I’m sure by now many people are starting to see some light at the end of the tunnel. I expect I will be fully vaccinated by early May and hopefully my wife will follow soon thereafter. As we consider re-entering society, I’ve been thinking a lot about how I want to spend my next few years.
Work has become a drag
Work has gotten a little annoying lately between juggling tedious, never-ending projects to having to wrangle with new difficult personalities. And it was fine for most of the pandemic because there wasn’t much else to do. But now I can see that it’s limiting the time I can spend with my wife and son and preventing me from physical activity and pursuing my interests.
When I first started, I thought it was a dream to be able to work remotely and on a part-time, consulting basis. But my hours have increased tremendously since I started — going from under 600 my first year to 1,000 the following year and 1,800 last year. Last month I billed 220 hours. I lay the blame at the feet of a new partner who is good at getting work, but has an almost pathological tendency of hoarding work, even when the firm does not have the manpower to do it all. The rest of us get volunteered for a perpetual all-you-can eat competition. That makes me feel like a jerk for wanting to say no all the time while everyone else is slaving away.
It’s not really what I signed up for and my time is usually pretty constrained. I start working around 8:30 am and then have to wrap up by 4 pm so I can watch the little guy while my wife prepares dinner. The kiddo usually goes to bed around 9:30 pm (is that normal??) and if I feel like it, I can work another hour or hour and a half after that. It’s pretty tough to squeeze in 10 billable hours in a day.
Now we are expecting another baby due in July. We can do one of four things. 1. Continue our current routine and ask my parents to be involved on a regular basis. 2. Hire another nanny (I forget if I mentioned that our nanny moved out-of-state a few months ago). 3. Send our son to preschool when he turns two this summer. 4. I quit and we have ultimate flexibility in childcare.
We were originally going to pick option 1 until our son turns 3 and then send him to preschool. But lately, I’ve been feeling an intense desire to just quit. The feeling comes and goes, but it recently hit again when someone (without asking) volunteered me to take four back-to-back depositions. (I had to snap back and say I would only do one or two.) Anyway, option 4 has been sounding pretty good. I gave my wife a heads up a few weeks ago that I might not last much longer at this current gig.
Can we afford it?
When we last quit our jobs in 2016, we felt like we were FIRE. We had a spending rate of approximately $55k-$60k and had a comfortable withdrawal rate of under 3.5%. But that did not account for increased housing costs, self-paid health insurance, child care, etc.
Not long ago, I posted about how much we have been spending with a house and baby. If I were to look, I would imagine we’re spending more than double today than we did in 2016. We pay $4,000 a month on our 15-year mortgage plus another $10k a year in property taxes. This more than double what we used to pay in rent. Our reason for going with a 15-year as opposed to 30-year mortgage was not only to reduce interest, but also stagger our housing costs with eventual college costs. This way, our youngest will be 16 when we pay off the mortgage, giving us a good runway to start paying college tuition a few years later. (I know part of the mortgage payment goes to principal and should be counted as savings, but I’m treating this as a liquidity exercise.)
This doesn’t even include all the money we’ve spent on home improvement in the last two years. We did a lot of work around the house on a rolling basis. Maybe 40k? Hopefully spending in this category will drop significantly. Unless, of course, we decide to redo any of the bathrooms or the floors, or maybe the doors and trim…
Our $26k in nanny costs have gone away for now, but will soon be replaced by $1,800 a month in preschool tuition starting next year. We can call it a wash over the next 5 years for 2 kids.
Our health insurance costs us $1,200 a month for a family of 3. I haven’t looked up costs yet for a family of 4. Before the pandemic, we were on my wife’s employer’s high deductible plan. But the HDHP was stressful for my wife who tends to use more medical services than I do. After she was laid off a year ago, we switched to an off-exchange Gold HMO plan. She was only working for the health insurance anyway. Once we made the leap, self-paying turned out not to be that bad after all.
Despite doubling our expenses, our net worth has also doubled over the last 5 years. Actually more than doubled. 235% by my calculation. So the numbers still work.
Can I handle going back to a scarcity mindset?
In the past I’ve written about the abundance versus scarcity mindset. Financially, things have been very easy the last few years. The market has been on a tear and we very often see monthly six figure gains in our portfolio. My paychecks cover our expenses and allow us to put away a decent amount in retirement accounts.
Switching back to a SWR-driven mindset will not be easy. At the same time, it’s (probably) not a permanent decision. I imagine people will put out feelers to see if I want to work with them, etc. I imagine I will say no until our youngest starts going to preschool.
But on balance, I think it will be worth it.