Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Very Tough Choices ... Please Give Your Suggestions
Old 06-07-2008, 07:31 PM   #1
Full time employment: Posting here.
Join Date: Dec 2004
Posts: 714
Very Tough Choices ... Please Give Your Suggestions

I don't post here often, but respect the intelligence and fairness of this forum ... let me post a friend's challenges here, and get your input. My perspective is blurred by our relationship.

His situation is as follows:
  1. Executive, 56, who is really burned out. Used to make $200K+ annually in a "C" level position, but really doesn't believe he can hold down such a job in the future. Not sure he can even work at all, but I believe he will heal in time.
  2. He divorced last year, and is paying $3K alimony per month, plus $1,600 per month in child support. (Following his severance period below, he'll still owe about $50K total to his ex for alimony and child support.)
  3. He is on a severance now from his last job, ending in 10 months, over $200K/yr.
  4. His total net worth is probably $950K now (half of pre-divorce) ... $400K in realistic real estate equity (net of debt, and at reasonable values in this economy ... $100K home, $300K rental), and $550K otherwise (of which $325K is IRA's).
  5. Following the divorce, he is living alone in their 5 bedroom home, and clearly getting more and more depressed. He should move just for the sake of his mental health.
  6. He has a very close girlfriend living in a western city, and they are in love. Separated by many miles.
  7. She makes $28K annually, stable job, one boy finishing college and the other halfway through high school. The boy's have / can get scholarships to the state university.
The guy is not in very good mental shape right now ... very lonely, and clearly at his wit's end about what to do. On the one hand, he knows that finanically he should take another "C" level job, and try to earn the big bucks ... but perhaps cannot.

Emotionally, what he wants to do is join his girlfriend, and get whatever job he can in that market. Tough choices.

Here is what he and I have discussed so far ... assuming that, mentally, he has truly run his race, he could:
  1. Sell his real estate, pocket the $400K, with the only complication he would need to 1031 $300K of it to defer tax. He could buy his girlfriend's place for $100K, and she could "rent" it from him at a fair market rental. Invest the remaining $200K in rental property(ies) Otherwise, he has $100K to use ... see 3.
  2. He could start 72t distributions of roughly $19K annually.
  3. He could use the remaining $275K liquid ($225K + $100K home net, less $50K to ex) to produce another $11K, or roughly $30K annually in total, at 4% safe withdrawal.
  4. That $30K plus his girlfriend's roughly $28K salary would give them about $58K annually, plus they'd be better off by another $8K they would together save annually in P&I payments on her home. In other words, they'd have $58K pretax to live on, in a paid off home, plus whatever rental income the other $200K produces.
  5. Age 62 comes in 6 years for him, and he should have another $20K in social security at that time.
  6. Whatever job he gets in the meantime simply bolsters their annual $58K plus rental income, and gives more room for savings.
Now, all of this seems way too tight to me, but ... perhaps doable, and better than him going crazy with despair. He is seeking my advice, and the numbers are getting blurry for me now. Any suggestions will be appreciated. He may be able to get his head together a bit more over the next few months, but he is also clearly not enjoying life right now.

Good friend, and I would like to help him find more happiness. Life could be better for him and his girlfriend.

Any suggestions? Thanks.
Craig is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-07-2008, 07:58 PM   #2
Recycles dryer sheets
mews's Avatar
Join Date: May 2008
Posts: 479
If he is truly fried, then right now he shouldn't go for a job that will fry him even more.

I would suggest - a short course of counselling - divorce & job loss on top of each other is an *lot* of stress! 4 - 5 visits with a results oriented counsellor could do some good. He could sort things out with an uninvolved person.

If he moves, could he get a job that he likes? If he doesn't need the 'big bucks', he might be very happy working for [for example] a not-for-profit that would be happyhappyhappy to have someone on board with his skills. Usually the pay is moderate, but the benefits are ok.

If, after a year or two, he is then bored, or dissatisfied, and gets the itch for a job closer to his old job, fine. If not, fine too!

good luck to him & to you - he is fortunate to have a friend that cares about his happiness.

mews is offline   Reply With Quote
Old 06-07-2008, 08:27 PM   #3
Moderator Emeritus
Rich_by_the_Bay's Avatar
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Sounds like a rough situation. But nothing will ever fall into place if he is clinically, diagnosably depressed. It's tempting in such scenarios to say "of course he's depressed; lost his job, wife" etc. and that may well be true.

But in some people a "situational depression" or "adjustment reaction" can trigger a major clinical depression complete with chemical imbalances.

I suggest that he or a close friend step back, make a judgment about whether his depression itself has created problems, and get him seen. Start with his primary care physician and maybe get a psych referral.

Then he can face the financial and relationship problems that remain.
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Old 06-07-2008, 08:33 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
Not much help on the divorce front; I was happy after mine...

Otherwise, counseling seems like a good idea. Maybe get laid...

Sell current residence, move to rental until he gets the tax break? That doesn't solve the GF issue, though. Not a real estate attorney...

Bank every possible dime of the severance.

Good luck!
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 06-07-2008, 09:15 PM   #5
Thinks s/he gets paid by the post
Spanky's Avatar
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,443
It seems that your friend may ask the court to reduce alimony and child support since he is unable to work due to a mental breakdown. As others have suggested, he should seek help for his depression.
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Old 06-07-2008, 09:16 PM   #6
Full time employment: Posting here.
Join Date: Dec 2004
Posts: 714
Yes, he is seeing a counselor, and working on the depression ... should have mentioned that.

As he and I go over the numbers, appears he and his girlfriend can make it on $58K with a paid off home, but certainly won't be living high on the hog. Any income he can bring in after that would be available for savings and hopefully a little "living".

What about the financial prospects ... what comments and advice do you have? Assuming the obvious frugal lifestyle, do you believe a couple can live on roughly $5K pretax per month, in a paid off home? Years ago I'd say of course ... today, I don't know.

Craig is offline   Reply With Quote
Old 06-07-2008, 10:38 PM   #7
Recycles dryer sheets
Join Date: Apr 2006
Posts: 143
I went through a similar experience when I entered my midlife crisis almost 20 years ago (my details were different, but the agony with regards to facing life seems to be similar).

All of the financial alternatives presented are probably viable. The real question is his coming to grips with the situation and accepting the financial alternative he chooses (because it is lilkely there will be a reduction in his expectations about his future and his standard of living going forward, which will probably be hard for him to swallow).

In my case, I agonized over the emotions for a few months and then was forced to come to grips with my rapidly deteriorating finances. I did what I had to do to stop the financial bleeding (i.e., find a job that was not too stressful, but still paid the bills) and took life one day at a time until I was able to crawl out of my financial and emotional hole. Then I was able to make some longer-range plans again and start doing the things I needed to do to move towards achieving them.

Logic and rational thought probably won't do him much good at the present time. He has to "hit bottom" first so that he will be motivated to do what he has to do to turn his life around. Then he will be able to accept good advice from those around him he trusts.

Note: I'm only a practitioner of life. I may have read a couple of psych books over the years, but I'm not a psychiatrist.
rogersteciak is offline   Reply With Quote
Old 06-08-2008, 12:09 AM   #8
Full time employment: Posting here.
Join Date: Dec 2004
Posts: 714
rogersteciak, thank you ... that is very helpful. Out of curiosity, how old were you then, when you went through a similar experience?

Would you be willing to share other tips and experiences either here or offline?

Thanks again for your kind help.
Craig is offline   Reply With Quote
Old 06-08-2008, 01:26 AM   #9
Full time employment: Posting here.
Join Date: Jun 2006
Posts: 927
His ex skinned him good and he is in a financial bind and he is in a hurry to move in with another woman? Love is not just blind, it is also stupid. I would think that the smart thing to do right now is get out of the expensive house so he can get his expenses down and at the same time see how the professional help he is getting works out. His gf does sound like she may have her head screwed on right but I do wonder what she sees in him?
jclarksnakes is offline   Reply With Quote
Old 06-08-2008, 04:04 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Feb 2007
Posts: 5,072
He should not make any decisions while under stress and after a stressful event... like a divorce. Divorce is difficult on all involved.

If he has the classic signs of depression, he should visit his doctor.

Some people are successful doing self help (reading, introspection, etc). Unless he has a problem mental health problem.... a little time and reflection should help.

If he is not ill, and he needs to work (financially)... he should get back on the horse as soon as possible. It gets more difficult the longer he is out of the game. He might be able to use a headhunter to find a job close to his girl friend.

IMHO - Getting married quickly after a divorce is a bad idea.
chinaco is offline   Reply With Quote
Old 06-08-2008, 04:19 AM   #11
Thinks s/he gets paid by the post
Join Date: Apr 2005
Location: Duesseldorf, Germany
Posts: 1,176
IMO he should sell the big house asap, then relocate to the area of his GF but rent a small place there for the first 6 months. NOT MOVE IN DIRECTLY.

Look for a job there, work with a consultant / outplacement specialist to find out how he can make himself attractive for a new employer - unless he finds out that he loves his life as ER too much to return to "slavery".

I would be reluctant to buy te GF house. Too many strings and risk attached. Rather look for a reasonable place to move in together if the 6 months go well.
chris2008 is offline   Reply With Quote
Old 06-08-2008, 05:13 AM   #12
Walt34's Avatar
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 23,970
I agree with chris2008. Been there done that. Having a gf is good. Buying her house at this point is at best unwise. He needs to dump the house he's in - at this point his mental health is more important than what he can get for it - don't ask how I know - but he needs to get out of there.

He may find he doesn't hate his job after all without the distractions of a bad marriage. I know one guy who's ex got the house and quarter-million racehorse, he's living in a doublewide doing aerial photography and is happy.
When I was a kid I wanted to be older. This is not what I expected.
Walt34 is offline   Reply With Quote
Old 06-08-2008, 05:29 AM   #13
Thinks s/he gets paid by the post
tryan's Avatar
Join Date: Mar 2005
Posts: 2,514
yeah, this dude needs some time off. A 1031 exchange should not be needed if his lived in the house 2 years (or is forced to move for a job) ... it's his primary residence , right?

Sell the house and move in with the girl friend.

Ride out the severence then with NO income renegotiate the alimony payments. Once they're cut in half (or better) then decide what the next step is.
FIRE'd since 2005
tryan is offline   Reply With Quote
Old 06-08-2008, 06:20 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
Join Date: Oct 2003
Posts: 5,105
Although it might seem harsh there is some good advise here:
- seek help about the depression
- sell the house
- don't do anything with the money until a year or so until the depression is cleared up
- don't move in, marry or buy the girl friend's house - she should be understanding considering the divorce and loss of the job.
- don't burn any bridges at work
- don't tell people at work about the depression
- get an employer search firm to give him an assessment of his options.
- I doubt if he will get much or anything of a reduction in alimony/child support payments. Legal fees might take any savings. It might be worth asking a lawyer if the depression/unemployment would have any influence on the judge. My guess the judge would say - get another job. I don't have any experience here.
I had a bout of depression caused by a reaction to a drug - I was not in the right frame of mind to make any decisions (neither is your friend). I think the dr. would say the same. I made mistakes because I didn't even know I was depressed. Your friend at least knows he is depressed.

What he should do is:
Exercise- even just walking - it helps with depression
If he is on good terms with the wife and kids; let them know he is seeing a Dr. about depression - they might be helpful
Let him know he will get through this and eventually be happier. It does not seem that way now but it will.

On a side note - Your friend make me glad I got married young and divorced when I didn't have children or any real money.
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Old 06-08-2008, 06:33 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2005
Posts: 16,009
Originally Posted by tryan View Post
yeah, this dude needs some time off. A 1031 exchange should not be needed if his lived in the house 2 years (or is forced to move for a job) ... it's his primary residence , right?

Sell the house and move in with the girl friend.

Ride out the severence then with NO income renegotiate the alimony payments. Once they're cut in half (or better) then decide what the next step is.

I think he was saying to 1031 the other real estate.... but I do not think that is an option as it is supposed to be 'like kind' property.... but who knows what people do today...

I agree with most people to a point.... he is already dealing with two of the biggest stress inducing items..... a lost marriage and a lost job... so adding the stress of selling his house, moving etc. is not something he should jump at unless his finances will be shot... If he can handle this, then yes he should try and cut expenses if he can....

He might not get any reduction in his alimony and child support even if he gets a low paying job.... I knew someone who did that and the judge used his 'earning potential' to set them.... didn't care at all what job the guy took... said he could earn more if he wanted... why will it stop?? Because his kid is 18? What about college etc? Is he going to abandon his kids

I have never been through one... but I think a year is quite soon to already have a major girlfriend that lives far away.... is this someone he knew? How did he meet her? Seems a little fishy to me...

Making over 200K per year and only having about $1.9 mill that was split seems a bit low in savings.... so it seems they were 'living large'... well, you did say they were living in a large house... so what makes you think he can scale back so much? Become a minimalist?

I see a long slow process here... and to tell the truth... maybe getting a job will help this guy...

My curiosity.... what is a C job?
Texas Proud is offline   Reply With Quote
Old 06-08-2008, 06:58 AM   #16
Thinks s/he gets paid by the post
Rambler's Avatar
Join Date: Jul 2007
Posts: 2,487
CEO, CFO, CIO, CMO, etc...sounds like he was the big boss of something.

Rambler is offline   Reply With Quote
Old 06-08-2008, 07:45 AM   #17
Thinks s/he gets paid by the post
Join Date: Nov 2005
Posts: 1,445
I see two major questions:
1. Is your friend ready (financially, intellectually, emotionally) to retire or make a radical change in how he goes about making a living?
2. Should your friend move in with his girlfriend?

These are both tricky questions. It would be easier to address these questions if they are kept separate; however, one scenario has them linked, as you've mentioned. I would counsel your friend to defer the second question for the time being and concentrate on the first. The first question isn't just about money, of course - there are many factors to consider.

socca is offline   Reply With Quote
Old 06-08-2008, 11:33 AM   #18
Recycles dryer sheets
Join Date: Apr 2006
Posts: 143
Originally Posted by Craig View Post
Out of curiosity, how old were you then, when you went through a similar experience?

Would you be willing to share other tips and experiences either here or offline?
I was 39 when I entered my midlife crisis and it took me a few years to get through it. I've had two other major burnout transitions also: age 28 and age 55 (I consider these to be "major midcourse corrections"). There have been numerous "minor midcourse corrections" along the way that I consider routine.

The experience at age 55 (two years ago) was less traumatic because I had reached early semi-retirement financially. Not having money worries meant time was on my side financially as I sorted out the emotional side of my life (it's still a work in progress).

As far as tips, here are a couple:

Personal Journal: I have been keeping a personal journal for over three decades (i.e., "personal blogging with pen and paper"). In some years, I wrote two pages a day, while in other years, perhaps only one page for an the entire year. My rule is that if something is on my mind no matter what it is, it goes in the journal. The benefit of a journal is that I can learn a lot about myself by looking at what was on my mind several years earlier. At the time I wrote those entries, I was "too close to myself" to see the bigger picture. But revisiting those times years later provides me with invaluable insight about myself in terms of what my values and thinking were at an earlier stage of life (i.e., some "big problems" I faced earlier in life were solved within a matter of a few weeks or months, while other "big problems" are still with me years or decades later).

Living by Learning: I'm always reading books and articles (mostly financial material now, but various other topics over the years). I also like to read a good self-help book every now and then. One book I stumbled upon three decades ago was the classic Think and Grow Rich by Napolean Hill. I had to read and reread it a few times over a period of many years, but it slowly took hold and helped me to change my attitudes and thought processes. One book that was recommended recently by someone I highly respect is the new book Happy for No Reason: 7 Steps to Being Happy from the Inside Out by Marci Shimoff. I just bought the book and will be reading it soon (I have no idea where it will lead, but it will probably help me out in some fashion).

I'm sure there are many other tips I can provide, but the two I discussed above are the ones that come to mind. I'll post any others I can think of, but I prefer not to do anything offline on grounds that details personal to me probably do not apply to any other people. It's better to "learn how to fish" by keeping a journal and living by learning (or whatever techniques work work best for you).
rogersteciak is offline   Reply With Quote
Old 06-08-2008, 12:55 PM   #19
Thinks s/he gets paid by the post
2B's Avatar
Join Date: Mar 2006
Location: Houston
Posts: 4,337

I'll throw in my 2 cents FWIW.

I agree with the plurality that nothing serious should be done with the girl friend until he's over his job loss depression. I suspect that anything done to make anything "permanent" won't fix his issues but create new ones.

Financially, your advice to him to get out of a 5 bedroom house he doesn't need makes a lot of sense. I think he should simplify his life as much as possible and cut expenses. Free cash gives opportunities and choices.

I don't have a divorce background but I did lose an "important" job without warning. Eventually, I realized how important I really was to the organization. I believe I would have been diagnosed as clinically depressed had I gone to a doctor. Depression runs in my family so I think I recognized it and I knew what to do to turn it around. I also know that if you get officially diagnosed with it you will have medical and employment issues for the rest of your life so I didn't want to be "diagnosed."

What does he need to do?
  • He needs to simplify his life as much as possible.
This is where getting rid of the house and anything that is hanging on his mind. He can set up his alimony and child support on autodraft so he doesn't have to dwell on this. He doesn't need a "serious" relationship to cause angst. Periodic sex and an otherwise pleasant short visit would be a possitive but a new marriage wouldn't. Other than that, I suggest you talk with him about his concerns.
  • He needs to start doing "normal" things.
He was "important" but he needs to get over it. He may never get a new position that in anyway resembles what he was doing. Even if he thinks he might want to retire, I suggest he start a search for a comparable position. Knock Em Dead is a good book for beginning the search. He needs to be open to a "lower" position than he had just to get back in the game. Nothing makes a new employer nervous like a candidate being unemployed. I took a position pays about 2/3 of my prior position with no chance of bonus and with poor benefits. Once I was employed, offers started to roll in and my decision was whether the new offer was really what I wanted to do for the long term. While waiting for the phone to ring or email to appear, I suggest he get a job doing almost anything. I found that being a substitue teacher did wonders for getting me up and out of bed. I also forgot how miserable I felt. Working part-time at Wal Mart or Lowe's would also fit the bill. It's not about the money it the "lifestyle." He went to work before and he needs to again until his head's on straight.
  • He needs to interact with people.
He was probably socially dependent on his ex-wife. Most "important" men are so most of his "friends" are really his ex-wife's friends. If they went to church, it was her church and she probably still goes there so it would seem best to avoid it if that is the case. That doesn't mean he can't join one close by (if religiously inclined) and possibly have a discussion with the head of the church (priest, rabbi, minister, mullah, etc.....) about his issues. My experience is that they can be pretty helpful even if you aren't religious. The next suggestion is to join a hobby type club. He should call any of "his" friends and try to meet with them individually for lunch or a drink (singular) about every 2 to 4 weeks. He needs to fish, golf or knit with his usual partners. Even if he worked with some of them they might actually be a friend despite the prior work relationship.

I figured out in my 2/3 pay job that I was really FI and could retire. For various reasons, I chose not to and eventually took a position that now pays about 25% over my "important" job. It is almost a contract position with few benefits but it's low stress.

His worst enemy is daytime TV.
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 06-08-2008, 07:55 PM   #20
Recycles dryer sheets
Join Date: May 2005
Posts: 51
No one has mentioned the children. Does he have any visitation rights or joint custody? Does he want to maintain a relationship with his children? Key questions before deciding to move away to live with his girlfriend.
steinj is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Tough Way to Live haha Other topics 56 02-27-2008 05:08 PM
Tough Spending Decision grumpy Life after FIRE 100 10-06-2006 04:02 AM
Man, We Are Tough On Terror poboy Other topics 20 05-05-2006 04:24 PM
Ok, so heres the tough question cute fuzzy bunny Other topics 24 09-11-2005 04:24 PM

» Quick Links

All times are GMT -6. The time now is 06:13 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2022, vBulletin Solutions, Inc.