Help with career dilemma

[nobodyknows]

I have been a long-term lurker here for the past 5-6 years. This site has helped me realize the importance of FI and the possibility of ER. I greatly appreciate the valuable information I have gained over the years.

Now our family is facing a dilemma and I would like to get your inputs.

My husband and I are in the late 30s with one young child. Our net worth is about to reach 7 digits (including our primary residence of 230k). Our goal is to ER in our early 50s when our little one finishes college.

I make 150k per year, but my job contract may not be extended after the middle of next year. Once my contract ends, it is unlikely for me to get a similar position with comparable pay locally, which means that I may have to relocate to another state in the summer of 2013. We are not FI yet, so I cannot ER.

My husband is a newly tenured professor in a state school and he has some part-time gigs, which brings in 80k all together. However, he does not enjoy his teaching job and would like to have a career change. This is because his current program is quite small, and his area of teaching is quite narrow. He often worries that his program will not survive the next budget cut, and even if tenured with the program gone his position will be gone as well. On the other hand, this concern of job security has been a while, but it has not materialized.

A few days ago, he received an offer of 65k to head a new/small department in another local college, which has a better reputation than his current state school. The new job is an untenured staff position. If he takes the new offer, he will not be able to continue his part-time gigs, because he will be responsible to start up a new department which is expected to be very time-consuming.

He is inclined to take the new offer (with a $15k paycut) because he likes the new college better, which could also provide quite a few potentials in establishing and developing a new program at a better school.

Due to the uncertainty of my job, I am a little hesitant of this move. If I have to find a new job in another state next year (which is very likely), he will have to join me in the job-search. Another possibility is that my contract gets extended and will be able to stay for a few more years. Right now, it is too early to tell.

We need to make a decision very soon, but we do not know what to do. The only place I feel comfortable talking about money is this site and we really need the inputs from the forum members.

 

[MooreBonds]

Now our family is facing a dilemma and I would like to get your inputs.

I make 150k per year, but my job contract may not be extended after the middle of next year. Once my contract ends, it is unlikely for me to get a similar position with comparable pay locally, which means that I may have to relocate to another state in the summer of 2013. We are not FI yet, so I cannot ER.

A few days ago, he received an offer of 65k to head a new/small department in another local college, which has a better reputation than his current state school. The new job is an untenured staff position. If he takes the new offer, he will not be able to continue his part-time gigs, because he will be responsible to start up a new department which is expected to be very time-consuming.

He is inclined to take the new offer (with a $15k paycut) because he likes the new college better, which could also provide quite a few potentials in establishing and developing a new program at a better school.

We need to make a decision very soon, but we do not know what to do. The only place I feel comfortable talking about money is this site and we really need the inputs from the forum members.

A few observations:

Your husband's $65k offer - obviously, if they approached him out of the blue, they're interested in him. And you NEVER give your 'best and final offer' as your first offer. They have wiggle room.

Tuition benefit for your child - Quite a few colleges offer some form of benefit for full-time employees, where their children can attend college at a reduced rate (sometimes for FREE) if their parent is a full-time staff member (usually if the parent has worked for at least 5-7 years). Often the private schools offer a better benefit than public schools. Don't overlook this potentially HUGE benefit for your child...could amount to $30k-$40k+ a year (before the positive tax benefit!) If your husband takes the new position at $65k/year, do you feel he would still have a job there in 10 years when your young child is about to start college? 4 years of low/free tuition at the college could come out to $15k/year tax free in extra equivalent salary for your husband (over 10 years). If this college, for some reason, doesn't offer a reduced/free ride to children of full-time staff (or offers a lower benefit), ask your husband to get it in writing that they will sweeten their existing benefit if your child can meet the average entrance requirements for grades.

On a similar vein, look to see what other fringe benefits that other college could offer your husband that could help offset the difference in pay. Things like their benefits package - how do they compare on 403(b) contributions? Pensions? Health insurance plans and rates? Could they offer your husband a few years of service credits in their pension plan to make up for the difference in salary? Or even think outside the box, like (for example) if there's some annual meeting or expo (that just happens to be in a destination you and him would pick for a vacation ) that the college would pay for him to fly to, and put him up in a room, and pay for some meals. That way, you could tag along, and it would only cost the two of you the cost of your ticket and some meals. (could be worth $1,000-$2,000 after-taxes that you would have otherwise spent). Things like that can add up and really equalize things out.

Finding your new contract position - sounds like a pretty sweet gig at $150k/year. You mention that you doubt you'd find another position locally with such a lucrative deal. What are the odds you'd find a similar deal ANYWHERE else? Would it be a same cost of living area, or would you have to live in a more expensive area to get a similar contract? How much do you like the area you're in now? Could be worth sacrificing $30k/year or whatever in income (pre-tax....much less after all taxes are taken out) to stay in the area you're in now.

Also, let's say you do find a similar position in mid 2013 for a similar pay rate...how long do you think it would reliably last? Just 1-2 years, and then you AND your husband are back looking for a new position, possibly having to move AGAIN? Might not make sense if both of you have to constantly uproot yourselves every so often for a new high-paying job.

Negotiating your contract lower - If you find out your current contract is not extended, why not try negotiating a lower rate (could be worth it to sacrifice even tens of thousands of $k pre-tax to stay in the same house). By the time you pay a realtor 6% to sell a house, $3k-$5k in closing/financing costs on a new mortgage, $5k in total moving expenses, several house-hunting trips in another city to search for a new house, renting an apartment for a few months while you try to line up selling your old house, starting a new job, and finding/closing on the new house, etc., just one move can really sock it to you.

It's impossible to count every possible financial and emotional point...but try to capture the big ones to see what your picture would be like for staying put vs going to another unknown city.

 

[Htown Harry]

Welcome, and congrats on your progress to FIRE.

Seems to me it's not a money question...$230k > $215k = -7%. Lots of folks aiming for ER have seen much greater variations in household salary than that.

My last employer change a few years ago was a lateral move at a slight drop in salary. I weighed all the pros and cons with DW and it has worked out fine for us. In hindsight, I now see the ups and the downs of my portfolio over 4 years have had a much greater effect on our progress to FI than the modest change in income.

The potential for a family move in 2013 is indeed a big deal. I think you are correct to weigh the job opportunity against this possibility.

My thoughts and ideas, generalized because you haven't said much about the fields you work in:

• If DH is willing, late 30's is a good time to tackle a start-up. The energy / smarts / experience mix is about optimal.
• "Started" and "managed" are good verbs in a business-oriented resume. I assume the same is true for an academic resume. I also know if I was looking to hire someone from academia into business I'd be interested in that type of experience.
• Institutional reputation has value in academia. Perhaps you could look at the salary drop in the way an incoming freshman might compare two acceptance letters. Will DH's "investment" in foregone salary pay off with greater opportunities down the line?
• If there's a concern that he'd leave the new employer in a bind if a family move is needed in 2013, then he can aim to structure the program in a way that he leaves a likely successor. Not overtly, of course, just by making key staffing moves with an eye toward leaving things on a forward trajectory if a move becomes necessary.
• Do you know where you might move to? Perhaps you both could work toward cultivating some professional relationships with peers there? Again, nothing overt, but as a slight hedge against big disruptions in both careers in the event that your expiring contract requires the move.

 

[ronocnikral]

I would prioritize what is most important to you. For instance, I would put coming home every night to DW & DD at the very top of the list, location 2nd and pay somewhere at the bottom.

it seems to me, you want it all, and I certainly hope you can figure that out. But if not, at least get what is most important to you.

good luck.

 

[pb4uski]

I wouldn't let the fact that your contract MIGHT end influence the decision. Make the decision based on the merits based on the situation today. If your contract ends, then deal with that when/if the time comes.

Worst case is that your gig ends and you find something as lucrative elsewhere right away in the summer of 2013 and DH then looks for another job in your new locale. Not a bad worst case IMHO.

 

[Midpack]

Congrats on excellent progress toward FI. The interim benefit (before ER) is you can change careers without fearing the temporary lack of income.

You've already gotten some great input. What stuck out for me was what are the probabilities that your contract won't be extended and/or your DH's program will fall to budget cuts? Only you can guage this aspect.

Sounds like he doesn't really like his current position, that should be a factor if the new position is more appealing. Life is short, I'd rather have a job I enjoyed than one I didn't like or that wasn't secure even if the money is better (for now).

Gaps in a resume aren't helpful either unless your profession is in very high demand, something to think about if either of you are cut loose. Usually better to be proactive and leave than to wait to be let go, if you really expect to be let go. But again, job satisfaction is a reason to wait...

 

[MBAustin]

I wouldn't let the fact that your contract MIGHT end influence the decision. Make the decision based on the merits based on the situation today. If your contract ends, then deal with that when/if the time comes.

Worst case is that your gig ends and you find something as lucrative elsewhere right away in the summer of 2013 and DH then looks for another job in your new locale. Not a bad worst case IMHO.

+1

My career decision philosophy was always to be able to say "YES!" to "did I make a good decision at the time based on what I knew" (as contrasted with "did I make the best choice"). I've given the same advice to many over the years and it seemed to be helpful. Good luck, and congratulations on being well on your way to FI and RE. Hope you stay on the boards and continue posting, too!

 

[nobodyknows]

MooreBonds,

Thank you so much for the great observations.

To answer some of your questions, the $65k offer is the final offer after some negotiations. The initial offer was only $55k. The local college is fully aware of the fact that by accepting their offer, my husband will be taking a pay cut and moving from a tenured faculty position to an untenured staff position.

The state school does not offer any tuition benefits, but the local college does. The concern here is that our daughter is 14-15 years away from college and there is no way to know if the tuition benefits will be there in 15 years. Although the local college has a better reputation than the state school he is working for right now, we hope that our daughter can make to an even better place.

Regarding retirement benefits, the state school offers both 403b and 457 while the local private college offers 403b only. He will not receive any pension from either employer. Right now, we max out both his 403b and 457, which helps a lot with taxes. Health insurance plans and rates are comparable. The new position will require some international travels because he will start up the new department with some international collaboration. Given a young child at home, international travels will be burdensome to our family.

My position – there is a fair chance that I can find a similar position elsewhere, though nothing is guaranteed. Due to the nature of the work, the pay does not seem to correlate with costs of living that much. We do not hate the area we are living right now, but we do not love it either. We do not have family nearby. We have made some friends here, but our close friends have moved away recently. If I find a similar position in mid 2013, it would probably last another 5-6 years. And typically, the new position will pay for some relocation benefits to offset the costs of moving. Again, nothing is guaranteed.

Htown Harry:

Thank you so much for the thoughtful response. At this moment, I really do not know if my contract will be terminated for sure or get extended for a few more years. It is just too early to tell. If I have to guess, the chance will be 50-50. If we do move, it will be totally job driven.

ronocnikral:

Thanks for the comment on prioritizing. It is truly important to us. My job is flexible. As long as I deliver, it is Ok if I miss a day or two at the office. However, my husband’s new position won’t be as flexible.

For all other posters -

Thanks for the thoughtful comments. I really appreciate your kind help and this place feels like a home.

 

[MooreBonds]

The state school does not offer any tuition benefits, but the local college does. The concern here is that our daughter is 14-15 years away from college and there is no way to know if the tuition benefits will be there in 15 years. Although the local college has a better reputation than the state school he is working for right now, we hope that our daughter can make to an even better place.

A benefit is never 'guaranteed', but I would expect that a child would receive at least SOME tuition waiver if their parent is a full-time faculty. Rather than completely eliminate it overnight, I would expect them to cut the benefit a bit over time (if they ever would), and/or increase the number of years you have to work before becoming eligible, rather than suddenly completely doing away with it. And even if it's not a 'first-choice', perhaps there's an opportunity for your daughter to do her first 1-2 years there to get the basics out of the way, then transfer to another school?

Regarding retirement benefits, the state school offers both 403b and 457 while the local private college offers 403b only. He will not receive any pension from either employer. Right now, we max out both his 403b and 457, which helps a lot with taxes. Health insurance plans and rates are comparable. The new position will require some international travels because he will start up the new department with some international collaboration. Given a young child at home, international travels will be burdensome to our family.

I know your post didn't have anything to do with soliciting questions on your job benefits, but did you say you're a contract employee? Are you considered an independent contractor? If so, there are some ways for you to substantially lower your current taxes through a SEP IRA or Solo 401(k) (or even do a defined benefit plan for yourself).

My position – there is a fair chance that I can find a similar position elsewhere, though nothing is guaranteed. Due to the nature of the work, the pay does not seem to correlate with costs of living that much. We do not hate the area we are living right now, but we do not love it either. We do not have family nearby. We have made some friends here, but our close friends have moved away recently. If I find a similar position in mid 2013, it would probably last another 5-6 years. And typically, the new position will pay for some relocation benefits to offset the costs of moving. Again, nothing is guaranteed.

I realize this is a pretty crazy option, but would it be possible for your husband to take a sabbatical from the state school in order to become an independent contractor (or contract employee) for the private school, for the sole purpose of setting up their new department over the next year? Then, when you find out if your contract is renewed or canceled and you have to move, your husband would be complete with his contract work setting up the department, and you and him would be able to move to another location. If your contract is renewed, then the private school hires him full-time to head up the new department.

I realize that might be ass-backwards for the school (they'd probably need the department head first to attract new talent/resources), but just throwing out an idea. That way, your husband gets an exciting challenge in a new experience, it keeps the door open for his easy departure in case you have to relocate for a new job, and the private school isn't burned just as they are starting up a new department by having your husband leave after just 1 year. Also, by taking a sabbatical from the public school, your husband also keeps that door open in case you renew your contract and stay put, but in case he finds out that new gig at the private school isn't quite what he was hoping for.

 

[nobodyknows]

I was the OP. I thought I should give everyone a quick update. My husband resigned from his tenured faculty position and took the new opportunity a few months ago. He really enjoys his new post. Financially speaking, we did not even notice the drop of the monthly income because there is not much difference after tax withholdings and deductions. The decision-making process was tough. Thank you all for the support. It turned out to be OK.

 

[boatfishandnature]

Great, congratulations! ... on being way ahead in planning for your future and on the decision you both just made. I did not see the origina post, but you are both still very young, so my advice would definitely have been to give priority to your careers at this point... just what your husband has done. Working another 15 or so years at a job that he does not enjoy when he is fortunate enough to have better options would have made those 15 years much harder than they needed to be. And the new , more exciting position at a college with a better reputation may even turn out to be a steepping stone into something even better in the future, who knows?
All the best