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Re: Got laid off today ...... opportunity to RE?
Old 08-04-2004, 09:34 PM   #21
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Re: Got laid off today ...... opportunity to RE?

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Is there a way to get 4%-5% income stream today from a $1 Million portfolio?
I'm helping my mother set up her 800k portfolio to generate an additional 30k per year with little to no risk. Accept a little more and you'll definitely hit your target of "$50K total ...$40K-$45K in dividends," in fact it might be fairly difficult to not hit that target! And congrats on the ER. Enjoy the 'gift' that your employer gave you ... 6 month's salary / benefits to ER! I did it in February and still loving it!
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Re: Got laid off today ...... opportunity to RE?
Old 08-04-2004, 10:12 PM   #22
 
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Re: Got laid off today ...... opportunity to RE?

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I'm helping my mother set up her 800k portfolio to generate an additional 30k per year with little to no risk. Accept a little more and you'll definitely hit your target of "$50K total ...$40K-$45K in dividends," in fact it might be fairly difficult to not hit that target! And congrats on the ER. Enjoy the 'gift' that your employer gave you ... 6 month's salary / benefits to ER! I did it in February and still loving it!
Gayl,

Good to know that someone just ER'd successfully in February. Congratulations to you!

Are you looking at an all bond/cash portfolio for your mother to achieve the additional $30K income?

Regarding it being fairly difficult to not hit that target, are you thinking an 80/20 stock/bond mix as recommended by Bernstein in his Four Pillars book? Or a mostly fixed income portfolio with corporate, municipal bonds, etc.?

Dante
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Re: Got laid off today ...... opportunity to RE?
Old 08-05-2004, 04:09 AM   #23
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Re: Got laid off today ...... opportunity to RE?

Dante60093
I'm still working so it is not set up for retirement. I believe many asset classes are overpriced so much of my $ is in cash. I don't recomend it for you.
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Re: Got laid off today ...... opportunity to RE?
Old 08-05-2004, 07:05 AM   #24
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Re: Got laid off today ...... opportunity to RE?

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BabyApe,

I calculated our expenditure for 2003 and it is $45,627 actual - *let's say $50K total for a family of 3 (two of us and third grader son) for 2004. We have $600K equity in the house and a mortgage that is less than $200K.

I'd feel more confident about RE if I could get the portfolio to produce the $40K-$45K in dividends. That way we could maintain our lifestyle and also do our own thing.

Are you in a similar situation?

Dante *

Hmmmm...

A couple of things I would suggest you think about:

- Health insurance: have you figured out what you will do about this? I suspect that your calculated expenses may not include anything in the kitty for healthcare insurance. This can be a big obligation.

- The house/mortgage: Wow, $600k, really? Any possibility of relocating to less expensive digs and pocketing the difference? If not, you might want to do a little putzing around with a spreadsheet to see if it is worth paying off the mortgage. No, you probably won't come out ahead in terms of return on investment on an after-tax basis. However, I would take a look at how much reduction in monthly cash outflow you would "buy" by paying off the mortgage versus what the incremental $200k would earn you. Might make a lot of sense to kill the debt.
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Re: Got laid off today ...... opportunity to RE?
Old 08-05-2004, 08:20 AM   #25
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Re: Got laid off today ...... opportunity to RE?

I've owned DODBX and OAKBX before. They're good funds with good track records, especially DODBX. What made me stop owning OAKBX was the expense ratio...roughly 5x that of Wellesley. DODBX is about 2.5x higher, but still a very manageable cost. Those both are 60/40 stock/bond indexes (vs wellesleys 40/60) and lean more towards some growth rather than a reasonably pure value tilt as wellesley does. If that balance appeals to you, look at vanguards Wellington. Its also a 60/40 and uses similar stock/bond choosing as Wellesley. Its about half the cost of DODBX to own and less than a third the cost of OAKBX.

I'll second the selling of the expensive house and moving to a less expensive area to 'cinch' your ER. I sold my half mil mcmansion and bought a place 30 miles further north for half the price. My new house would be considered a pretty good home for a solidly middle class family. I like my neighbors here much better. Property taxes, utilities and other costs are lower. I'm not that far away from everything else I used to go do.

Consider it the opportunity to live where you always would have if you didnt have to worry about being close to a place you could get work.

With little to no debt and a good conservative cash generator, even through a tough time or with a need for a larger sum of cash to fund an emergency, you wont ever need to re-engage that 100k a year job. You can take on a small job here and there or do something in line with your old job only on a consultancy or part time basis.

The other thing that gives me a good buffer is I got a $100k home equity line of credit on the house. Should I ever run into a major problem, that gives me a backstop.
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Re: Got laid off today ...... opportunity to RE?
Old 08-05-2004, 08:44 AM   #26
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Re: Got laid off today ...... opportunity to RE?

"The other thing that gives me a good buffer is I got a $100k home equity line of credit on the house. Should I ever run into a major problem, that gives me a backstop."

********************

Now here is something I struggle with from time to time. I sometimes think that having a HELOC as a backstop would be a good thing. OTOH, I have a modest e-fund (maybe 4 months' worth of expenses) and a decent size taxable investing account (2 or 3 years' worth of dugh), so I am not exactly likely to hit a severe liquidity crunch any time soon. I also worry that I will suddenly get bit by the consumerist bug with what would probably be an enormous line of cheap credit, although it hasn't been a problem in the past. Further, I have no idea how good a backstop a HELOC really is, considering it is an unfunded commitment that the bank could presumably yank any time they like. Thoughts on this?
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Re: Got laid off today ...... opportunity to RE?
Old 08-05-2004, 09:02 AM   #27
 
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Re: Got laid off today ...... opportunity to RE?

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I've owned DODBX and OAKBX before. *They're good funds with good track records, especially DODBX. *What made me stop owning OAKBX was the expense ratio...roughly 5x that of Wellesley. *DODBX is about 2.5x higher, but still a very manageable cost. *Those both are 60/40 stock/bond indexes (vs wellesleys 40/60) and lean more towards some growth rather than a reasonably pure value tilt as wellesley does. *If that balance appeals to you, look at vanguards Wellington. *Its also a 60/40 and uses similar stock/bond choosing as Wellesley. *Its about half the cost of DODBX to own and less than a third the cost of OAKBX.

I'll second the selling of the expensive house and moving to a less expensive area to 'cinch' your ER. *I sold my half mil mcmansion and bought a place 30 miles further north for half the price. *My new house would be considered a pretty good home for a solidly middle class family. *I like my neighbors here much better. * Property taxes, utilities and other costs are lower. *I'm not that far away from everything else I used to go do.

Consider it the opportunity to live where you always would have if you didnt have to worry about being close to a place you could get work.

With little to no debt and a good conservative cash generator, even through a tough time or with a need for a larger sum of cash to fund an emergency, you wont ever need to re-engage that 100k a year job. *You can take on a small job here and there or do something in line with your old job only on a consultancy or part time basis.

The other thing that gives me a good buffer is I got a $100k home equity line of credit on the house. *Should I ever run into a major problem, that gives me a backstop.
TH,

Based on your prior post, one thought I have is to consider buying $250K worth of Admiral shares of the Wellington fund. But given that you have not made the switch back into the fund from the short term corporate fund makes me pause - maybe there is something wrong with my timing. Also Dex's response was not favorable for the 3 funds he mentioned.

Regarding moving to a different area, probably not an option right now. Love the town and neighborhood, good school for our son and good value for real estate here. BTW, I also opened up a $250K HELOC two years ago for the same reason you did. Have not used it except for some remodeling work - interest is tax deductible and very low rate, 3.5%.

At 47, I have been in the $250K compensation range, so it is a hard choice to make to give all that up but as you said it, I can always do some consulting/part time/free lance work if needed.

Dante
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Re: Got laid off today ...... opportunity to RE?
Old 08-05-2004, 09:11 AM   #28
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Re: Got laid off today ...... opportunity to RE?

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Now here is something I struggle with from time to time[...]Further, I have no idea how good a backstop a HELOC really is, considering it is an unfunded commitment that the bank could presumably yank any time they like. Thoughts on this?
I dont have the consumerism streak, so that helps. This is simply for "oh crap, I totalled the old car right after I dropped collision insurance and I need another one and I dont want to sell 10k worth of xyz fund right now but I might in six months" or "shoot a stud broke in the attic and six feet of my roof collapsed and I need 10k right now to repair it".

With this in hand, I dont need that "1-2 years emergency cash buffer" or whatever length/size people feel comfortable with. I drain a couple of months expense money from my short term corp fund every few months and leave it at that. If theres a huge drop in the market, I might even consider pulling some of that tax deductible 4% heloc money out for investing, but it'd have to be a hell of a drop.

I suppose the bank could cancel the heloc anytime they wanted to. I could get another one somewhere else anytime I want to. I think the only reason they'd do that is if the valuation on my home dropped below the value of the heloc. Right now mine is 100k against a $250k valuation. My wife has one for $40k against her $180k house.

Neither of us paid a penny for either heloc; mine is through my credit union, hers is through ING direct.

The downside really is taking a big chunk and not being able to pay it back. I figure worst case I could convert it to a regular mortgage, or sell the property. We're into "stuff realllly hitting the fan" land.

I have avoided using it though for the most part. We just did a 40k remodel on her house and I paid for it out of my short term corp fund. Paying 4% on a loan vs making 3% on it in a short term bond fund made no sense to me. When we get around to selling the house in a few years, I'll refund my portfolio. In the meanwhile, that money is 'diversified' into RE.
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Re: Got laid off today ...... opportunity to RE?
Old 08-05-2004, 09:25 AM   #29
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Re: Got laid off today ...... opportunity to RE?

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TH,

Based on your prior post, one thought I have is to consider buying $250K worth of Admiral shares of the Wellington fund. But given that you have not made the switch back into the fund from the short term corporate fund makes me pause - maybe there is something wrong with my timing. Also Dex's response was not favorable for the 3 funds he mentioned.

Regarding moving to a different area, probably not an option right now. Love the town and neighborhood, good school for our son and good value for real estate here. BTW, I also opened up a $250K HELOC two years ago for the same reason you did. Have not used it except for some remodeling work - interest is tax deductible and very low rate, 3.5%.

At 47, I have been in the $250K compensation range, so it is a hard choice to make to give all that up but as you said it, I can always do some consulting/part time/free lance work if needed.

Dante
Dante -

I wouldnt hesitate to move money into the Wellesley fund, I'm just fiddle diddling and its probably counter productive. I was trying to avoid a 5-8% drop in wellesley that could have come with a 2% total rate rise, which I thought was a lock when I pulled the money out. Now I'm not so sure we're going to see more than another quarter point. My whole thing with this fund is that the principal really shouldnt be an issue, like unclemick I'm taking the dividend and letting the principal ride, hopefully for 20+ years. My discipline sucks sometimes.

The wellesley vs wellingon choice is straightforward: buy wellesley if you're concerned about the near to intermediate future of stocks and you need/want a 4% yield. Buy wellington if you feel stocks will do well and can get by on a ~2.5% yield. Some people split and buy half of one and half of the other, giving them a nice 50/50 split.

Or if you love indexing, buy a 40-60% chunk of large cap value and the rest into the total bond market or intermediate muni fund for your state.

Moving is a personal choice. My old neighborhood was getting overbuilt and congested, I had stuffy neighbors, and while it was expensive to live there I wasnt appreciating what the expense bought.

I was making high six figures before I retired. My personal choice was to make a change that resulted in a better life. It was nice to eat out six days and nights a week, have my huge house cleaned for me and the yard manicured professionally, own three luxury cars and a boat, and walk around with the attitude "buy whatever you want, you'll make more".

Its even nicer to sleep til noon every day if I want to, have little to no stress, not worry about that moron Jack over in that other department thats playing political games with me, not have to get yelled at by another vice president over something irrelevant, and not to have to worry about much of anything at all.

Now with our first child on the way, I'll get to spend each and every day with her and never miss a precious moment.

Thats worth it to me.
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Re: Got laid off today ...... opportunity to RE?
Old 08-05-2004, 02:42 PM   #30
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Re: Got laid off today ...... opportunity to RE?

Just curious, in what industry do you make in the "high six figures" and have a "vice president" over you?
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Re: Got laid off today ...... opportunity to RE?
Old 08-05-2004, 05:26 PM   #31
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Re: Got laid off today ...... opportunity to RE?

[quote]Just curious, in what industry do you make in the "high six figures" and have a "vice president" over you? *[/quo

LA Newsboy:
Realize you directed this question to TH.
But, on my last job, I also made in high six-figures.
$9,489.38. But come to think of it, the fellow over me was Boss-Man. (Hell, maybe he was a Vice President).
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Re: Got laid off today ...... opportunity to RE?
Old 08-05-2004, 07:31 PM   #32
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Re: Got laid off today ...... opportunity to RE?

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Just curious, in what industry do you make in the "high six figures" and have a "vice president" over you?
A pretty darn good one that lets you ER at 39.

Good old silicon valley high tech. That figure includes net value of stock options sold in that year along with salary and bonuses running in the 400-500k a year range.
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Re: Got laid off today ...... opportunity to RE?
Old 08-06-2004, 10:17 AM   #33
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Re: Got laid off today ...... opportunity to RE?

Damn TH, that is some bank.

If I made that kind of coin, I would be counting the days to ER.
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Re: Got laid off today ...... opportunity to RE?
Old 08-06-2004, 10:52 AM   #34
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Re: Got laid off today ...... opportunity to RE?

TH, $500K sure is a lot of money, but wouldn't that be mid six-figures?
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Re: Got laid off today ...... opportunity to RE?
Old 08-06-2004, 03:00 PM   #35
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Re: Got laid off today ...... opportunity to RE?

I guess that post could be read in two ways so I'll be more explicit.

Salary and bonuses in the mid 6 figure range along with annual stock options that were ALSO in the mid six figure range, resulting in a high six figure total figure.
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Re: Got laid off today ...... opportunity to RE?
Old 08-06-2004, 06:46 PM   #36
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Re: Got laid off today ...... opportunity to RE?

Go figure!

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Re: Got laid off today ...... opportunity to RE?
Old 08-11-2004, 11:43 PM   #37
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Re: Got laid off today ...... opportunity to RE?

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. . .

They couldnt just offer it to specific people, . *. *.
Why not? *Was there some sort of legal requirement?

I'm curious because I tried to take two different companies up on their voluntary buy-out offers and both turned me down. *I'm wondering if I was cheated out of several years of ER?

I finally got a buy-out by making a deal with the VP I was working for to make it happen. *
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Re: Got laid off today ...... opportunity to RE?
Old 08-12-2004, 04:22 AM   #38
 
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Re: Got laid off today ...... opportunity to RE?

Obviously they can offer buyouts only to specific people,
or classes of people. However, this is just the sort of looney tunes idea your government likes to promulgate,
i.e. any buyouts must be offered to everyone. Ergo,
if "everyone" takes it the company disappears. This would be a "good thing" (a little Marthaism there)
as then the country would be rid of those evil greedy
fat-cat entreprenuers

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Re: Got laid off today ...... opportunity to RE?
Old 08-12-2004, 08:28 AM   #39
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Re: Got laid off today ...... opportunity to RE?

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Was there some sort of legal requirement?
I was talking to my brother-in-law the other day. *He's a lawyer who often handles discrimination cases. * I asked him about the burden of proof for a class-action discrimination suit.

Basically, if a company has a corporate policy that turns out to favor a specific group based on statistical analysis, that's pretty good grounds for a class action lawsuit. * The discrimination doesn't even have to be intentional.

So, my guess is that large companies go overboard by offering "deals" very broadly to avoid even the semblance of discrimination.
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Re: Got laid off today ...... opportunity to RE?
Old 08-12-2004, 08:50 AM   #40
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Re: Got laid off today ...... opportunity to RE?

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Why not? Was there some sort of legal requirement?

I'm curious because I tried to take two different companies up on their voluntary buy-out offers and both turned me down. I'm wondering if I was cheated out of several years of ER?

I finally got a buy-out by making a deal with the VP I was working for to make it happen.

Apparently so, although I never looked into it, I just took it. We *are* in california ya know. I do remember the 'feeling out' conversation I had with my boss where I asked "hey...this separation package...is that available to everyone or is it specifically targetted? You know, in case someone else asks me After eyeballing me for 10 seconds he said "We're offering it only to certain divisions, with a cap number per division, but anyone in that division has to be eligible."

Had a couple of execs try to talk me out of it "You are NOT the kind of employee we're looking to lose through this!"

In fact, the deal ended up being modified twice to include small bonuses and benefits that were promised and scheduled to be delivered to employees at a later date. The funny part is those never materialized so if you left the company, you got them. If you stayed you didnt.
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