Work Less Or Make More?

I’m knee deep in the trenches of job interviews.

The past week has been an overwhelming whirlwind. So many recruiting calls that I am starting to really believe those plunging unemployment numbers.

After starting this process, there are a lot of directions I can see myself going. One of the metrics I’ve been considering is whether I want to work more or make less at my next job. This is an exclusive or, mind you. I think I’m likely to see an offer this week that will mean more money (and potentially a lot more money within a few years), but will potentially require a lot more work than I’m currently used to. On the other hand, I could also try to off-ramp, find something less stressful in a different industry, but correspondingly make quite a bit less money.

Financial independence plans skew a lot of these decisions. It’s hard for me to think of anything I do as a career, mostly because I’m thinking “Can I handle doing this over 5 years?” not the rest of my working life. I’m treating paid work like an endurance game and I can see the finish line in the distance.

But there are other ways to go about it. You can, and people often do, make the choice to take work that is less demanding of your time now in exchange for less money. There’s a balance at play. Time versus money. Or, as I think of it from a FIRE perspective, your time now versus your time later.

And sometimes you have to work with real numbers to know where your line is. For instance, I wouldn’t work 25% more hours for a 10% increase in pay. Heck, I probably wouldn’t even do it for a 25% increase. If my comp increased 50%, I’d do it, maybe? I don’t know, I really value my time.

On the other side of the coin, I’d take a 50% pay cut if it meant I could work half as many hours. That would be a perfectly sustainable way for me to live in the long term. Now I just need to find a professional job that’ll salary me to work half-time.

Which would you prefer: working less or making more? How much of a pay cut would you be willing to take to work half as much as you do now? How much of a raise would you need to work 25% more?

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Stock Market Dip: How Are You Reacting?

I am not a financial planner nor a financial advisor. This post reflects my own uninformed opinions and does not contain financial advice. 

After a comeback rally Friday, the DJIA closed at ~24,200, still down about 9% from its high at the end of January.

For those of us with a long time horizon, this downturn is a blip. Whether the market bounces back or craters in the next year or two isn’t make-or-break for me, though it may shift my FI plans, depending on timing of the recovery.

That said, the recent stock market volatility has tipped the scales on at least one borderline decision:

Because I plan to quit my job, I have decided to build up my cash cushion a bit before maxing out my retirement accounts. I still plan to fill my 401k before I leave, but I want to make sure I have cash on hand first in case my employer terminates me early. I’ve dropped 401k contributions down from 50% of my income down to the match; I’ll push it back up after my cash cushion reaches optimal levels. The stock market volatility has, in effect, tipped the balance toward this more conservative course of action.

Other than adopting more conservative sequencing in preparation for my sabbatical, though, I have no plans to change my behavior. I’m pretty happy with my investment allocation. Charitable contributions continue apace. Given that I’m looking unemployment in the face, I’m feeling remarkably unfazed. That said, give it a few months and a potential recession and see whether I’ve changed my tune.

At least for now, though, all there is for me to do market-wise is to watch and to wait. And to idly speculate what may come next (mostly because it’s fun). With no real basis whatsoever– no data, not a finance person, etc etc etc hedging– my guess is this correction is going to be “the big one” we’ve all been waiting for. Maybe it’ll last a few months, maybe even a year. I wager– again, based on no knowledge, wisdom, or reliable intuition into these matters– this’ll end up being a 30%+ correction and the DJIA will drop below 20,000 once more. I’ll be DCA-ing in anyway, I’ve been wrong about this stuff before. But, hey, we all try to think about what’s next during crazy times, don’t we?

How are you reacting to recent market fluctuations (if at all)? How low do you think we’ll go?

Object Lessons: Backdoor Roth Edition

It’s official: Congress is aware of (and seemingly okay with?) Backdoor Roth IRA contributions. I’ve been conservative and avoided Backdoor Roth contributions because of the step transaction doctrine. Now I can make this work if I roll my Traditional IRA into my 401k. This will take some doing and may not be worth it if I am leaving my job soon. That said, I think I should probably try to manage it, especially if I can swing a Mega Backdoor Roth contribution on my way out the door.

In case you missed it, the stock market has been pretty wacky the past week. I’m a buy and hold person– I learned that one the hard way– but single day 1500-point drops don’t happen all too often and it caught my attention. TIL: there is an ETF that tracks volatility (VIX) and a twin ETF that inversely tracks volatility (XIV). Whatever finance wizardry makes this possible also helped this guy lose $4 million in a day, including $1.5 million of raised capital. Ouch.

Digital linguistics run head on into our legal system: interpreting emoticons to determine intent. Also, apparently some judge in Israel decided that emojis constitute a binding written agreement?

Physician on Fire’s story about getting sued for volunteering on the board at his former small community hospital is e-x-a-c-t-l-y the reason I don’t advertise my net worth in $’s on this blog. The more people think you have, the more likely they are to hack you, sue you, or otherwise put a target on your back for money. I feel sad and paranoid writing that, but I really think it’s true.

I found this article in Nature fascinating. “Biological sex” in humans is so much more complicated than just X and Y chromosomes.

From FastCompany: Beyond Survival Kits: Humanitarian Aid Is Going Wireless, Communal, And Autonomous. I really like the idea of Citizenship Kits for quick distribution of temporary relief and aid:

The framework for dynamic national mobility (DyNaMo) builds on the precedent and practice of successful long-term e-residency programs developed by Estonia in the 2010s. It allows displaced individuals to gain digital-legal “citizenship”–though not necessarily rights to physical residency. The Kit places between 2,000 and 50,000 people into a pool for temporary legal “citizenships” and provides a means of extending local legal and welfare systems for up to 120 days to those displaced from countries under meaningful threat from war, genocide or non-voluntary resettlement due to a natural disaster or other significant cause.

Early Retirement Extreme put together this table designating the “Wheaton levels of personal finance.” I fall at completely different levels depending on which attribute you consider, but in general I think I’m somewhere around Level 5 or “Optimization.” My savings rate is high, I prioritize expenses based on my values, and I like to, uh, optimize. What level are you? 

Making The Decision To Leave

I’ve hinted in some other posts that I’m not feeling entirely fulfilled at my current job. But it wasn’t until this week that I decided it was time to move on.

The decision was a hard one to make. I’ve been at my employer for over five years. This was my first job out of college and the only offer I received at the time and since. I worry that once I quit this job, I won’t be able to find another. That, as has happened time and time again, I’ll put myself out there to be judged by hiring committees only to be rejected again and again and again. And with fiancé unemployed as well, the stakes feel even higher.

I don’t have an offer yet, but the reality is I can’t stay here. Staying means I only half-heartedly look for other positions. Staying means I keep coming home day after day feeling depressed, despondent, and useless. This Reddit thread comes as close to mirroring my feelings without actually being me. As much as my FI plans mean to me, and as much as quitting will put those plans on ice, I can’t use delayed satisfaction as an excuse to keep wishing years of my life away.

So, here’s the plan: annual bonuses in my company get distributed mid-March. After those are sent out, I will inform my manager of my intention to leave the company. I will stay at my company until June 1st unless I get another offer before then. That gives me four months to job search and squirrel away some cash. In the “worst case” scenario, I take the summer off in the city, which is the best time to be idle around these parts.

Over the next couple weeks, I’ll go into the financial preparations I’ll be taking for this potential self-funded sabbatical. Also, you’ll get to see me try to spin up some side hustles that will (hopefully) help tide me over should I remain unemployed for a while.

In any case, wish me luck.

Have you left a job without an offer lined up? Am I foolish to quit a stable, well-paid position? 

Financial Update – January 2018

Each month I will post an update on my finances to both give you, the reader, some insight into my situation and to give me markers of my progress on my financial journey. My updates consist of two parts:

  • Financial Progress Table – Tracks net worth progress.
  • Spending Table – Compares monthly spending to an average (for me) “bare bones” budget, keeping me accountable for additional expenses.

For now, monthly updates include only my personal net worth and spending. As my fiancé and I combine our finances, updates will shift to cover going values instead.

Financial Progress

Each net worth goal in the Financial Progress table is broken down into undisclosed units of money. My current goal is to reach “Financial Freedom.” By the time I reach this goal I will have:

  • A retirement account that can support us when my fiancé hits 65
  • Two college savings funds funded for four years of in-state public university tuition, room, and board
  • An emergency fund for six or more months of living expenses
  • Sufficient liquidity for my fiancé and/or I to make a career change with one to two years’ runway
  • A mortgage less than two times my gross salary without bonuses

Once “Financial Freedom” is achieved, the focus will then working be towards “Financial Equilibrium”, where the income from investments covers all our ongoing expenses.

jan18

Spending

I’ve created a “bare bones” budget which represents the average minimum amount I can expect to spend each month. This is the minimum amount I need to comfortably live in case of a job loss, emergency, etc. I expect to frequently go over my “bare bones” budget in a number of categories (here’s looking at you, “Groceries & Dining), but I want to remain accountable to myself when I do so.

For privacy reasons, there are two things I do not include in my spending updates: my monthly mortgage and charitable donations (pegged at 10% of my net income).

january 2018.png

Money Summary

This month has been a train wreck. Not financially— in that respect January has been pretty dang good. But my job? Oh my goodness. It’s like the entire city’s economy emerged from its winter doldrums all at once. With frenetic energy, everyone has decided there are no more bomb cyclones to delay us: work needs be done. And it was all due yesterday.

In any case, my personal life is going swell. I’m making good progress on getting my core into shape as per my yearly goals. I’ve also managed to dredge up enough energy to work on some personal coding projects. With all this activity, though, I’ve fallen behind on blogging. I think, for the foreseeable future, I’m going to be posting less, though certainly not disappearing.

Finances, a.k.a. the theoretical topic of my blog and this post. What to say about those? Well, the stock market is bonkers. I know it’s bad to say this, but I kind of wish the market would have a minor to moderate correction (say, 15%+). Right now, because of bullish spirits in the financial markets, I feel like we’re being gaslit to believe in this weird parallel universe where everything’s just fine guys and what could go wrong? Anyhow, I have enough in my investments and the market is speeding forward so quickly that I’m seeing four-digit daily fluctuations in my net worth. I know I should be celebrating, but more than anything I find it deeply concerning. That said, maybe the dip last few days are an indication that we’re finally in a period of downturn. Which is good, I think. 

Since it’s the beginning of the year I’m back to maxing out my traditional 401k. If my projections are right on our incomes— there is some uncertainty regarding by bonuses and fiancé’s job prospects— we should be able to max out our Roth IRAs. Because I’m contributing so much pre-tax, at least nominally my net worth progress is rocketing, nearly twice as much in January as it’d be in a normal month. This should more or less continue through April, though unlike most years it seems I owe taxes for 2017. So no refund to look forward to. Womp, womp.

As far as spending goes, my food was high for any reasonable person but normal for me. We had really high utility bills this month due to the devastating cold. I’ve also added a line item for wedding expenses, which I’ll total up after we have the actual ceremony. On the whole, though, January has been alright on the spending front. I’ve been too busy to even think of buying things.

How were your finances in January?

What Do I Want My Post-FI Life To Look Like?

I’ve been thinking: though I’m on a solid track toward financial independence, I want to make sure I’m preparing myself for my post-FI life in the real way, not just financially.

For instance, after I reach financial independence I’d like to write a novel, get it published. But, as any writer would tell you, your first novel is like a first pancake. As in, it’s probably going to s-u-c-k. What makes a good writer, like most things, is intention and practice. Or so I’ve read.

Therefore, it makes sense for me to start writing now so that when I finally hit financial independence I’m not just starting and struggling. I want to have gotten through that first part of the S-curve. Like my financial front-loading I want to have built the foundation emotionally and skill-wise for a successful fauxtirement. Soon as I put in my notice, I want to be rolling.

But before we get to the point of preparing myself for post-FI, I need to look at the possibilities. Because, while it’s still abstract, there are so many ideas of what my life could look like. Getting a survey of my goals first will help me figure out what skills I should be preparing for later.

So here they are, my what-if-I-didn’t-have-to-work-anymore life paths:

Writer

love to outline stories. Character development, plotting, scene development. But here’s the deal: when it comes to actually writing as in can I put a string of words together I am very much a work in progress. My sentences are either too long or too short, I use too many commas, and half the time I’m like what the hell are words even. Don’t even get me started on writing dialogue. I remember once my creative writing professor said that one of my pieces read “like it was written by a third-world dictator, maybe North Korea.” I’m still not entirely sure what she meant by that, but I assume it was bad (and also kind of racist).

I’ve had some practice in the past few years writing on blogs, theater-y work, and general report writing for my job. But if I wrote novels or short stories, they’d probably fall somewhere between science fiction and literary fiction.

Benign capitalist

Unfortunately, as much as I think governmental intervention is important in creating safeguards and rules for a just society, it seems the only way to make an impact quickly either for the betterment or detriment of people’s lives is to use the most flexible institutional structure available in our country. That is: start a business. I’d like to found a B-corporation, build it up, and then transfer the ownership to the company’s employees, giving labor the financial benefit it’s due and starting afresh to found new companies in different areas.

As to what my businesses would actually do? I’m not entirely sure yet. I think I’d like to provide services that make zero waste living more viable (think, e.g. Go Box which provides businesses with reusable takeout containers). Or maybe I’ll buy up foreclosed property (to compete with exploitative buyouts like what’s happening in Detroit) and resell to previous owners under a rent-to-own model.

Tinkerer

Sometimes I feel like I just want to make things. Play around with an Arduino, learn how to do basic carpentry. This life path feels the most amorphous, in part because I rarely do anything with my hands and wouldn’t even know where to begin. But it also seems like it could be a lot of fun. Just having adult play. And if I come up with something useful then maybe I can spread it to the masses.

What would you do with your life if you didn’t have to work? How are you preparing yourself for post-FI?

Object Lessons: HQ2 Edition

The Real Real got hit with a $5 million law suit because, according to the complaint, TRR “systematically inflated the total weights of small uncertificated gemstones knowing that the average consumer would have no way to know that the weights were inflated.”  I’ve read rumblings about problems with TRR’s authentication process, but the allegation the company is actively defrauding buyers is stunning. Given my own bad experiences, I’m resolved to steer clear.

This public defender is a friggin’ saint: when being a good lawyer means dressing your client.

My Money Blog deconstructed Charlie Munger’s life and turned it into a financial independence blueprint. Munger’s approach–building up to 10x annual living expenses through saving his salary and then pivoting to more aggressive investments– seems like an appealing alternative to sticking it out with a job until I’ve reached 25x. I’m not a real estate investment sort of person, so I’d have to think of another type of business that’s scalable.

Seventeen states introduce right to repair legislation. Good, I say! The fact that only Apple can replace batteries on their laptops and mobile devices is absurd and anti-competitive.

Amazon announced their candidate cities for HQ2. Not to be a major NIMBY about it, but I really hope it doesn’t end up in my metro region. The recent immigration of highly-paid tech workers (myself included) is pushing local housing costs to their limit. The current rate of housing development already can’t keep up and is hollowing out the city’s middle and working class households. Not to mention my generally iffy feelings about Amazon and the absurd tax breaks cities are offering. For instance, Chicago proposed letting Amazon keep tax revenue generated by its employees. Bonkers! Is your city on the list?

After demonetizing a bunch of LGBTQ and mental health-related content last year, YouTube has decided to up the ante and cut money going to smaller vloggers by raising the standards for ad eligibility. Meanwhile, after years of pushing brands to pivot to video, Facebook overhauls their news feeds algorithm to, you guessed it!, “de-prioritize videos, photos, and posts shared by businesses and media outlets”. It’s almost as if these huge online platforms don’t care about their content creators at all.

Not all technology is bleak though. For instance: