Sanity Check: Career Gap Year

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Roger945
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Joined: Tue Jun 30, 2020 5:19 pm

Sanity Check: Career Gap Year

Post by Roger945 » Tue Jun 30, 2020 5:28 pm

Hello! I am considering quitting my secure, good-paying job at the end of the year to take ~12 months off to spend time with family, travel domestically, and take a bit of a career “reset” for my wife and I to reflect on and decide some big picture things like where we would like to raise our kids and what we would like to do for work going forward and how that fits into our family lives. This was originally my wife’s idea and she is totally on board. Wife is currently a SAHM but will return to work as a school administrator in a couple years. For the past 7 years I have worked as an associate at a “big law” law firm and have found it to be impossible to truly invest in relationships with family or friends while doing this job. I am 100% confident that I don’t want to continue to do this job, but am at a loss as to what I should do next. Our thought is that, while we are not yet “FI,” we have the financial flexibility to take a breather and be intentional about our next steps instead of just hopping onto the traditional route of taking an in house job and upgrading neighborhoods to keep spinning the proverbial hamster wheel.

Our high-level estimated financial details for YE 2020 are below. I estimate that, at a 1% real rate of return, our 529 savings are sufficient to cover 4 years of in state public school tuition and fees for each of our 2 kids. Also, I estimate that at a 3% real rate of return, our taxable plus retirement investments are sufficient (without any additional contributions) to cover our current budget from 60 and up at a 3% withdrawal rate. We intend to recommence retirement and 529 contributions after the gap year, but these two stats, together with our paid off house, underlie my thinking that we have some flexibility to be intentional with our decision making going forward.

I’d very much appreciate any sage (and any other) advice from the smart folks on this board as to whether I am missing anything huge with this plan? Also, from Bogleheads who have taken or considered this sort of a break, any recommendations, advice, or suggestions?

Thanks in advance!

Age: 33 / 32 with two kids (3 and 1)

Yearly Expenses: $34K (base budget) // $40K (base + luxury budget) (these figures do include health insurance in our state)

Cash: $105K

Taxable Brokerage: $100K (60% stock / 40% bonds)

Retirement Accounts: $510K (90% stock / 10% bonds)

529 Accounts: $95K

Debt: No debt. ~$500K house and recent model vehicle fully paid for.

Random Poster
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Re: Sanity Check: Career Gap Year

Post by Random Poster » Tue Jun 30, 2020 8:27 pm

Roger945 wrote:
Tue Jun 30, 2020 5:28 pm
Hello! I am considering quitting my secure, good-paying job at the end of the year to take ~12 months off to spend time with family, travel domestically, and take a bit of a career “reset” for my wife and I to reflect on and decide some big picture things like where we would like to raise our kids and what we would like to do for work going forward and how that fits into our family lives. This was originally my wife’s idea and she is totally on board. Wife is currently a SAHM but will return to work as a school administrator in a couple years. For the past 7 years I have worked as an associate at a “big law” law firm and have found it to be impossible to truly invest in relationships with family or friends while doing this job. I am 100% confident that I don’t want to continue to do this job, but am at a loss as to what I should do next. Our thought is that, while we are not yet “FI,” we have the financial flexibility to take a breather and be intentional about our next steps instead of just hopping onto the traditional route of taking an in house job and upgrading neighborhoods to keep spinning the proverbial hamster wheel.
If you know or reasonably believe that you don’t want to be a lawyer anymore (and, in that respect, join the club), then you might as well leave on your own terms to do what you want, although you could always get “lucky” and get a lay-off package. But I’m not sure if law firms do those anymore.

That said....
Roger945 wrote:
Tue Jun 30, 2020 5:28 pm

Our high-level estimated financial details for YE 2020 are below. I estimate that, at a 1% real rate of return, our 529 savings are sufficient to cover 4 years of in state public school tuition and fees for each of our 2 kids. Also, I estimate that at a 3% real rate of return, our taxable plus retirement investments are sufficient (without any additional contributions) to cover our current budget from 60 and up at a 3% withdrawal rate. We intend to recommence retirement and 529 contributions after the gap year, but these two stats, together with our paid off house, underlie my thinking that we have some flexibility to be intentional with our decision making going forward.

I’d very much appreciate any sage (and any other) advice from the smart folks on this board as to whether I am missing anything huge with this plan? Also, from Bogleheads who have taken or considered this sort of a break, any recommendations, advice, or suggestions?

Thanks in advance!

Age: 33 / 32 with two kids (3 and 1)

Yearly Expenses: $34K (base budget) // $40K (base + luxury budget) (these figures do include health insurance in our state)

Cash: $105K

Taxable Brokerage: $100K (60% stock / 40% bonds)

Retirement Accounts: $510K (90% stock / 10% bonds)

529 Accounts: $95K

Debt: No debt. ~$500K house and recent model vehicle fully paid for.

Leaving aside your retirement projections, I’m not seeing how you plan to pay for the gap year. Just burn through the cash? Does the $40k a year include all of the domestic travel that you want to do during the gap year?

I don’t have any issue with the idea of taking a gap year (although, with kids, it does more risky than it might otherwise be), but I would only be concerned with paying for it. And, to be honest, I would expect a 7th year big law associate to have a lot more assets, but maybe the money all went to paying off student loans, and I would expect it to be difficult to walk away from the big law salary.

For whatever it is worth, I quit 2 years into a small law associate job to travel around the world for a year (the trip ended up being about 9 months long) when I was 26, but I didn’t have kids and I didn’t have a house. Or any real retirement savings. No regrets, and taking the gap year got me into a big law job, which then got me into a in-house role (that I am now laid off from, but such is life). All to say that the gap year didn’t hurt my career in any way.

And I think that if you plan it out “right” so that you aren’t just sitting at home everyday, and if and when you get back into the employment arena you can point to things you did or experienced and how it made you better or educated you in some way, a gap year won’t hurt you either.

On a more practical point, though, even if you don’t want to be in the legal area, it might be worth timing your departure such that the law firm pays your bar dues for all or most of your gap year and bulk up in CLE while you can so that you can go non-practicing or inactive with a minimum amount of hassle later.

oldfort
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Re: Sanity Check: Career Gap Year

Post by oldfort » Tue Jun 30, 2020 8:28 pm

Your base budget seems low. It's not much above the federal poverty level for a family of four. Are you in a position to make partner? If so, suck it up until you're in a position to FIRE. A gap year is when kids decide to party for a year before uni, not what a married man with two infants and a SAH wife usually does.

RocketShipTech
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Re: Sanity Check: Career Gap Year

Post by RocketShipTech » Tue Jun 30, 2020 8:32 pm

I’m guessing you make $350-400k?

If your expenses truly are $40k, you can retire with $1M saved up. That’s two more years of savings by my math.

So work two more years and then pull the plug and do what you want.

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Roger945
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Re: Sanity Check: Career Gap Year

Post by Roger945 » Tue Jun 30, 2020 10:52 pm

Sheesh, tough crowd. Which is good. All helpful points and I will try to answer some of the questions here.

- Paying for gap year: Current cash is $105,000, so after $40,000 for the gap year we would have about 19.5 months of expenses in cash. This seems conservative. The $40K / year does not include any travel other than just visiting family. We would make ourselves cover any other travel via side hustles. Also, when your expenses are this low it makes it easier for one of us to find something to offset a large portion in a pinch even if its not a career advancing job. This helps to ease any concerns I have about runway.

- Net Worth: Our net worth is about $1.35MM. Considering (i) all that fancy income is ordinary income, (ii) we did pay off about $100K of student loans very early on, (iii) we tend to be conservative in some aspects (e.g., paying off house), (iv) as I noted, we are a single income household at the moment, and (v) the markets are still off a bit, I personally don't think there are many big law associates doing much better without getting lucky on investments or inheriting money. But I could be wrong.

- Timing: I haven't focused on FIRE because I don't necessarily want to retire, just take some time off to think about what I want to do as a career instead of private practice. I'm honestly excited to find the next thing. As for making partner, this isn't really a function of years in service anymore, but rather a function of building a book. And this (i) does not lend itself to being involved with one's family and (ii) is a bit pointless if you don't want to be a lawyer in private practice anymore ...

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geerhardusvos
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Re: Sanity Check: Career Gap Year

Post by geerhardusvos » Tue Jun 30, 2020 11:04 pm

Roger945 wrote:
Tue Jun 30, 2020 10:52 pm
Sheesh, tough crowd. Which is good. All helpful points and I will try to answer some of the questions here.

- Paying for gap year: Current cash is $105,000, so after $40,000 for the gap year we would have about 19.5 months of expenses in cash. This seems conservative. The $40K / year does not include any travel other than just visiting family. We would make ourselves cover any other travel via side hustles. Also, when your expenses are this low it makes it easier for one of us to find something to offset a large portion in a pinch even if its not a career advancing job. This helps to ease any concerns I have about runway.

- Net Worth: Our net worth is about $1.35MM. Considering (i) all that fancy income is ordinary income, (ii) we did pay off about $100K of student loans very early on, (iii) we tend to be conservative in some aspects (e.g., paying off house), (iv) as I noted, we are a single income household at the moment, and (v) the markets are still off a bit, I personally don't think there are many big law associates doing much better without getting lucky on investments or inheriting money. But I could be wrong.

- Timing: I haven't focused on FIRE because I don't necessarily want to retire, just take some time off to think about what I want to do as a career instead of private practice. I'm honestly excited to find the next thing. As for making partner, this isn't really a function of years in service anymore, but rather a function of building a book. And this (i) does not lend itself to being involved with one's family and (ii) is a bit pointless if you don't want to be a lawyer in private practice anymore ...
Don’t be surprised at the responses so far. In general, it’s a bad idea to pause a career, although it’s getting slightly more popular, it’s not all it’s cracked up to be. It does make sense to maintain some kind of employment, and whether you’re willing to admit it or not, you are burnt out and it can impact your health and family.

If I were in your position, I would try to negotiate a part time role within the firm, maybe cut your billable hours in half or by a quarter. Be honest with them about your life and career goals and see if they are open to that. Sometimes you may be surprised once you’re open about what you’re trying to do if you know you were going to quit anyways. Alternatively, you could get a less stressful job in corporate America in the council or legal department, or you could stick it out for a little longer and get your savings up to $1 million which will support your budget indefinitely. If you’ve gone this far, I would personally would just get it done. I’m in a similar spot at age 30 and probably have 6 to 10 more more years until I’m free and clear, but with the family I’m not going to take time off even though I want it. Negotiate some significant vacation time, or take a three month sabbatical or family leave, etc. you can do what you want to do, but try to build your hybrid life to bridge the gap until you make it. Then once you are financially independent, you’re in a better spot. Do what you will though, and it’s definitely admirable to want to spend time with family in these crucial years. I have built the work life balance that I want now so that I can make it until the end, if I wasn’t drawing boundaries I would be toast in corporate America AND a terrible father and husband, but for now I’m even more respected because I draw my boundaries and am better performing than my peers in general
Last edited by geerhardusvos on Wed Jul 01, 2020 11:40 am, edited 1 time in total.
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123
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Re: Sanity Check: Career Gap Year

Post by 123 » Tue Jun 30, 2020 11:14 pm

The risk in a gap year for a career professional in these COVID19 times is that it could take an extended period to get another good job on your return to the workforce. Economic trouble can have an unexpected cascading impact. Some professional individuals who end up not working, whatever the reason, might not be able to work their way back into equivalent positons for 3 to 10 years (or more). You may not appreciate what you have had until there is no way to have it again.
The closest helping hand is at the end of your own arm.

Afty
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Re: Sanity Check: Career Gap Year

Post by Afty » Tue Jun 30, 2020 11:23 pm

I agree that this seems very risky given the current state of the economy. I would not make any big changes until we are though this crisis, and even then I would consider taking a shorter break that would not require you to quit your job. I was able to take 2 months of unpaid leave a couple years ago. It was fantastic and scratched the same itch I think you are having.

PartIrish
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Re: Sanity Check: Career Gap Year

Post by PartIrish » Tue Jun 30, 2020 11:42 pm

Traveling with 3 and 1 year olds will not create memories for them--they are too young. They already have the benefit of a stay at home parent. If quality time and travel with your wife and kids are foremost in this decision, I would work for a few more years. Your options will expand and your kids will be old enough to remember the time you spend with them. If you're just sick of the practice of law, are there other opportunities within your firm, such as firm management? Recruiting?

I certainly get the whole disillusionment with practice. I still retain my law license but spent only a few years practicing before turning to other opportunities. In this case, you may be better off with an "all in good time" approach.

mw1739
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Re: Sanity Check: Career Gap Year

Post by mw1739 » Wed Jul 01, 2020 12:16 am

Financially, yes you could make it work. Should you? That’s up to you and your family. Coming from someone with kids a few years older, I would wait a couple years so the kids can actually remember the trips and be more self sufficient (and reduce the hassle of traveling with toddlers).

I second the idea of asking for some work schedule flexibility. You can clearly live on less than your Big Law salary so you may as well take a pay cut until you can figure out your next move.

BTW congrats on the financial position and courage to take the leap. I’m similar age and net worth and personally wouldn’t do it, but my job is low stress. I am dreaming of cutting back to part time in my early 50’s though.

bikesandbeers
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Re: Sanity Check: Career Gap Year

Post by bikesandbeers » Wed Jul 01, 2020 12:30 am

I know someone with 4 kids who quit practicing law to go to med school at age 40
I also someone who took a gap year after their medical residence, or more like a honey moon as new wife was also a new doctor.

Give current ravel restrictions and the fact the the 1-3 year old won't really benefit form travel, I would wait at least a year in your current position.
I know nothing about law practice but you could just say you need to spend more time with your family i can work 40 (or 36) hours a week and no longer. Have you thought about hanging you own shingle?
My cousin was in a band with a lawyer. He spent most of his time making music and did some small personal injury stuff just to pay the rent and new guitars.

catlady
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Re: Sanity Check: Career Gap Year

Post by catlady » Wed Jul 01, 2020 9:37 am

How long have you been living on the $34k/yr budget? How closely have you been tracking your expenses?

Between property taxes, insurance (home, car, health, term life for you and your wife), co-pays for any doctor visits, groceries, gas, clothes, utilities, home maintenance, and things like internet and cell phone, your budget seems quite low with very little wiggle room.

If you’ve been tracking your spending closely for the last couple years and feel very confident your budget is reasonable, then it seems doable. If you haven’t been tracking your spending closely, I would recommend starting immediately as you could be in for a surprise. I will say living on $40k while making 6 figures feels differently than living on $40k because that’s all you can afford.

oldfort
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Re: Sanity Check: Career Gap Year

Post by oldfort » Wed Jul 01, 2020 9:45 am

Roger945 wrote:
Tue Jun 30, 2020 10:52 pm
Sheesh, tough crowd. Which is good. All helpful points and I will try to answer some of the questions here.

(ii) is a bit pointless if you don't want to be a lawyer in private practice anymore ...
You don't want to be a lawyer anymore. This is starting to sound less like a gap year and more like a permanent change of career.

Pomegranate
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Re: Sanity Check: Career Gap Year

Post by Pomegranate » Wed Jul 01, 2020 9:52 am

Roger945 wrote:
Tue Jun 30, 2020 5:28 pm
Hello! I am considering quitting my secure, good-paying job at the end of the year to take ~12 months off to spend time with family, travel domestically, and take a bit of a career “reset” for my wife and I to reflect on and decide some big picture things like where we would like to raise our kids and what we would like to do for work going forward and how that fits into our family lives. This was originally my wife’s idea and she is totally on board. Wife is currently a SAHM but will return to work as a school administrator in a couple years. For the past 7 years I have worked as an associate at a “big law” law firm and have found it to be impossible to truly invest in relationships with family or friends while doing this job. I am 100% confident that I don’t want to continue to do this job, but am at a loss as to what I should do next. Our thought is that, while we are not yet “FI,” we have the financial flexibility to take a breather and be intentional about our next steps instead of just hopping onto the traditional route of taking an in house job and upgrading neighborhoods to keep spinning the proverbial hamster wheel.

Our high-level estimated financial details for YE 2020 are below. I estimate that, at a 1% real rate of return, our 529 savings are sufficient to cover 4 years of in state public school tuition and fees for each of our 2 kids. Also, I estimate that at a 3% real rate of return, our taxable plus retirement investments are sufficient (without any additional contributions) to cover our current budget from 60 and up at a 3% withdrawal rate. We intend to recommence retirement and 529 contributions after the gap year, but these two stats, together with our paid off house, underlie my thinking that we have some flexibility to be intentional with our decision making going forward.

I’d very much appreciate any sage (and any other) advice from the smart folks on this board as to whether I am missing anything huge with this plan? Also, from Bogleheads who have taken or considered this sort of a break, any recommendations, advice, or suggestions?

Thanks in advance!

Age: 33 / 32 with two kids (3 and 1)

Yearly Expenses: $34K (base budget) // $40K (base + luxury budget) (these figures do include health insurance in our state)

Cash: $105K

Taxable Brokerage: $100K (60% stock / 40% bonds)

Retirement Accounts: $510K (90% stock / 10% bonds)

529 Accounts: $95K

Debt: No debt. ~$500K house and recent model vehicle fully paid for.
Career Gap Year? Wife is SAHM? Travelling? I'd suggest to start from Revolutionary Road movie :sharebeer

VoiceOfReason
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Re: Sanity Check: Career Gap Year

Post by VoiceOfReason » Wed Jul 01, 2020 10:00 am

Speaking as someone that watched their wife go through the exact same scenario...I will say you need to do some real soul searching.

Do you want to be partner or pursue your legal career in a private law firm? (Leaving your job voluntarily for a year off, at this stage in your career, will significantly hurt your big law firm career path at any future law firm you’d look to join.)

If not, what do you want to do with your career and what have you done to pursue those options to date?

There are other options to pursue. In house counsel, teaching, government jobs, lobbying, or something completely different.

With a SAHW and two little babies, I think it’s extremely risky to do what you are suggesting. Many would say you lost your freedom to do things like this the day you had kids.

I’d suggest a career change that will bring you happiness is way more responsible and effective.

gr7070
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Re: Sanity Check: Career Gap Year

Post by gr7070 » Wed Jul 01, 2020 10:06 am

It would seem you could figure out all these decisions without talking a year off. Most folks do.

Maybe taking a new job, with better work/life balance would be the first step.

While I don't doubt that a year of no income will not be a killer financially for you, I'm not sure a year long "sabbatical" is the end all be all for someone like yourself either. Just start making incremental decisions and changes to make your situation what you want.

I'd try the increment approach to start with. If you've found that work is getting in your way of family you're going to have to learn to set boundaries anyway. Like most things that's an incremental process. May as well start the process now.

tashnewbie
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Re: Sanity Check: Career Gap Year

Post by tashnewbie » Wed Jul 01, 2020 10:10 am

I'm an attorney too, and after a clerkship and about 4 years at a small firm, I was ready for a change. I jumped ship and went in-house. No regrets so far. I don't even have a family, but I can definitely understand your desire to have more work-life balance.

I think you can financially afford to take 1 year off, but as someone else has noted, given the current economy, you may be forced out of the market for more than 1 year. You seem to have sufficient cash reserves to last at least 2 years. Your budget seems exceptionally frugal, especially in a high or MCOL area. One thing you may not be accounting for in your budget is out-of-pocket healthcare insurance premium costs and expenses. Research your options to see how much you'll need to cover those costs.

What do you plan to do during a gap year? If the goal is to travel more, then as others have mentioned, that may not be practically feasible right now, your kids won't remember anything, and traveling with toddlers is more complicated. Otherwise, what do you plan to do with your time? You may find you get bored really quickly if all you can do most days is stay at home. On the other hand, maybe you'll have time to devote to hobbies or exploring what you want to do with the rest of your working years.

The issue of whether you should take a gap year now is a different question. I personally would not take a gap year right now, given the uncertainty with the economy. I would probably start looking for new jobs. Either something else in the law (in-house or public sector) or something outside the law. I agree with someone else who mentioned that it would be worth front-loading your CLE while with your current employer, if you decide to take time off. Good luck!

TSR
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Re: Sanity Check: Career Gap Year

Post by TSR » Wed Jul 01, 2020 10:19 am

Former big-law attorney here. I think your finances look good (surely people are overlooking that you have a paid-off house), but not so good that you as a family of four should be necessarily going without an income at this strange time (of course you can "afford" do it if you want). I'll just throw in my two cents here and say that I think the better plan is this: accelerate your wife's plan to return to work, and you become a stay at home dad for a couple of years. That would (1) give you a break from the law grind; (2) not increase the parent grind much worse than it would be during your gap year (traveling around the country with kids that age isn't all that easy); (3) give your wife a break from the kids and the challenge of returning to work; (4) build empathy with your wife; (5) give you time with your kids that you could never get back if you keep working; (6) likely motivate you to get back to working in a few years; and (7) not reduce your family income to zero and keep you insured. You guys are in a decent position to scale back, but I think you may be looking at a more drastic "break" than is necessary. Good luck!

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Re: Sanity Check: Career Gap Year

Post by Jack FFR1846 » Wed Jul 01, 2020 10:24 am

I'd like to see an accounting of living off of $40k a year. I also have no payments of any type and no mortgage and have tallied my expenses to be more like $60k.

The 2 biggies I'd start with are property taxes and total health costs. That doesn't mean just premiums. I know for our family, I use our flex spending account for health and spend the entire amount, which I think is $2650 this year by July. Co-pays, out of network, prescriptions, deductibles, etc add up. For me, health without work help plus property taxes are well over $20k.

For the taking off a year. As others have said, your kids will remember nothing of a year travelling the country or the world. We used to bring our kids down to Aruba where my parents had a wonderful beachfront place. My mom would spend hours under a palm tree on the beach with my older son (6 and on) while our younger son splashed in the kiddie pool. We did this for about 4 years in a row. Younger son remembers nothing of it.

Alternative: Find a job somewhere with less stress and less money. Something you'd actually like doing. I know corporate attorneys (played in a band with one) and they work 8-5 and have no obvious stress. There are certainly other things attorneys can do besides all-in big law, right?
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BrooklynInvest
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Re: Sanity Check: Career Gap Year

Post by BrooklynInvest » Wed Jul 01, 2020 10:29 am

In general I love the idea of a prolonged change/break if you can afford it, and it seems from what you've posted that you can.

Healthcare access would be a concern if you're reliant on an exchange. I'd be very, very cautious to pull the trigger until key issues are resolved.

Good luck!

stoptothink
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Re: Sanity Check: Career Gap Year

Post by stoptothink » Wed Jul 01, 2020 10:44 am

Jack FFR1846 wrote:
Wed Jul 01, 2020 10:24 am
I'd like to see an accounting of living off of $40k a year. I also have no payments of any type and no mortgage and have tallied my expenses to be more like $60k.
Family of 4 and we did ~$45k last year; with a mortgage, wife in school, and 1 in childcare. We're probably looking at <$30k this year (mortgage done and no childcare). But, we're in a MCOL area and I don't make BigLaw associate money.

tashnewbie
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Re: Sanity Check: Career Gap Year

Post by tashnewbie » Wed Jul 01, 2020 10:46 am

stoptothink wrote:
Wed Jul 01, 2020 10:44 am
Jack FFR1846 wrote:
Wed Jul 01, 2020 10:24 am
I'd like to see an accounting of living off of $40k a year. I also have no payments of any type and no mortgage and have tallied my expenses to be more like $60k.
Family of 4 and we did ~$45k last year; with a mortgage, wife in school, and 1 in childcare. We're probably looking at <$30k this year (mortgage done and no childcare). But, we're in a MCOL area and I don't make BigLaw associate money.
But did you have at least partially subsidized health insurance premiums? I think it'd be near impossible to do $40k (or the $34k OP said is base budget) without partially subsidized healthcare.

stoptothink
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Re: Sanity Check: Career Gap Year

Post by stoptothink » Wed Jul 01, 2020 10:55 am

tashnewbie wrote:
Wed Jul 01, 2020 10:46 am
stoptothink wrote:
Wed Jul 01, 2020 10:44 am
Jack FFR1846 wrote:
Wed Jul 01, 2020 10:24 am
I'd like to see an accounting of living off of $40k a year. I also have no payments of any type and no mortgage and have tallied my expenses to be more like $60k.
Family of 4 and we did ~$45k last year; with a mortgage, wife in school, and 1 in childcare. We're probably looking at <$30k this year (mortgage done and no childcare). But, we're in a MCOL area and I don't make BigLaw associate money.
But did you have at least partially subsidized health insurance premiums? I think it'd be near impossible to do $40k (or the $34k OP said is base budget) without partially subsidized healthcare.
Yes, we have employer-subsidized health insurance, but with no mortgage/daycare/college tuition we are still ~$40k/yr if we had to cover our insurance (based on a quick Google search of costs for family of 4 on exchange in my area). Not sure how realistic it is for OP, but considering the average HHI of families in this country, literally millions of families are surviving on $40k/yr. May not be comfortable, but it is probably doable (depending on where they are).

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Watty
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Re: Sanity Check: Career Gap Year

Post by Watty » Wed Jul 01, 2020 11:28 am

Roger945 wrote:
Tue Jun 30, 2020 5:28 pm
.....I don’t want to continue to do this job, but am at a loss as to what I should do next.
It sounds like you have a lot going on so getting some professional counseling might help you figure out how to handle the situation.

It might also be a good idea to get a good physical and talk with your doctor about what is going on just in case there could be something else going going on that is affecting you like a health problem or sleep disorder. The pandemic is also causing a lot of stress for people.

Couples counseling could also help your marriage survive all the upcoming changes. Some marriages are worth working hard on to make them last so be sure to keep an open mind about doing that.

Just quiting your job and sitting at home for a year without a plan could easily make things worse.

Some counseling might also help you come up with a plan to go directly to your next career without the gap year. That could be a real good thing since moving towards something is a lot better than just moving away from something.
RocketShipTech wrote:
Tue Jun 30, 2020 8:32 pm
I’m guessing you make $350-400k?

If your expenses truly are $40k, you can retire with $1M saved up. That’s two more years of savings by my math.

So work two more years and then pull the plug and do what you want.
If that is right then hanging on for another year or two would be worth considering and that would also give you some time to get some counseling and come up with a better plan.

You could also set boundaries at work to make it more manageable, the worst thing they can do is to fire you or not give you a big promotion or bonus.

I have also seen people set boundaries at work and have it work out surprisingly well once the company had the chance to adapt to the new limitations.
Roger945 wrote:
Tue Jun 30, 2020 5:28 pm
Age: 33 / 32 with two kids (3 and 1)

Yearly Expenses: $34K (base budget) // $40K (base + luxury budget) (these figures do include health insurance in our state)
People do live on that but realistically that is just a little bit above the federal poverty level for a family of four.

Having a paid off house helps but you would also have higher expenses for things like property taxes and high utilities with your house.

Even with the luxury budget you would not be able to much if any travel. Even a campsite at a state park can cost $20 a night and you would not be able to afford a lot of those on that budget.

Random Poster
Posts: 2177
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Re: Sanity Check: Career Gap Year

Post by Random Poster » Wed Jul 01, 2020 11:48 am

Roger945 wrote:
Tue Jun 30, 2020 10:52 pm

- Net Worth: Our net worth is about $1.35MM. Considering (i) all that fancy income is ordinary income, (ii) we did pay off about $100K of student loans very early on, (iii) we tend to be conservative in some aspects (e.g., paying off house), (iv) as I noted, we are a single income household at the moment, and (v) the markets are still off a bit, I personally don't think there are many big law associates doing much better without getting lucky on investments or inheriting money. But I could be wrong.
That may be your paper net worth, but it isn’t your real, available and accessible net worth. You can’t eat your house (unless you are a termite, I suppose), and if you were to sell your house and net the entire 500k valuation, you’d still have to live somewhere and that costs money. Sorry to say, but in my view your net worth is $715k, and that is even with a rather inflated stock market.

I still think that if you are convinced that you don’t want to be a lawyer anymore, then you might as well take the gap year and do something else with your life. But you do run the somewhat substantial risk that you will never again make as much money as you do now and that your savings progress will be set back considerably.

It is easy to tell someone else that they should work a bit longer at a job they don’t like, but the more I think about your post, the more downsides I see compared to the upsides. Save at least another $750k and then you have many more options.

cshell2
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Re: Sanity Check: Career Gap Year

Post by cshell2 » Wed Jul 01, 2020 12:06 pm

tashnewbie wrote:
Wed Jul 01, 2020 10:46 am
stoptothink wrote:
Wed Jul 01, 2020 10:44 am
Jack FFR1846 wrote:
Wed Jul 01, 2020 10:24 am
I'd like to see an accounting of living off of $40k a year. I also have no payments of any type and no mortgage and have tallied my expenses to be more like $60k.
Family of 4 and we did ~$45k last year; with a mortgage, wife in school, and 1 in childcare. We're probably looking at <$30k this year (mortgage done and no childcare). But, we're in a MCOL area and I don't make BigLaw associate money.
But did you have at least partially subsidized health insurance premiums? I think it'd be near impossible to do $40k (or the $34k OP said is base budget) without partially subsidized healthcare.
I would think if you were a family of 4 making 40K/year and buying off the market it would be pretty heavily subsidized, but I've always had employer provided, so not sure.

Having said that. I could do 40K with no mortgage. I've been at about 60K for a long time (if you add in child support) and have two kids, one a teen driver (extra insurance) that just graduated from private school and one still getting childcare (until the covid thing anyhow). My mortgage is 16K/year of that 60K and I save a lot, so if I cut back retirement and college savings... Property taxes are cheap here. I pay $2700/year on a pretty big place in the country. I could cut that in half if I downsized, but I wouldn't even have to.

hookemhorns
Posts: 118
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Re: Sanity Check: Career Gap Year

Post by hookemhorns » Wed Jul 01, 2020 12:33 pm

My advice from somebody in a similar situation and age range: I would take 2 weeks of vacation and use that time to figure out what you want to do next. I did that about 2 years ago and charted out a new career path that I am currently in the process of transitioning towards. I wanted to be running towards something I wanted, not away from something I disliked.

On practical terms, I think now would be a bad time to quit given the huge economic uncertainty. Traveling also simply won't be that fun the next few months with many stores, restaurants, museums, etc. shut due to COVID.

One book I recommend if you're considering a career / personal reset is "Design Your Life." There was a thread on bogleheads about it. There's also a podcast called 3,2,1 iRelaunch which you might find useful. Whatever you do, you should have a plan first before jumping.

sailaway
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Re: Sanity Check: Career Gap Year

Post by sailaway » Wed Jul 01, 2020 12:59 pm

A big reason that we are pursuing FI, rather than travelling earlier, is due to watching my brother who expected to fund traveling the country via side hustles and contract work. They traveled, never found anything better than helping out at campgrounds in exchange for offsetting the campground costs, and ran out of money. It is much better to have the option to turn to a new career than the necessity.

As a few have said above, this is not the time for travel. Wait out COVID, and then make a decision. Use the time to think about what travel looks like for you and how much that might cost.

millennialmillions
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Re: Sanity Check: Career Gap Year

Post by millennialmillions » Wed Jul 01, 2020 1:22 pm

I'm surprised the responses thus far are so pessimistic about this idea. You are in an amazing financial position. Even assuming your expenses are understated a bit, you have a paid off house and an investment portfolio that, left untouched, will fully fund your retirement when you're in your 60's. Thus you have reached "Coast FI."

You have plenty of cash to take a year off and cover expenses. After that, you can decide the best way to earn enough between you and your wife to cover your family's expenses and let your retirement funds grow. You have accumulated enough money to substantially change your lifestyle, so it's worth exploring.

Also, how did you manage to accumulate $510,000 in retirement accounts during a 7-year career? Very impressive. Did you and/or your wife have access to a mega backdoor Roth?

hookemhorns
Posts: 118
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Re: Sanity Check: Career Gap Year

Post by hookemhorns » Wed Jul 01, 2020 2:51 pm

millennialmillions wrote:
Wed Jul 01, 2020 1:22 pm
I'm surprised the responses thus far are so pessimistic about this idea. You are in an amazing financial position. Even assuming your expenses are understated a bit, you have a paid off house and an investment portfolio that, left untouched, will fully fund your retirement when you're in your 60's. Thus you have reached "Coast FI."
I wouldn't describe a $500k retirement portfolio as being anywhere near close to enough to retire on, certainly not in one's early 30s. I would still love to see the OP's expense breakdown. As others have stated, $35-40k living expenses with a family of four is near poverty level. I get that his house is paid, but it still sounds unsustainably low.

My bigger concern if I were the OP is what I would do long term for a career. It's much easier to hop off the >300k/yr job train than it is to hop back on it. Maybe he wants to do something else and take a big pay cut, and there's certainly nothing wrong with that, but I would try to figure that out first before jumping. Layer on the health and economic crisis and this doesn't seem like the right time to do something drastic.

millennialmillions
Posts: 49
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Re: Sanity Check: Career Gap Year

Post by millennialmillions » Wed Jul 01, 2020 3:00 pm

hookemhorns wrote:
Wed Jul 01, 2020 2:51 pm
millennialmillions wrote:
Wed Jul 01, 2020 1:22 pm
I'm surprised the responses thus far are so pessimistic about this idea. You are in an amazing financial position. Even assuming your expenses are understated a bit, you have a paid off house and an investment portfolio that, left untouched, will fully fund your retirement when you're in your 60's. Thus you have reached "Coast FI."
I wouldn't describe a $500k retirement portfolio as being anywhere near close to enough to retire on, certainly not in one's early 30s. I would still love to see the OP's expense breakdown. As others have stated, $35-40k living expenses with a family of four is near poverty level. I get that his house is paid, but it still sounds unsustainably low.

My bigger concern if I were the OP is what I would do long term for a career. It's much easier to hop off the >300k/yr job train than it is to hop back on it. Maybe he wants to do something else and take a big pay cut, and there's certainly nothing wrong with that, but I would try to figure that out first before jumping. Layer on the health and economic crisis and this doesn't seem like the right time to do something drastic.
I agree $500k is not enough to retire on. That is not what Coast FI means. However, if OP can find work that simply covers expenses after this year sabbatical, the $610k portfolio will grow to $1.5 million over 30 years, using a very conservative 3% real return. That retirement portfolio would support annual expenses 50% higher than OP is estimating, ignoring social security.

Obviously it is not optimal financially to take the year off. But OP easily has the means to do so and has very little risk of not being able to find a job that can cover his expenses while the retirement portfolio grows.

cosmonaut
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Re: Sanity Check: Career Gap Year

Post by cosmonaut » Wed Jul 01, 2020 3:21 pm

If deciding to take the gap year, might as well try to negotiate a leave of absence with the firm so that it's an option to return, if only for a short time and even if you have no intention of actually coming back.

Colorado
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Re: Sanity Check: Career Gap Year

Post by Colorado » Wed Jul 01, 2020 3:34 pm

Deleted
Last edited by Colorado on Wed Jul 01, 2020 3:37 pm, edited 1 time in total.

Colorado
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Re: Sanity Check: Career Gap Year

Post by Colorado » Wed Jul 01, 2020 3:35 pm

Deleted

Random Poster
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Re: Sanity Check: Career Gap Year

Post by Random Poster » Wed Jul 01, 2020 3:38 pm

Did the OP just change usernames?

Colorado
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Re: Sanity Check: Career Gap Year

Post by Colorado » Wed Jul 01, 2020 3:39 pm

Deleted

Topic Author
Roger945
Posts: 4
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Re: Sanity Check: Career Gap Year

Post by Roger945 » Wed Jul 01, 2020 3:47 pm

millennialmillions wrote:
Wed Jul 01, 2020 1:22 pm
I'm surprised the responses thus far are so pessimistic about this idea. You are in an amazing financial position. Even assuming your expenses are understated a bit, you have a paid off house and an investment portfolio that, left untouched, will fully fund your retirement when you're in your 60's. Thus you have reached "Coast FI."

You have plenty of cash to take a year off and cover expenses. After that, you can decide the best way to earn enough between you and your wife to cover your family's expenses and let your retirement funds grow. You have accumulated enough money to substantially change your lifestyle, so it's worth exploring.

Also, how did you manage to accumulate $510,000 in retirement accounts during a 7-year career? Very impressive. Did you and/or your wife have access to a mega backdoor Roth?
This and your subsequent post are very much in line with my thinking. I'm not stating that I can retire forever at this point, but merely that the 60+ years are covered at a base level and our focus is on getting from here to 60 along the path of our choice instead of grinding in miserable jobs for money that we will likely never need. The intermediate year off would be used to simply enjoy some time off and to figure out what we want to do next. I have no interest in finding another $300K / year job, but something around $80K - $120K / year would enable us to continue to make sizable retirement contributions going forward. And I actually think there is quite a bit of fat in our $40K budget since we don't have mortgage or rent payments to make. I think some of the folks on this thread are living in higher COL areas than us, and likely have different spending priorities, and that's reflected in their thoughts on budgets.

One key to accumulating the $510K in retirement accounts over these years was that my wife had access to a 403b and 457 while she worked in the public school system.

I do think the points about trying to set boundaries with work and/or go part time are valid, but my experience is that attorneys who attempt this very quickly find themselves out of work or as an uncomfortable pariah in their legal department. Nevertheless, this is a path I will explore further

Topic Author
Roger945
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Re: Sanity Check: Career Gap Year

Post by Roger945 » Wed Jul 01, 2020 3:47 pm

cosmonaut wrote:
Wed Jul 01, 2020 3:21 pm
If deciding to take the gap year, might as well try to negotiate a leave of absence with the firm so that it's an option to return, if only for a short time and even if you have no intention of actually coming back.
I left this out of my original post, but I would technically be taking a "leave of absence" on good terms and would be given priority for any opening that was available on my return.

financeidiot
Posts: 195
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Re: Sanity Check: Career Gap Year

Post by financeidiot » Wed Jul 01, 2020 3:50 pm

Do it. If you need time to think and experience something new, do it. You may not get the job you had, but there's always another job or another opportunity.

In regards to COVID or economic uncertainty, it's always the wrong time. On the way up, you'd be crazy to get off the ride. On the way down, you'd be crazy to give up a sure thing. At some point you have to jump and do what you believe is right.

7eight9
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Re: Sanity Check: Career Gap Year

Post by 7eight9 » Wed Jul 01, 2020 3:53 pm

$34K spend is certainly doable with no mortgage or other payments. I suspect the OP should be able to avail themselves of the ACA to obtain subsidized health insurance.

Below is my breakdown from 2018 (don't have access to 2019 offhand but the variance was only a couple hundred dollars).

2 adults - MCOL city. No mortgage or car payments.

$7.0K - International travel
$5.3K - HOA / Property taxes / insurance (1500 sq ft condo in good neighborhood)
$4.0K - Car insurance / registration / repair / gasoline (2 Toyotas)
$3.3K - Food (groceries, beverages, eating out)
$2.6K - Household (everything from dish soap to a new bed)
$2.0K - Electric / natural gas / internet / home phone / cellular phones (2)
$0.5K - Gifts
$0.4K - Clothing

Approximately $18.1K for day to day living ($1,500/month).
I guess it all could be much worse. | They could be warming up my hearse.

VoiceOfReason
Posts: 71
Joined: Sat Jan 02, 2016 6:54 pm

Re: Sanity Check: Career Gap Year

Post by VoiceOfReason » Wed Jul 01, 2020 4:47 pm

Roger945 wrote:
Wed Jul 01, 2020 3:47 pm
cosmonaut wrote:
Wed Jul 01, 2020 3:21 pm
If deciding to take the gap year, might as well try to negotiate a leave of absence with the firm so that it's an option to return, if only for a short time and even if you have no intention of actually coming back.
I left this out of my original post, but I would technically be taking a "leave of absence" on good terms and would be given priority for any opening that was available on my return.
:shock: :o :o

Wait what?? Minor detail.

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