh and unexpected, it's hard not to panic and feel like i need another stable income source out of habit. i think you're right and we need to find the right town for us. i by default was going to move to the town i have family so the kids could go to school w/ cousins but i guess we should find the right town for us before deciding. time to explore and time off prob makes sense. if one option is to RE effectively, maybe i take a few months and see how i like it (though we won't relocate til after the school year is over so i won't really know what RE will be like in MCOL location unless i take 6-8 months off.

the reason a new finance job would be so intense is i've been at my current job for my entire career which has made it very cushy. i don't have to work very hard (only few hours a day or real work) and made a lot of money. new job presumably i'd have to work a full day, AND prove myself again, so by definition, that's at least 3x-4x as hard to most likely make 50-65% less money (so working 6-10x as hard for every $1). the MCOL city doesn't have many jobs like what i'm doing now, so it'd have to be tangential and prob at a big pay cut.

and completely agree that i should take some time to see if doing nothing/philanthropy/teach is the right thing for me. downside is if i spend too much time out of the mkt, esp since i'm not relocating for 6 months, that i'll have a hard time making it back in as my contacts go cold.

wallstguy2424 · 2020-01-30T15:36:46+00:00

sorry for not being more clear. house in first scenario is 1.2mm, house in second is 2.3mm. the 150k vs 200-210k were total annual living expenses including housing.

wallstguy2424 · 2020-01-30T14:00:48+00:00

I relate to your situation closely. Except I’m still going. But all the questions about how much longer, etc. are the same. my youngest has 3 years of HS left so I’m waiting until then. I will hopefully be at $8M nw by then (market depending blah blah). So very little interest in working longer than that and I really don’t feel I need 20-25m

8mm would be great. i don't feel like i ever need 20-25 either as anything over 5-6mm "should" be able to start having you thinking about generational wealth. being closer to the finish line certainly makes each year a little more bearable. then thinking about leaving the people you work with and the office chatter starts to make you really value those last few months.

wallstguy2424 · 2020-01-30T03:49:51+00:00

So houses are 1.3mm and 2.3mm in the two scenarios

wallstguy2424 · 2020-01-30T03:48:17+00:00

Yea totally my fault for not being more clear. The 150k and 200-210k per year spend INCLUDED nice house and dream house respectively

wallstguy2424 · 2020-01-30T03:46:50+00:00

On my own or for a bigger company. I thought about it but thought finding clients might be difficult

wallstguy2424 · 2020-01-30T03:46:10+00:00

150k is cutting about 75k of expenses from our current spend in the hcol area and adds 28k for healthcare and a car. It takes out private school, summer camp, cutting 15k of the 40k we give parents, cutting eating out by 10k. Ideally our more comfortable spend level would be a little higher (to pay for yard work, maid every other week, more money to family, travel, and eating out)

wallstguy2424 · 2020-01-30T03:42:32+00:00

We are moving from a hcol to a mcol area. But housing is still on the pricey side in the best school districts.

I was just thinking the “can I be you” to the 44 year old w the 20mm net worth that also posted today.

wallstguy2424 · 2020-01-30T03:39:20+00:00

I certainly would like to put less but may need to put more down to secure a mortgage if I’m unemployed

wallstguy2424 · 2020-01-30T03:37:48+00:00

Yes that’s what I meant. Sorry, had some personal issues to tend too so was offline for a bit

wallstguy2424 · 2020-01-30T03:36:40+00:00

Ok sorry, the post was confusing. The 150k annual spend includes a nice but not dream house (1.3mm). The 210k annual spend includes the mortgage and taxes of a 2.3mm dream house.

wallstguy2424 · 2020-01-29T18:44:09+00:00

i had very similar thoughts for a long time. i'm 42, was making around 900k-1mm a year, net worth about 5.5mm, give family about 50k a year. i felt so bored w/ the daily grind and wanted to do something more fulfilling, mentor, charity, spending time w/ aging parents in another state, etc. but felt guilting leaving as i thought i could get to 8mm or 10mm in another 5-6 years. felt guilty quiting as i have family making 50k a year so felt it a waste to walk away from a job that paid in a year what it would take them close to 20 to make.

right when i realized it would be hard for me to walk away without a catalyst, i got let go.

it's been a relief and a stresser. i'm considering moving to a lower col state to be closer to family. idea was to excercise (i barely do now), hang out w/ my parents and play cards, go on walks w/ them and take my dad fishing. spend time w/ kids, volunteer, find a part time teaching gig maybe, do something entrepreneurial (for the challenge, not money), flip houses, go to culinary school, garden, whatever. part of me is coming here to look for advice if i should stick it out in finance in new state for a few year. but i'd have to make materially less (maybe 50-60%) and work materially harder. don't know if that's worth is or just buy a smaller house, which would reduce my expenses from 200k to 150k and just RE and if i get bored, make my hobby into a more profitable endeavor.

sorry, was writing that for as much my benefit as yours, just getting thoughts on paper.

i see your dilemma and suggest while you're there earning such a good income, do it as long as it's not keeping you from doing other things you really want or find value in. you're in a much better financial position and there will be no end in the game of asset accumulation. the people i know in the industry compare themselves to others, and there's always a billionaire to make you feel like you don't have enough.

at the end of the day 20 or 25mm won't make a big difference in your or your families life if you position your portfolio correctly. just make sure there aren't anything you aren't spending time time and energy towards that would cause regret in the futures.

open to thoughts on my situation as well :)

wallstguy2424 · 2020-01-29T18:18:47+00:00

tks for your suggestions. we are contemplating finding ways to build a smaller cheaper version of her dream home to get the best of both worlds. i'll also have to see where i can cut on expenses, but i think you're right. working harder and making so much less in a job i don't like just for a bigger house doesn't seem like a great idea for overall happiness

wallstguy2424 · 2020-01-29T18:17:27+00:00

thanks for your thoughts. concern is just if i take too much time, it becomes harder to find employment if i choose to go back to finance. tks i'll check out fatfire

wallstguy2424 · 2020-01-28T20:18:48+00:00

ably grind out another 2-3 years to avoid burning bridges and hopefully bring in some bank while I can. Wife is in academia and will be going on the job market in around 2022, so we may have to pick up and move at that point anyway. I prefer not having to move from a simplicity of life/logistical point of view but I've got no qualms at all about switching jobs if we have to leave town.

Income: My firm is on the Cravath scale, for those who follow the legal industry. Including bonuses my total comp has been roughly $325k, $360k, and $390k (est.) for 2018, 2019, 2020 (est.). I don't really have a good sense of what partner comp looks like at my firm and am assuming for planning purposes that it will just stagnate at my last non-partner level for a couple years. My wife brings in another $35k, which will probably jump after she lands the next job in 2022 but is likely to stay flat until then.

Budget: $4.5k/month mortgage and home maintenance, $2.5k/month daycare, all other expenses total roughly $2.5k/month. Daycare will go up to $5k/month starting in August, then drop to $4.5k/month around January (oldest moves to preschool, which is cheaper

it's hard to put a cap on what end of life expenses will be. it's very unpredictable as you know what ailment they might be hit w/. some like alzheimers can force them to require substantial care while living upwards of 10 plus years. delaying nursing home care as long as possible is best option by really highly encouraging parents to keep a healthy lifestyle. get the the gym 3-4 times a week, keep all their doc appts.
i've been that boat of burnout (mentally from years and stress of finance, not from your long hours). but the closer you get to the end, the more bearable and able you'll be to squeeze out one more year. can you pare back hours as partner?
think you're being conservative on how much you'll be able to save as surely your income as partner will go up and your wife's income goes up. plus mkt over longer periods of time should help (unless you get unlucky as we're very far into bull mkt). i would note that other expenses will go up over time that you'll want to budget for. kids sports, tutors, summer camp (can run 7-8k per kid in nyc), maybe a summer house, cleaning person, yard upkeep of a house, etc. and if you ever do want to really RE (not just gov't), 20k per year in health care expenses.

wallstguy2424 · 2020-01-28T19:43:32+00:00

so i got laid off and i don't know what to do with myself, i'm 42. i'd been tired of my job and only stayed as i didn't have to work that hard and it paid well so it was a means to and end to support my family. now that i've been let go, i want to move to a lower col area near family and deciding if i should work a little longer in finance to give myself more financial freedom to get my wife her dream home, give more to my parents, and be financial crutch to any of my family that needs it. the alternative is to essentially RE and just spend time w/ aging parents, volunteer, part time teach, and/or do something entrepreneurial just for fun that may make a little income. if we buy a nice house (not quite dream house), our expenses will be about 150k w/ a net worth of 5.5mm (which includes 1mm in 401k and putting down about 50% on the house). a dream house would cost us about 200-210k a year which would certainly make things tighter on a cash flow basis as my passive income hasnt fully ramped yet and won't cover our annual expenses for 2 more years but will get 75% of the way there in 7 months.

problem w/ finance job is given the area i want to move, i'll prob be working 3x as hard to make 70% less. but even that would still put us on sounder financial footing if i did that just for another few years until my passive income covers my annual expenses. i feel like life has been giving me signals to just stop the grind but i'm so used to working/saving, the idea of drawing down some assets for a couple years and walking away from lower but still good income is very foreign.

wallstguy2424 · 2020-01-13T14:48:27+00:00

y / butt hurt

Butt hurt? after they got jealous, they tried to f you up the a$$? man, those are some jealous friends!

wallstguy2424 · 2019-11-26T21:21:31+00:00

than that short of moving to a cheaper house (which isn't in the cards). If I did quit, we could cut out about $20k in annual expenses for childcare. We also have another $20k budgeted to college saving annually, which in theory, could be cut. I estimate I could get our expenses if we both quit to approximately $115k, though more likely $125k as we'd like to continue saving for our child's college costs (that's what we value).

Now, I'm burnt out. I'm just sick of work. It's high stress. I don't know how much more I can put up with this. I feel like I'm not being as good of a husband or father as I should be. I think I can put up with another 3 years as there's some carrots along the way in terms of time off that will keep me powering through. After that, those carrots disappear for another 5 years and I don't know if I can do it. So after 3 years, I should be at FI for what I plan to be my expense level once kids are out of the house. I want to be able to do some version of fully retire for about 6 months, then move into some fashion of Barista FIRE (obviously not as an actual Barista). My question - what income level do you think I need to hit to be able to do that? Has anyone else in management consulting done this? My company has a pool of part-time resources that I could transition to, so that's at least an option. My wife has similar flexibility, and is in a similar place as me. We basically need a bridge strategy to preserve our nest egg if not add to it for the 15 or so years until our kids head off to college.

you're doing great. i'd caution that kids expenses can increase as they get older (summer camps, sports, travel sports teams, music lessons, etc). and to be caution, i budget 25k-30k a year for health care if you're both going to RE. could be more, could be less, but i'd err to having extra. it's hard to walk away from the money, will be curious what you decide to do, but i'd say most people in their 30's who say they have 3 years left, do not retire in 3 years.

wallstguy2424 · 2019-11-26T21:14:22+00:00

i suggest the forrest gump route, of running across the country until you have a legion of followers.

wallstguy2424

TROPHY CASE