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rated:
I'm looking for some insight from the fatwallet braintrust/flametrust for some insight on my situation.

My wife and i are late 30s, in 2 unpleasant careers that require high hours and take their toll emotionally and physicially for us.  We recently had a son and adopted a second son of similar age.  Both are about 8 months right now, in daycare, and we are both working. We toy with the idea of taking a years-long break from work and not going back to our stressful careers.  We're both fine to adopt second careers (think fishing guide, dishwasher, yoga instructor - possibly all three) but would really rather make a clean break from our current careers.  We'd really like to spend more time with our kids and possibly do some RV travelling with them for the next few years.  Somewhere down the road, we might like to buy some land or find a cheap-ish house to lay low for a few years and maybe do some travelling in cheap locales.

Although I track expenses on Mint, I don't have a good handle on where it all goes.  Our monthly spending ranges from about 5000-8000, although has been on the higher end since we started daycare.  The budget I list below is my best guess at where our outlays are.  I view most of our expenses as part of our working life and don't really consider them fixed  since I think a change in lifestyle will change what we spend (less childcare, less drinking).  We have no debt outside of the mortgage on the rental property so most of our spending is just making it to the next day and trying to undo the dysphoria that comes from going to our jobs every day.  Of course, if we pull the plug, we'll have to pay for our own healthcare, but we'll have the benefit of being in a low income bracket for as long as that lasts.

Current assets according to MINT
     950k in a mixture of retirement and retail accounts.  Mostly index funds with approx 150k indiv stocks (I know, I know)
     60k equity in rental house (80k left on 3.875% note with rate readjust 2020 - rental income 1000/month; exp 700)
     350k in Cash, CDs, Money Market, treasuries

Monthly expenditures:
    Daycare                  2000
    Rent                       1300
    Utilities                    400
    Groceries/food        1000
    Insurance                300?
    Gas/auto                 300?
    Entertainment/travel 1000
    Junk/blackhole          500

Not sure what I left out.  Ask away and flame away, that's what I came here for!





   
    




 

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rated:
At your current spending levels you'll be out of money in less than 20 years assuming 5% market return and 2% inflation over that period.

Obviously daycare costs will go down some, but kids are still expensive and college aint getting cheaper.

Classic thought is that 4% is a safe withdrawal rate, so if you're ok living on about 50k/year you can probably quit the rat race, otherwise you're still in it for another 5-10 years.

Info on current salaries and rate of savings would be helpful.

rated:
jd2010 said:   At your current spending levels you'll be out of money in less than 20 years assuming 5% market return and 2% inflation over that period.

Obviously daycare costs will go down some, but kids are still expensive and college aint getting cheaper.

Classic thought is that 4% is a safe withdrawal rate, so if you're ok living on about 50k/year you can probably quit the rat race, otherwise you're still in it for another 5-10 years.

Info on current salaries and rate of savings would be helpful.
 

  
Thanks for your thoughts.  That analysis is helpful.  My thought is that we'll get some jobs that are just for a little spending money down the line that don't take much out of us.

Current salaries - me 320k; wife 220k.  Rate of savings - not entirely sure.  I track net worth in Mint and we've saved approx 380k the trailing 12 months and 300k the 12 months before that.  That is a mix of retirement and retail accounts.  I wanna say that 2016 tax return we made around 500k and paid about 150 in tax. 

rated:
Some will say that's not enough, others will say that's more than enough.

What matters is are you happy with your situation? If you're not then are you willing to trade off income to buy happiness?

I know what I'd do in your situation and it isn't doing nothing.

rated:
I'm assuming the reason that more than half of your total savings happened in the past 2 years is because you and wifey are doctors/lawyers and had significant student loan debt to get rid of.

That income stream would be too massive for me to walk away from. Gritting your teeth and putting in another 3-5 years would take your retirement from iffy to more than comfortable. You could be out of the game for good in your early 40s with 2.5 million in the bank, 2 young kids ~5 years old, and you and wifey able to do whatever the hell you want with the rest of your life.

Different strokes for different folks though...

rated:
You really think traveling in an RV with two 8 month olds for a few years is going to reduce stress?  IMO, you should ditch the RV idea for at least 6 to 10 years.

rated:
You clearly have the capital to take a break. Based on your salary and the current unemployment rate, I'm sure a year off or so won't hurt your chances very much of getting back into the work force. I think what you need to really consider is are you truly going to be happy with a downsized life? You want to do this because it will improve your quality of life rather than because you're so sick of what you do now anything else sounds appealing. You probably won't know until you try it out. Could you and your wife take a few weeks off and try the RV thing? You may find after 2-3 weeks that living in a cramped space isn't your thing.

What about staying in your fields but switching to part time? Basically I would say go for it but dip your toe in rather than dive head first.

rated:
At your incomes and spending, keep working a few more years... after taxes, you have to be saving more than $250k per year. So each year you work, you put away between 3 and 4 years of spending. Basically, you can work another 4 years, put another million in the bank, and then call it a day.

Suck it up while you can... it takes a whole lot of time as a fishing guide or yoga instructor to put aside that kind of money.

rated:
For your income level, the assets are not adequate to quit your professional career and take up yoga instruction. Can you take a less stressful job in your field for a (relatively) smaller but still good salary. Even a 50% reduction in salary will be quite high in absolute terms, particularly on an after tax basis.

Alternatively, can one of you take a break and be a full-time home-maker while the other one continues in your current career.

rated:
@speedracer - Def not happy with the current situation, but I'm unsure of what doing nothing means.  Do you mean doing nothing about the unhappiness, or doing nothing ala sitting on couch eating cheetos?

@jd - thanks for your take.  Can confirm, we are doctor/lawyer type. Part of this is having enough people calling me an idiot for me to believe it - or not.

@NoMoney - yes, I honestly believe travelling in an rv with kids would be less stressful than these careers.

S197, ALmostDone - Thanks

rated:
First - try to figure out what is your monthly/yearly targeted expenditure?
Next - find out how much money you need to perpetually support that level of expenditure, inflation adjusted.
Last - don't forget the wildcard known as healthcare, especially for your kids and when you turn older.

So - one theoretical calculation might be like this.

Yearly Target expenditure - $50k.

Money required to support this level, inflation adjusted, to perpetuity (assuming 2% return in growth/dividend stocks - since I don't know of any other really inflation adjusted cash flow that is lower risk) would be approx $2.5MM.
Add medical "uncertainity" premium - whatever amount you are comfortable with. Maybe another $20k/year -> $1MM lump sum.

So you now have a Target of $3.5MM!!

Save that up and you can retire and do whatever you want!!

Of course - individual assumptions, numbers etc will vary. However, this framework should work.

rated:
If your wife quit 'high earning but less than yours' job to take care of the kids and you kept yours, you could cut out daycare expenses and presumably a significant amount of the stress by removing most of the domestic duties on your end. If you can get a better handle on what your expenses are and probably lower them, then it shouldn't be a problem to get to a point in 2 or 3 years where where you could basically be set for life and take whatever part-time bum jobs you wanted and not worry at all about what they pay.

You have enough now that if you were frugal enough you could quit the jobs now and not worry about money, but you'd have to cut way back on your expenses and you make so make money that the lifestyle you could sustain by working and saving just a couple more years seems crazy to give up.

ETA: If you're a doctor, I have a friend who is a doctor and works at a clinic where they pay $90/hr (no benefits) and he can basically work as many or as few hours as he wants and says they still have a hard time finding people because most doctors can make more elsewhere (working more hours). If you could find something like that it could be a low stress option to work 25 hours a week or something if you aren't necessarily set on the early 40s retiree path but hate your current job. 

rated:
puddonhead said:   Yearly Target expenditure - $50k.

Money required to support this level, inflation adjusted, to perpetuity (assuming 2% return in growth/dividend stocks - since I don't know of any other really inflation adjusted cash flow that is lower risk) would be approx $2.5MM.
Add medical "uncertainity" premium - whatever amount you are comfortable with. Maybe another $20k/year -> $1MM lump sum.

So you now have a Target of $3.5MM!!
... However, this framework should work.

  Uh, yeah a 2% withdrawal rate should work. Historically a 3% withdrawal rate has a 0% 50 year failure rate. 3.5% goes all the way up to 3.1% failure rate and requires 43% less starting capital than a 2% withdrawal rate if you're willing to take a 3.1% risk that you'll have to go back to work for a few years or find a way to cut back on expenses if the sequence of returns risk in the beginning looks poor. 

rated:
While I agree with the majority that with your current income and other situations, it's probably best to suck it up a few more years and have a real safety net, I'm going to leave this here as well. What are you really saving for?
A vacationing American businessman standing on the pier of a quaint coastal fishing village in southern Mexico watched as a small boat with just one young Mexican fisherman pulled into the dock. Inside the small boat were several large yellowfin tuna. Enjoying the warmth of the early afternoon sun, the American complimented the Mexican on the quality of his fish.

"How long did it take you to catch them?" the American casually asked.

"Oh, a few hours," the Mexican fisherman replied.

"Why don't you stay out longer and catch more fish?" the American businessman then asked.

The Mexican warmly replied, "With this I have more than enough to meet my family's needs."

The businessman then became serious, "But what do you do with the rest of your time?"

Responding with a smile, the Mexican fisherman answered, "I sleep late, play with my children, watch ball games, and take siesta with my wife. Sometimes in the evenings I take a stroll into the village to see my friends, play the guitar, sing a few songs..."

The American businessman impatiently interrupted, "Look, I have an MBA from Harvard, and I can help you to be more profitable. You can start by fishing several hours longer every day. You can then sell the extra fish you catch. With the extra money, you can buy a bigger boat. With the additional income that larger boat will bring, before long you can buy a second boat, then a third one, and so on, until you have an entire fleet of fishing boats."

Proud of his own sharp thinking, he excitedly elaborated a grand scheme which could bring even bigger profits, "Then, instead of selling your catch to a middleman you'll be able to sell your fish directly to the processor, or even open your own cannery. Eventually, you could control the product, processing and distribution. You could leave this tiny coastal village and move to Mexico City, or possibly even Los Angeles or New York City, where you could even further expand your Enterprise."

Having never thought of such things, the Mexican fisherman asked, "But how long will all this take?"

After a rapid mental calculation, the Harvard MBA pronounced, "Probably about 15-20 years, maybe less if you work really hard."

"And then what, señor?" asked the fisherman.

"Why, that's the best part!" answered the businessman with a laugh. "When the time is right, you would sell your company stock to the public and become very rich. You would make millions."

"Millions? Really? What would I do with it all?" asked the young fisherman in disbelief.

The businessman boasted, "Then you could happily retire with all the money you've made. You could move to a quaint coastal fishing village where you could sleep late, play with your grandchildren, watch ball games, and take siesta with your wife. You could stroll to the village in the evenings where you could play the guitar and sing with your friends all you want."


https://www.youtube.com/watch?v=PGO8MzjBaiw



rated:
You didn't say what your careers are, but can you and your wife just work less hours? Some fields prefer you work massive hours but if you don't, you just don't get the extra bonus, promotions, better raises, etc... If your field is always short handed and need people and you and your wife are excellent employees, management will usually make accommodations. Sometimes the pay may go down a bit but if you are still full time, you will have all your benefits. I've seen this preferred over part time from some companies.

Just throwing out suggestion that may relieve some stress in case you want to stay and save more before changing careers.

rated:
vranaco said:   If your wife quit 'high earning but less than yours' job to take care of the kids and you kept yours, you could cut out daycare expenses and presumably a significant amount of the stress by removing most of the domestic duties on your end.
  

That's what I would do.  Quality of life should improve dramatically for the whole family (assuming wife is OK with this).
 

rated:
gremln007 said:   
vranaco said:   If your wife quit 'high earning but less than yours' job to take care of the kids and you kept yours, you could cut out daycare expenses and presumably a significant amount of the stress by removing most of the domestic duties on your end.
  

That's what I would do.  Quality of life should improve dramatically for the whole family (assuming wife is OK with this).

  Why the wife, why not he put his career on hold they can make it on her salary as well.  And he is the one here complaining.

I would first figure out your budget and where your money is really going.  Then I like the idea of a few week vacation to see if you really like the RV life long term. Will also give you a mental break from your work.

rated:
I was thinking exactly like crazycow - there is a wide range of work for both doctor and lawyer types. A big pay cut may go along with a less stressful scenario, but it would let you continue to get value back from all the work that already went into getting you there. I'd probably want to spend time more closely tracking your expenses and if reductions are expected, try to follow them before cutting loose. You've got a very large time and young children, and I think medical costs even in the near term are very uncertain.

rated:
If you've decided to go RVing with 2 8mos you're doing it for yourself, not to "show them the world."

Bank that dough until they are 5-6 and they'll remember all of the awesome trips...

rated:
Tiggerlgh said:   
gremln007 said:   
vranaco said:   If your wife quit 'high earning but less than yours' job to take care of the kids and you kept yours, you could cut out daycare expenses and presumably a significant amount of the stress by removing most of the domestic duties on your end.
  

That's what I would do.  Quality of life should improve dramatically for the whole family (assuming wife is OK with this).

  Why the wife, why not he put his career on hold they can make it on her salary as well.  And he is the one here complaining.

I would first figure out your budget and where your money is really going.  Then I like the idea of a few week vacation to see if you really like the RV life long term. Will also give you a mental break from your work.

  
He makes 45% more than her.

rated:
howmuchisenough said:   fishing guide, dishwasher, yoga instructor

 

  
Is <30/yr enough?

rated:
Have you thought about why your work in unpleasant? Are the high hours absolutely required? Can you fix these issues by changing jobs?

Personally, quitting now to go live a constrained life of $50K per year is stupidity. There is so much of the world out there to go enjoy  and one can easily burn 10K+ on a long international trip. And why get a cheapish house when you can easily do a lot better. Hate to be snobbish but there is a lot of baggage that comes with a cheapish house (unless the area is geographically cheap) - if you are unfortunately, you run into some real uneducated scum for a neighbor and that can make your life miserable. And personally, it is a great feeling to wake up in a nice house with nice goodies and when you step out of the house, you step into a very well maintained neighborhood. All that feels great. But the key thing is to fix the job thingy - none of that matters if the job remains miserable. And learn to enjoy yourself while working - that is a trick that most people miss and then they are miserable.

And I would do something more useful with that 350K in cash/CDs etc.
 

rated:
BingBlangBlaow said:   
A vacationing American businessman standing...

  
Geez, not again

rated:
My take is the opposite. You are pulling in >.5m but spending <20%, and renting a 1300 place?? I'd say spend more of your money to make yourselves comfortable. Find ways to save time and stress by outsourcing any chores that you can. Your time is worth much more than the dollars you will spend, you will have more free time with the family, and be in a better mood to handle your jobs.

(btw, I think there's 0% chance these two will quit their jobs. It just sounds like he's here to blow off some steam.)

rated:
vranaco said:   
puddonhead said:   Yearly Target expenditure - $50k.

Money required to support this level, inflation adjusted, to perpetuity (assuming 2% return in growth/dividend stocks - since I don't know of any other really inflation adjusted cash flow that is lower risk) would be approx $2.5MM.
Add medical "uncertainity" premium - whatever amount you are comfortable with. Maybe another $20k/year -> $1MM lump sum.

So you now have a Target of $3.5MM!!
... However, this framework should work.

  Uh, yeah a 2% withdrawal rate should work. Historically a 3% withdrawal rate has a 0% 50 year failure rate. 3.5% goes all the way up to 3.1% failure rate and requires 43% less starting capital than a 2% withdrawal rate if you're willing to take a 3.1% risk that you'll have to go back to work for a few years or find a way to cut back on expenses if the sequence of returns risk in the beginning looks poor. 

  
>> Historically a 3% withdrawal rate has a 0% 50 year failure rate

Inflation adjusted??

i.e. you start at year 1 withdrawing 3%. Let's assume this about is X. Next year you withdraw X + inflation and so on every year. My guess is a set up like this will show a much larger failure rate.

The exact %age is not quite relevant. Point is to stay below the sustainable dividend rate of big blue chips with sustainably growing dividend..

rated:
your wife is already planning the divorce, you need a couple of laundered millions in Russia so you can have more than 1 kid and continue your family line

rated:
puddonhead said:   
vranaco said:   
puddonhead said:   Yearly Target expenditure - $50k.

Money required to support this level, inflation adjusted, to perpetuity (assuming 2% return in growth/dividend stocks - since I don't know of any other really inflation adjusted cash flow that is lower risk) would be approx $2.5MM.
Add medical "uncertainity" premium - whatever amount you are comfortable with. Maybe another $20k/year -> $1MM lump sum.

So you now have a Target of $3.5MM!!
... However, this framework should work.

  Uh, yeah a 2% withdrawal rate should work. Historically a 3% withdrawal rate has a 0% 50 year failure rate. 3.5% goes all the way up to 3.1% failure rate and requires 43% less starting capital than a 2% withdrawal rate if you're willing to take a 3.1% risk that you'll have to go back to work for a few years or find a way to cut back on expenses if the sequence of returns risk in the beginning looks poor. 

  
>> Historically a 3% withdrawal rate has a 0% 50 year failure rate

Inflation adjusted??

i.e. you start at year 1 withdrawing 3%. Let's assume this about is X. Next year you withdraw X + inflation and so on every year. My guess is a set up like this will show a much larger failure rate.

The exact %age is not quite relevant. Point is to stay below the sustainable dividend rate of big blue chips with sustainably growing dividend..

  I'm sure he's using Firecalc (http://firecalc.com/), which does account for inflation and indeed shows a 0% failure rate historically at 3%.

rated:
Your 8 month old children aren't going to remember a lick of an RV trip... nor would a 2 year old, nor 99% of 3 or 4 year olds. You're looking to do this way too early. Keep working another year. You're letting the stress of new parenthood (that you compounded by doubling your load in that regard) get to you. Maybe reduce the stress in your current careers. We can all make excuses, but if it is stressing you out it is because you are letting it happen. Since you aren't interested in the long-term viability of your current careers, don't stress yourself out... you won't have to do it for a promotion, a bonus, to make the boss happy, whatever... because you don't care.

I don't know your financial lifestory, but just having two kids, you can stand to sock away some more money into retirement, college savings, brokerage, whatever. Just plug away for another 3-5 years and deliberately lower your stress in what you're doing. If you have an opportunity to use some of your funds to get a business off of the ground, do it (I am not saying to pass up opportunties). After you do that, maybe do a nice trip with the kids before they get in school (seriously, no need for a year) and then get back at it. You will have opportunities for breaks when school lets up for breaks. Make a plan to be out by 40-45 and you should be squared away.

rated:
Those 4% or whatever historically "safe" withdrawal rates are usually done for retirees around age 65.  They include spending down your assets, not just living on interest or dividends.   As such, trying to retire in your late 30s with 2-3x as much time / living expenses than someone at 65 (and likely with college and childcare costs behind them), will require a much more conservative withdrawal rate.  So more money or a more frugal lifestyle, all else being equal.  No answers, but don't be mislead by those simple rules.

rated:
Not another whiny thread about 30 something’s making $500K a year and dissatisfied with their lives. Assuming you got the benefit of many $100K’s of education that was paid by parents, grants or the government on the assumption you would be productive members of society for at least the next 30 years, you want to toss that because of a mid life crisis? Maybe schedule an appointment with a therapist. BTW, anyone making that much should be able to adjust their workload downward to reduce the stress level. Work fewer hours and take on less clients.

rated:
xerty said:   Those 4% or whatever historically "safe" withdrawal rates are usually done for retirees around age 65.  They include spending down your assets, not just living on interest or dividends.   As such, trying to retire in your late 30s with 2-3x as much time / living expenses than someone at 65 (and likely with college and childcare costs behind them), will require a much more conservative withdrawal rate.  So more money or a more frugal lifestyle, all else being equal.  No answers, but don't be mislead by those simple rules.
 


Yupp!! Exactly the reason why I mentioned living within a sustainable dividend income of ~ 2%.

At least I am not aware of any other "rule" that will allow you to "preserve" your wealth, and still receive an inflation adjusted cash flow.

rated:
There are many discussions on Bogleheads about topics similar to this. OP - worth a search over there or a post if you don't find helpful advice.

rated:
I think several people have hit the nail on the head that you are just having a hard time adjusting to kids. I'll tell you the solution, and if you guys red me I'll come find you.

You need to get a nanny. You make more than enough, go get a nanny to help with the kids. Even if you think you aren't "that kind of person". Get one that will help cook, clean, etc. Ideally at your income level, you go get a bigger place and get a live-in. After 2 weeks of that, you'll feel better about leaving your kids w/ a stranger.

rated:
Thanks for the input.  I like alot of the discussion.  To answer some of the questions that popped up in the thread, or give a little clarification:

I could probably go part time, but my wife cannot.  She's limited to 2 wks per year in time off.  If we were to do a month-long RV trip, it would mean resigning her position.  My job is more flexible, but since we're a team, I'll just be hanging around the house for a while.

To add another piece to the puzzle, we're in a medium COL area that we don't like and workaholic culture here abounds.  We'd much rather be somewhere else in the country, but the idea of having to start over with a new employer is daunting.  The devil you know....

@libralibra - I'm not sure if a bigger house is gonna make much of a difference.  We'd pay an extra 1000 for an extra bedroom, but we're limited in my wife's commute times as to how far we'd relocate.   Chores around the house - although still chores - are infinitely more enjoyable than my work but just don't pay as much.   Sure - I'm here to blow off some steam but since you've got the numbers nailed down, what odds do you wanna give me for a friendly wager? With a 0% chance, I think 30:1 would be fair.  Easy money.

 

rated:
ryoung81 said:   I think several people have hit the nail on the head that you are just having a hard time adjusting to kids. I'll tell you the solution, and if you guys red me I'll come find you.
 

  No, they are not returnable. It's not like adopting a puppy from the pound. 

rated:
You are pretty much asking for life advice, but we don't know your life. Where do you live? What do you do for a living?

rated:
OP are you a doc, or a lawyer?

Seems with either one you should be able to find less stressful work, with a pay cut.

rated:
There is a long line between getting paid that amount of money and getting fired. As others have said, you may be able to slow down the hours you work because of "Life reasons" "Wife being sick" "Child being sick" "Doctor's visit" etc. Slowly try to tone your hours back to normal, and see if you can establish them like that. Your reviews and promotions and bonuses will suffer, but that could be a solution.

rated:
ryoung81 said:   You need to get a nanny. You make more than enough, go get a nanny to help with the kids. Even if you think you aren't "that kind of person". Get one that will help cook, clean, etc. Ideally at your income level, you go get a bigger place and get a live-in. After 2 weeks of that, you'll feel better about leaving your kids w/ a stranger.
  
THIS. As long as you have a spare bedroom you can do the live-in and I'm pretty sure it will be a wash over your current daycare costs. Include meals and a monthly agreed upon amount. You'll eat out less because food will be cooked at home, (offsets the nanny a bit) you'll enjoy your time with the kids more. No stress about picking the kids up before the daycare closes. No stressful mornings prepping the kids and getting out the door.  

At least that's how it works here, and people making WAY less than you are doing it.

I recommend an older woman who's raised plenty of kids. Going older also makes any potential issue with wife/nanny a near 0% likelihood. 

Skipping 124 Messages...
rated:
I think it's simply a personal choice one way or another.  When life becomes extremely stressful and you are way overworked things you otherwise loved or didn't mind become things you hate.  For example if I'm stressed I tent to fight more with people I love.

The thing about getting a nanny and seeing how it goes for stress is if it doesn't work they can still change jobs/move.  Coming home to a clean hassle free house at the end of a long day is a hugely different experience vs coming home to 1-2 hours of house chores.

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