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« FMF March Money Madness, Round 1, Posts 57-60 | Main | Reader Profile: JD »

March 14, 2013

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Similar situation financially, and similar situation in terms of being the main breadwinner but only loving your job 5/10. Total family income is about 50k per year higher, and more importantly am 4 years older and have a toddler.
My advice on your big decision as to whether to grind it out 10-15 years or to "make a bolt"- wait till 6months to 1 year after your first child is born.
Perspectives change, view of finances change. Tolerance of taking classes again and "retooling" your skill set changes. Tolerance of current work changes-both pro and con. Make the decision then.

"my dilemma is causing a internal battle between desire vs.being financially responsible." No, you have way too much money in the bank for you to see the delimma in this way. I have no doubt you will always be able to provide for yourself and family between whatever work you can find and your current savings. So the dillema is really the battle between the desire for the different job now vs. the desire to be completely financially independent ASAP.

Grinding out life is something we do when we have to (most of us have been there). IF you knew this new job path would be more enjoyable, then I think the decision is a slam dunk. The only tough part is figuring out is this really what you want to do, I'd suggest some kind of part-time job/internship before you quit your job to try to find out.

One other thought - if you can pump up your early retirement plan in a way that makes it legit in more like 5 years (which will obviously require some serious moves/plans like getting out of that expensive area when you're done with the good paying job), go for it. Gritting teeth for 5 years when you don't hate your current job seems much more doable. Then your CFP career will just be a side-income hobby...

If as you say you want to do financial planning to help people then do something like FMF and start your own blog. You can attain CFP on the side while staying in your job field until you reach financial independence. Then, at that time do whatever you like. In your shoes I'd fear that the new career of choice would not be as you'd expect.

I don't understand why you would want to leave your job before you are secure to do so? Maybe your 4 or 5 is more like a two?

It sounds like you have a solid handle on your finances. But I would tread slowly, in this environment,giving up a solid, well paying job. Especially because you are the sole bread-winner.

$750K sounds like a lot of money to keep you above water, but how much of that is truly accessible to you ? Retirement money in SEPS, 401K etc are not within your reach until you turn 59 1/2 without payment of taxes and penalties.

But don't give up your dream. I suggest you moonlight. Start a financial planning business on the side. Write a business plan and start the process. Finish up your schooling for the CFP, find some clients, see how it goes and , hopefully, start subsidizing your current income.

This is really the only way to see if you like it as much as you think you do. And a relatively risk free way to see if you can make the same income you are hoping to replace.

Don't forget about the benefits you will lose if you leave your current job. An office, Heath, life, 401K match, payment of 1/2 your social security tax, payroll . You will need to replace those benefits on your own.

And what about the consistency of your current paycheck. When you are self employed, you have good months and bad. Savings is not as simple and having an emergency fund is crucial.

I guess my point is don't take a leap of faith. Take small steps and prove to yourself that it is feasible and that it is what you expected before you go whole hog.

Good luck!

That was a great example on how to focus on a financial goal and knock it out. Kudos to you for eliminating your debt.

As much as I hate debt, I think debt might actually be easier to live with than moving back in with my parents.

Wow, that is great savings for your age! But as J Newman said, how much is accessible?

I love the optimism in thinking that in 2-3 years you can go from nothing to your current salary as a CFP, but is that very likely? I don't know, but it may be considerably longer than that.

You say you can see yourself continuing to work as a planner, even if you don't need the money, and you may be financially independent in 10 years. Why not split the difference? Work in sales for another X years, then you'll be better positioned to make the leap. Who knows, your wife's income may increase considerably by then, accelerating your schedule.

Well AP, you are living in "THE PLACE". My wife and I came here in 1960 when I was 26. Since then we have travelled the world and had a wonderful life. I worked as an aerospace engineer and, where I'm different from you, I loved my job. After retiring debt free in 1992 I devoted most of my energies into learning all I could about the investment field and the analytical side of investing and have been very successful at it.

My advice is to keep the job you have and put off your desire to work in the investment field until you are financially free. By then you will also be also be wiser.

My wife and I have always lived a simple and frugal life and we did a lot with our three kids. One good decision was buying a cabin years ago at Lake Tahoe where we spent a lot of time skiing, hiking and enjoying the beaches when the kids were growing up. We later sold it for a nice profit when they reached the age when they no longer wanted to hang out with "Mummy and Daddy". My wife stayed home while the children needed her but resumed her career later on and also made a great contribution to our finances. We did our major overseas travelling after the children moved out and had some fabulous trips to places like Africa, China, Nepal, Turkey, Morocco, Bali, Thailand, and of course, all over Europe.

I don't have to tell you the desirability of SV real estate, but you can save yourself a lot of money down the road by trying to relocate in one of the locations that has a great school district, examples being Saratoga, Los Gatos, Los Altos, Palo Alto, Cupertino etc. Properties in these areas appreciate better and are also much safer to live in.

The path you are on gets you to financial independence by age 42! Do you know how many people can say that? So far in my life I know of 1 as of about 5 minutes ago. :)

You have the goose that lays golden eggs. Killing the goose to follow your dreams as a butcher would not seem wise. From a purely financial planning standpoint, the risk is simply monumental when you consider what you are giving up.

Think about the advice you would give a client with a similar story once you were a financial planner.

The person lays out his finances, shows the large income, shows how he can reach financial independence in 10 years and you are thinking wow, this guy is doing great. Then he says his job is ok but he doesn't love it and really wants to give that path up to follow his dreams.

Are you telling me at that moment the little voice in the back of your mind is not screaming at the top of his lungs. NOOOOOOOOOOOOOOOO!!! I suspect if you listen you can hear his muffled screams in there when you think about this for yourself too. It's just no fun to listen to that guy when it's about you.

@AP

Just to let you know my advice is not hypothetical. I have been fighting this internal battle with that little guy for many years. Luckily he keeps winning and I am getting close to where I need to be because I listened. I am 42 now. Need another 3-5 years. Then I don't have to listen to him anymore. Well, not about this topic anyway. :)

I agree and you should probably wait until you have a kid or two to see how you feel again. For me, our kid helped push me out of my old career. We were prepared for a smaller income. If you can stand your current job, then stay with it until you are more financially secure. I'm sure you'll get there soon.

You've done quite well.

Like Apex said : As a financial planner what would you tell a client? Give up the high paying job they're 'just' satisfied with for a 'dream' or keep that current good salary, security, health insurance, etc for a few more years?

I think you should keep that job till you build up more money and once you've hit the point that you could retire early then go ahead and pursue a 2nd career. You don't have to love your job.

Go ahead and do some financial planning work on the side if you can. That will give you a good sense of how much you might end up licking it. Write a blog, volunteer to help seniors do taxes, read, read, read, etc.

PLease do not take that 6 figure job for granted. And don't assume you can replace that kind of money within a mere 2-3 years in a new career. I wouldn't even count on ever replacing your current salary as a financial planner. Maybe you'll do great but that shouldn't be your expectation as far as planning. BLS.gov site says financial planners median pay is around $65k. And you have zero experience, right? I'd assume you'll be below that for a while. Of course pay is better in your area but not that much better.

This is just my opinion of course.

We're in a similar boat, income a little higher due to rentals, retirement accounts lower, but just had 1st kid, job's about a 6. Wait till you have the kid, it will make you a little more reluctant to change jobs, and it's harder to get back to a six-figure job than it is to keep one and work a side business...

AP: I couldn't have stated your comment below any better myself.

Personal Advice:

1. Marry wisely and talk about finances openly as a team. You and your spouse must be on the same page financially as almost all decisions in life stem from the foundation of your finances.

My wife and I have been very happily married for 56 years after meeting when we were teenagers.

The single most deadly thing that can happen financially in a marriage is to have a divorce. Our son has been married for 17 years with one child but on April 17th. he and his wife are getting divorced. He is now 49 and is Western Regional Sales Manager for a large hi-tech international company and the biggest effect it will have on him is that his 401K will be cut in half and he will be paying alimony for 8 years. I wish he had taken your advice, it was obvious that they were totally unsuited right from the beginning but he wouldn't listen.

@Old Limey,

Affairs of the heart are a tough deal.

How directly did you suggest that he may be making a mistake?

I have always wondered as a parent how one should go about attempting to tell a child that you think they are making a mistake when they will likely ignore you and then perhaps create a rift since they now know that you disapprove of their choice. The choice that will be at all family gatherings for the next X years until they either get divorced or make it work and prove you wrong.

Of course sometimes we can just be wrong because we may have a tough time thinking anyone is good enough. That reminds me of a joke about a son at a gathering of his peers where three girls are clustered together and he says to his mom, of those three girls which one of them do you think I would like to marry. The mom points out one of them and says "that one." The son is a little bit shocked at how quickly she picked the one he had in mind and says, "that is right mom, how did you know that?" The mom says, "because I don't like her."

@old limey to be fair, they did last _17_ years, that's no small amount of time.

@Apex
I never actually told my son that I thought he was making a mistake - he wouldn't have paid any attention if I had. However there was a prior girlfriend that I thought was perfect in every way and I told him so. I even asked him if he could get me her parent's address as I wanted to write to them but he never did. The problem was that she was far better educated and tried to get him interested in intellectual activities that she liked but that didn't interest him. The bottom line was that he didn't want my opinion whether it was good or bad, and still doesn't.

In my own case my parents, grandparents, and all of my relatives loved the girlfriend that has been my wife for 56 years. There was however one occasion where I gave another girl at a dance way too much attention and she walked out on me. A few days later she came to our home and rang the door bell. I answered the door, she was all smiles and thanked me profusely for the beautiful flowers that she had received from me, so I quickly apologized and patched things up. Actually it was my mother that had sent her the flowers, with my name on the card. My mother was also a fabulous knitter and also used to send her the most beautiful hand knitted sweaters and scarves.

I am a Boglehead. I have wanted to change careers and become a CFP and have really looked into doing it. I am a decade younger than you so it would be a good time for me to make the move. The one thing holding me back is how to make money as a CFP. I hate high expense ratios and loaded funds.

To make a living as a CFP, you have to sell these things or insurance crap to make what you're making now. There are several advisors who charge a low AUM (about .25%). I would be fine with charging someone this amount, but start running the numbers for yourself. If you are grossing $170K now, I would plan on making $200K to make up for your benefits to get the same take home amount as you do now. Charging a .25% AUM you would have to manage $80M. You would only be able to help clients with a certain amount of money. A lot of people charge 1% or do commissioned insurance, but I would feel slimy for charging that much and would know that there are better options for my clients.

Do you like the feeling when you help people with personal finance and explain things to them? I love it. I just wouldn't feel right charging them an obscene amount of money for it.

My current job will likely let me retire early and I am sticking with that plan. I could become an advisor, a finance teacher, or anything else that catches my fancy when I am financially independent.

Make hay while the sun shines!

You're doing great so far. Based on what you've stated I'd like to point out the following:

Your wife lost her primary job relatively recently and her income is questionable in her business for this year and going forward.

You are paying two mortgages, one to support/help your parents who may or may not need your help as they age.

You are currently on track to have no debt in ten years, which may or may not mean financial independence. You still have to have income of some type to meet your expenses and while it looks like you will, enough information wasn't provided to be sure of that.

You would like a child or children in the near future, which could impact your spouse's ability to grow her business in the short term and impact your overall income.

Given the above, I will join the chorus of people saying you are better off waiting to pursue your other dream full time for a while, if nothing else until you no longer have any debt. In ten years time you will have likely settled on the size of your family, your spouse's earnings will be a better known amount, and you could have gotten all the classes you needed and may have found out via part time or volunteer work that your dream wasn't really all it was cracked up to be, that some volunteer work in the PF arena makes you happier than having to charge for services, or that you really love it and can pursue it full time. There is nothing stopping you from following the path of becoming a CFP while working full time, or after five years you may create an opportunity for working part time at your job and pursing the CFP more seriously while still being on track to be debt free.

It sounds like you have made great decisions in your life, good job! If I were in your shoes I would take a step back on the retirement savings a bit (740k at your age is PLENTY). With the extra money I would work on paying off the mortgages as soon as possible. Once the mortgages are gone, you can switch your career at any time without any regret and very little risk.

Although at first glance I was going to support the idea of going after your passion, I think the majority have suggested the right course of action. It certainly is a better financial decision to stay with your currently lucrative job and career path for a few more years, and perhaps start planting the seeds for your 2nd career on the side.

Also, I definitely agree with all 3 points you listed in your advice section. Enjoying life, simple things or not, is a big deal. And it's often difficult to find the right balance between enjoying the now verses planning for the future.

Good luck!

-Jon

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