Age 32--should I spend my FU money?

[Legally_dead]

I'm too young to be this tired of w*rk. Long commute and rat race are wearing me out. I want to spend more time living and with my family. I feel like I may be FI, but would appreciate your thoughts.

I have owned a small business with my brother and sister since January 1, 2016. They handle the day to day operations for a salary and we split what is left three ways. Business has a 25 year track record of profitability and grosses $10m a year all from a single account. There are plans to diversify, but currently all the eggs are in one basket. My distribution should be at least $120k/year. Relationship with my siblings is rocky. Neither of them have a strong business/management background and I have limited influence on the company's success.

Age 32. Wife (also 32) is SAHM. Two children (ages 2 and -2 months). Expect a third child in the future. No debts. Current compensation from w*rk is approximately $200k/year.

Total net worth is approximately $945k, including:

Retirement Accounts:$370k

Brokerage Accounts/Cash: $262k

Health Savings Account: $17k

Paid for house: $220k

Kids College Savings: $20k

Two paid for cars.

Annual expenses: Vary but were less than $50k/year the last three years. This year is approximately $70k but that includes home improvements. Health insurance currently covered by job so expenses going forward would include that. Distributions from the company should be enough to cover my expenses and college savings for kids, allowing my current investments to continue growing.

Would you pull the trigger?


Sent from my iPhone using Early Retirement Forum

 

[DrRoy]

You do not have enough in investments to live only on that for 50+ years. You state that the business is stable and profitable, but that your relationship with your siblings, who are the prime creators of that profit, is rocky. Only you can decide if you can rely on the business to support your family for so long.

 

[Totoro]

Would you pull the trigger?

Not yet. Too many variables and concentrated risks.

You do have an excellent cushion, congratz!

In two or three years, different story. It will be clearer then how stable the business is under new management, child #3 should be there and its associated impact on expenses, etc ..

I would consider taking a job closer to home, maybe even part-time. Hitting $30k a year together with your cushion covers alot.

Cuts down on the stress, but you'll never go back to high earner status ..

 

[pb4uski]

While it is not clear from your OP, it sounds like you are working a high stress job with a long commute and have the interest in the small business and if you quit you would rely on the distribution from the small business?

If so then I think it is high risk but you have some good options... as suggested find another more time-friendly job closer to home or another... use some of your brokerage account to buy control of the small business... your distributions would be higher because your ownership interest would be higher and that cash flow would be less risky because you have control and presumably could manage the business better. However the lack of diversification of the business is a bit scary.

 

[Senator]

I have owned a small business with my brother and sister since January 1, 2016.

You have been in business for only 4+ months? Do you have a job that you are walking away from? Is the $120k what you are walking from? It seems like you do not really know much about the business either, as you say you only have a limited influence on the companies success.

If you truly have a business making $120K a year, and $10M in revenue, and that is enough for you, then walk. You should devote more time to it and make it happen or sell the business.

It sounds like you were handed this business, and you and your siblings are trying to run it. Yet, you do not seem to think they are doing their share. And you have a limited role in growing the company.

Let's face it. Your investments are not enough to live on. You have a precarious business. You need to either put your big-boy pants on and work until you have enough, or work with the business to grow it, sell it, or shut it down. Life is tough. Deal with it.

 

[cooch96]

I would look for a lower stress job with a manageable commute. Even if it only pays $40k per year, you can make the difference via small withdrawals and a very good chance the whole nest egg will grow. We're only young once, you are right to want to spend your time with your family and not stuck in traffic.

There's a chance you're current nest egg will cover ER for you, but it's less than 50%. And I don't like the sound of relying on your siblings' business acumen.

 

[papadad111]

You have been in business for only 4+ months? Do you have a job that you are walking away from? Is the $120k what you are walking from? It seems like you do not really know much about the business either, as you say you only have a limited influence on the companies success.

If you truly have a business making $120K a year, and $10M in revenue, and that is enough for you, then walk. You should devote more time to it and make it happen or sell the business.

It sounds like you were handed this business, and you and your siblings are trying to run it. Yet, you do not seem to think they are doing their share. And you have a limited role in growing the company.

Let's face it. Your investments are not enough to live on. You have a precarious business. You need to either put your big-boy pants on and work until you have enough, or work with the business to grow it, sell it, or shut it down. Life is tough. Deal with it.

+1.

And I would not have been as eloquent as senator.

Sounds to me like a New York City Wall Street type job and sibs all inherited a business from mom and dad.

1 customer - the business could go down tomorrow.

I wouldn't want to have young kids and my income eggs all in a 1 customer business basket that I'm new to and have little control over given sibling situation.

Keep working and use the 120k to put money away for 5 or so years and re-test then.

In this case, just because you can doesn't mean you should ...

And a million in the bank with two little kids and a twinkle in her eye isn't much money these days

 

[Amethyst]

No offense, but I really didn't get any sense that OP's pants are anything other than the adult variety. That doesn't mean Senator's advice is off base, though. I myself would also advise continuing at the high-paying job until the nest egg (and kids) are a bit bigger.

That is because I get the impression that the business is worrisome to OP. It seems to have too many "ifs" associated with it. In his place, that business would be weighing on my mind and making everything else seem that much harder. But then, I am a conservative person who has always gravitated to a "paying job," the legacy of my Depression/WWII era parents I suppose.

Amethyst

You need to either put your big-boy pants on and work until you have enough... Life is tough. Deal with it.

 

[Legally_dead]

While it is not clear from your OP, it sounds like you are working a high stress job with a long commute and have the interest in the small business and if you quit you would rely on the distribution from the small business?

However the lack of diversification of the business is a bit scary.

For an attorney, my job is relatively low stress. It's mainly the workplace politics and my 3 hour roundtrip commute that are wearing me out. I do not have any interest in making the family business my day job because of the poor relationship with my siblings. My brother, who is technically the "CEO," is a high school drop out who was previously unemployed and smokes weed daily. My sister tripled her salary when she came to work for the business. They are both content with the status quo and threatened by my involvement. They are doing a good job and actually increasing the profitability, but they do not have the same sense of urgency I have to diversify.

You have been in business for only 4+ months? Do you have a job that you are walking away from? Is the $120k what you are walking from? It seems like you do not really know much about the business either, as you say you only have a limited influence on the companies success.

It's complicated, but our dad retired and we technically started up a new business using his business model and relationships. The $120k represents my distributions from the family business. My job pays me about $200k/year in salary and benefits. That is what I would be walking away from.

My role with the business is currently just big picture strategy. I have lots of business experience from my practice as an attorney. The business is very simple and I understand it, but my siblings have cush gig with the status quo and are not receptive to my ideas.

I would look for a lower stress job with a manageable commute. Even if it only pays $40k per year, you can make the difference via small withdrawals and a very good chance the whole nest egg will grow. We're only young once, you are right to want to spend your time with your family and not stuck in traffic.

Agreed 100%. I've thought of everything from hanging my own shingle to driving for Uber.

 

[cyber888]

Hi Legal .. it looks like you need a break, then a change of job, but the business w/ your family may work out.

My Networth, 401K and investment accounts are similar to yours but I'm almost 53, and 9 years to collecting SS.

 

[Markola]

Would you pull the trigger?

No, but I'd get a plan together to make myself happier, such as
1) Have my siblings buy me out of the business and end that headache. Partnerships rarely work out, and family dynamics make them even harder.
2) Put my legal and business smarts on the job market to find something closer to home with normal hours, like college administration, non-profit or government post.

If you are living on less than $50k/year, you can surely support yourself with a lower paying but more balanced job until your assets catch up and generate what you need, possibly only $1,250,000 or so plus some part time work. Good luck!

 

[ugeauxgirl]

I think you need a break too. Fortunately the business income covers your expenses for now. I wouldn't consider it a permanent solution, because the business situation with your siblings doesn't sound too safe, but it will probably give you enough time to take a couple of months off and find a job and commute you don't hate. Your numbers look great. You will be retired in no time- hang in there!

 

[EastWest Gal]

Look for a new job while you already have one. You are much more marketable if prospective employers don't see you as a quitter.

BTW, your situation sounds like burnout. I've been there, a number of times. Including at your age. When preterm labor at age 32 gave me time off, and I was grateful, not scared, I knew my relationship with work was screwed up. You could begin to analyze what changes you could make that make you feel less burnout.

I found that changing my self talk helped quite a bit. Thinking about being grateful for the opportunity to be a high earner is one. Pat yourself and your wife on the back for being frugal, which will allow you to save much of what you earn. These little things are actually big things. Enjoy your children.




Sent from my iPhone using Early Retirement Forum

 

[ESRwannabe]

Ok you have a paid for house and $262k liquid investments. Your living expenses are $50k or higher. So, no you can't retire yet. However you could switch to part-time work most likely if you lowered your living expenses slightly.

 

[Legally_dead]

Update: I was offered a government attorney position in my hometown. Pay would be around $60/yr (plus a pension that vests after 8 years), which is about a $100k/yr less than I currently make.

The office is telling it's an 8-5 gig with longer (8-6:30) hours one week a month.

This will definitely delay my ability to ER, but I also may find the work and more time at home rewarding and not need to RE quite so early. Thoughts?


Sent from my iPhone using Early Retirement Forum

 

[ivinsfan]

Did you apply for this job? You said your current job pay 200K in salary and benefits...are you getting 40K in bennies from your new job...?

 

[EvrClrx311]

While you don't get along with your siblings, it sounds like that is their lifeline... so my initial thought of trying to sell the business and distribute to all involved probably isn't going to work (they need it). I'd hate to own a piece in something that I was so removed from. That said, do you have the ability to let them buy out your stake in the family business. As I read that is sounds a bit of a nightmare. I'm guessing you'd be much happier with cash (for planning purposes) than an income stream from something that's being run by siblings you don't get along with.

The job closer to home sounds ideal, all else considered. I used to commute 75 minutes round trip, and now I'm 5 minutes each way... the quality of life improvement is something I can't put a price on. I can literally go home for lunch, or leave work and be in the forest hiking 15 minutes later (rather than sitting in traffic).

 

[Katiek]

When you consider the value of the pension, the difference in pay may not be as much as it seems now. Plus, if the business in profitable at least now, you'll have that money in the short term to make up the difference, and the pension to hep bolster long term security. It is a big pay cut, and ultimately you'll need to decide if it's worth it to you.

 

[Spudd]

So instead of a 3 hour commute, how long will your commute be at the new gig? A government pension is a nice benefit for sure. Given that 60k will almost cover your needs, plus you have the income from the business, I think the quality of life increase would be well worth it. Your wife can always start chipping in in a few years once the kids are older, too.

 

[aaronc879]

Update: I was offered a government attorney position in my hometown. Pay would be around $60/yr (plus a pension that vests after 8 years), which is about a $100k/yr less than I currently make.

The office is telling it's an 8-5 gig with longer (8-6:30) hours one week a month.

This will definitely delay my ability to ER, but I also may find the work and more time at home rewarding and not need to RE quite so early. Thoughts?


Sent from my iPhone using Early Retirement Forum

With such a large salary right now($200K/yr), why don't you just move closer to work? If you can knock the round trip commute down from 3 hours to 1 or less then that would be what i'd plan to do. If moving closer to work would result in a significantly higher cost of living then i'd probably go with the government job.

 

[Music Lover]

It's complicated, but our dad retired and we technically started up a new business using his business model and relationships. The $120k represents my distributions from the family business. My job pays me about $200k/year in salary and benefits. That is what I would be walking away from.

It's $120k in distributions today...but what will they be after a couple years of your siblings running the business, especially since you stated that they have very little experience and that your brother smokes pot daily? How many customers/clients that did business with your father did business because of him, and now that he is no longer there, they don't have the same sense of loyalty and will take their business elsewhere? How many other clients will be lost as time goes on due to the inexperience of your siblings? One poor decision made by an inexperienced owner can have devastating effect and destroy a business.

 

[Legally_dead]

@ivinsfan: Yes, I applied on Monday, scheduled interview on Tuesday, and was offered the job on the spot on Wednesday. It all happened very fast. $200k in my original post was high. Tough to put a dollar on the benefits, but the salary/profit sharing/401k match at my current job total about $175k. The new job has a base of $60,800. I don't really know how to value the pension.

@Everclrx: I would love for them to buy me out. But I am not sure how they would do it. They could not qualify for a loan and would have to pay me with their distributions. My commute would be very similar to yours. It is currently three hours round trip. The new job is five minutes from my house. I would love to come home and eat with my family for lunch or be more active with a full evening at home.

@Aaronc: My house is currently worth about $220k. A comparable house within thirty minutes of my work would cost $750k. And the schools are not great, so I would also have to pay for private school.

Music Lover: I agree it is incredibly risky. At this point, I am going to take the new job. But I am doing it realizing that the business income may dry up. That would delay ER, but still be manageable for me.





Sent from my iPhone using Early Retirement Forum

 

[EvrClrx311]

My commute would be very similar to yours. It is currently three hours round trip. The new job is five minutes from my house. I would love to come home and eat with my family for lunch or be more active with a full evening at home.

I can attest from my own experience that this is worth so much more than any spreadsheet or calculation can quantify. You'll never get those years back... or your youth, to enjoy that extra 2.5 hours a day. Time is the one thing we all lose indiscriminately. So much of happiness in life is learning to use it as wisely as possible, so we hold no regrets about the choices we made in our past; how we chose to utilize those seconds, minutes, hours each day.

Best of luck to you!

 

[Legally_dead]

I can attest from my own experience that this is worth so much more than any spreadsheet or calculation can quantify. You'll never get those years back... or your youth, to enjoy that extra 2.5 hours a day. Time is the one thing we all lose indiscriminately. So much of happiness in life is learning to use it as wisely as possible, so we hold no regrets about the choices we made in our past; how we chose to utilize those seconds, minutes, hours each day.

Best of luck to you!

Update: I am about two and a half months into the new government gig and have not had a single moment of regret. Quitting my high paying job had the potential to be one of the best decisions or one of the worst of my life, and it has turned out to be a great decision so far. The work is more meaningful than what I was doing for a mega corp. Getting home at 5:15 versus 6:30-6:45 everyday has made a huge difference on my quality time spent with my DW and kiddos.

One unexpected result of taking the new gig is that I have not been as hard core about ER as I was before. I used to read this forum multiple times a day. Now I read it once a week, if that. My desire to retire in my 30s seems to have been a product of the really bad work environment and commute that I had. Now I am shooting for 40 when my government pension will be fully vested.

The family business is still rocking along and paying me about $10,000/month (before taxes). I am urging my siblings to hire someone to run and grow it for the three of us. Net worth (including house) has grown to 1.05M.

Thank you all that responded to my original post and helped me think through this decision.

 

[ugeauxgirl]

Congrats- I'm glad you're enjoying your life more. You're really not far from FIRE at all considering your spending level- Best of luck and keep us posted.