Engineering an exit and preparing financially

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Topic Author
banook
Posts: 19
Joined: Sat Jul 14, 2018 3:25 pm

Engineering an exit and preparing financially

Post by banook » Sat Nov 16, 2019 12:44 pm

So, I did something what most BHs would call crazy this year and am now in the thick of it. I took a job with a later-stage startup unicorn at the behest of two former colleagues I respect and trust. I left my Fortune 500 company where I was vested with a good salary but where there had been lots of turmoil due to the fact that it had just undergone a big M&A, i.e. many friends were laid off, budgets frozen or flat, and it felt very empty, desolate and lonely - nonetheless I was retained and told to stay.... The late stage startup unicorn offered a substantial pay bump (30%), equity, and the opportunity to work remotely and travel. At the time (5 months ago) it felt like the right thing to do...

Now things have changed vastly; WeWork, Uber, and the like have changed VC landscape and put pressure on profitability - which is a good thing as the market should body check companies like these - unless you work at a company that is unlikely to be profitable any time soon. While still employed, I was just informed (although suspected) my friend, colleague and boss is leaving the company (the one who brought me in) and he has expressed the thought that whole group is unlikely to be retained.

So my question is: besides looking for job, what should I do to prepare financially? I am unlikely to get my old job F500 back and am considering taking a very secure, enjoyable, good quality of life job (no crazy travel), but large pay cut (30% from old Fortune 500 job, and much more from right now).

Financial details: Ages 35 and 39 (one with ultra secure job)

Joint net worth (not including house): 1.2 M (combination of taxable, cash, Roths, IRAs, 401k)
House: 40% equity, mortgage at 4.25% for 30 years (we currently pay it like it's a 15 yr - probably will stop that)
No debts other than mortgage.

2019 TE moves: maxed out my 401k with F500 and match, spousal max-out of 457 and nearing 403b max out, and spouse also vested in pension.

If I am leaving in January... what are the smart 2020 moves to make? Do I take the new drastic pay cut job, and if I do how do I save for retirement in a smart way - can I still save aggressively? Besides kicking myself for falling into this trap, what would the average BH do? 2020 looks so different from 2019 I'm having panic attacks.

sd323232
Posts: 309
Joined: Thu Jun 21, 2018 4:45 pm

Re: Engineering an exit and preparing financially

Post by sd323232 » Sat Nov 16, 2019 2:55 pm

i think you are being too hard on yourself, you have 1.2 mil networth. Take the safe job even with a paycut. You may not think so yet, but you have won the game. Why overthink?

MotoTrojan
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Joined: Wed Feb 01, 2017 8:39 pm

Re: Engineering an exit and preparing financially

Post by MotoTrojan » Sat Nov 16, 2019 2:57 pm

sd323232 wrote:
Sat Nov 16, 2019 2:55 pm
i think you are being too hard on yourself, you have 1.2 mil networth. Take the safe job even with a paycut. You may not think so yet, but you have won the game. Why overthink?
This.

ThePrince
Posts: 421
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Location: U.S.A.

Re: Engineering an exit and preparing financially

Post by ThePrince » Sat Nov 16, 2019 3:05 pm

MotoTrojan wrote:
Sat Nov 16, 2019 2:57 pm
sd323232 wrote:
Sat Nov 16, 2019 2:55 pm
i think you are being too hard on yourself, you have 1.2 mil networth. Take the safe job even with a paycut. You may not think so yet, but you have won the game. Why overthink?
This.
+1

Pacman
Posts: 182
Joined: Sun Feb 20, 2011 11:50 pm

Re: Engineering an exit and preparing financially

Post by Pacman » Sat Nov 16, 2019 3:07 pm

If you were fully vested at your previous f500, you had probably been there for 5+ years. With that on your resume, while you may not be able to get your old job back, you could probably get a job at another f500.

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Bogle7
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Re: Engineering an exit and preparing financially

Post by Bogle7 » Sat Nov 16, 2019 3:26 pm

banook wrote:
Sat Nov 16, 2019 12:44 pm
considering taking a very secure, enjoyable, good quality of life job (no crazy travel), but large pay cut (30% from old Fortune 500 job, and much more from right now).
1. Can you live on this income?
2. Consider re-fi on mortgage.

harrychan
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Location: Pasadena

Re: Engineering an exit and preparing financially

Post by harrychan » Sat Nov 16, 2019 6:16 pm

Your situation is not that unique as you think. No matter how volatile you work situation is, you should have 6-8 months of emergency funds. You don't have debt other than your mortgage so that gives you tremendous amount of flexibility. There is really no prediction as to what can happen. If you don't like the uncertainty, then start looking for a new job. Otherwise, you may be able to get a hint of your value at your existing company. Just because your friends are gone doesn't directly mean you are next.
This is not legal or certified financial advice but you know that already.

MathWizard
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Re: Engineering an exit and preparing financially

Post by MathWizard » Sat Nov 16, 2019 6:27 pm

Don't be hard on yourself, you took a shot at what you thought would be a better situation.

That's all any of can do.

The situation changing to less favorable does not make the decision to jump to the startup a bad one.

I don't think I'd go back to your old employer, but a similar position to what you had before or the ultrasecure one.

I'd probably stay as liquid as you can if between jobs, unless you have a really large EF. If you normally do an IRA in the current year, wait until Apr of the following year and specify that it is for the previous year. That frees up 12K between you and your spouse for a few months.

Good luck.

Topic Author
banook
Posts: 19
Joined: Sat Jul 14, 2018 3:25 pm

Re: Engineering an exit and preparing financially

Post by banook » Sat Nov 16, 2019 10:32 pm

Thanks for all the replies, and definitely got the confirmation that is unlikely any one in my group will be retained - so, best start thinking about strategy. We do have a sizable EF or ways of making one easily, so short-term it'll be ok.

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anon_investor
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Re: Engineering an exit and preparing financially

Post by anon_investor » Sat Nov 16, 2019 10:42 pm

banook wrote:
Sat Nov 16, 2019 10:32 pm
Thanks for all the replies, and definitely got the confirmation that is unlikely any one in my group will be retained - so, best start thinking about strategy. We do have a sizable EF or ways of making one easily, so short-term it'll be ok.
I would take this opportunity to look for as you said "very secure, enjoyable, good quality of life job". Short term financially it sounds like you will be fine, but long term, even with a pay cut, a job that is secure, you like and has good work life/balance may make you happier than the extra pay. Just a thought.

Not even 40 and $1.2M already, you guys are doing great!

crit
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Re: Engineering an exit and preparing financially

Post by crit » Sun Nov 17, 2019 11:11 pm

"it me", as kids these days say. We are a dink couple of startupland + tenured academic.

The three things on my mind: make sure your 401k is front-loaded, that is, fully funded with Jan and Feb paychecks. You lose access to that space with the job.

Make sure you max the 403b contributions, even if it means funding monthly expenses out of taxable; that way you're effectively shifting funds from taxable to tax-protected space.

Tax-gain harvest as you can in a lower bracket. Probably wait until the end of the year, just to be sure of what your bracket will actually be.

You're probably ok on healthcare, but look into what happens. Also, you'll lose some disability and life insurance with the job, so give that a thought.

lakpr
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Joined: Fri Mar 18, 2011 9:59 am

Re: Engineering an exit and preparing financially

Post by lakpr » Mon Nov 18, 2019 3:55 am

You might want to refi that 4.25% rate mortgage soon, while still employed. Rates are at 3.5% odd for 30 years

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Sandi_k
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Location: SF Bay Area

Re: Engineering an exit and preparing financially

Post by Sandi_k » Tue Nov 19, 2019 12:23 pm

You can get a 20 year fixed mortgage for 3.25% right now.

Best of both worlds - chop years off the term, but still keep a cheap payment close to your 30 year payment due to the drop in interest rates.

Topic Author
banook
Posts: 19
Joined: Sat Jul 14, 2018 3:25 pm

Re: Engineering an exit and preparing financially

Post by banook » Tue Nov 19, 2019 7:14 pm

You can get a 20 year fixed mortgage for 3.25% right now.

Best of both worlds - chop years off the term, but still keep a cheap payment close to your 30 year payment due to the drop in interest rates.
+100k saved in interest!!! Thanks!

bluquark
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Joined: Mon Oct 22, 2018 2:30 pm

Re: Engineering an exit and preparing financially

Post by bluquark » Tue Nov 19, 2019 8:51 pm

The economy is still booming. It should be easy for someone in your shoes to find another job. We had another thread recently from someone in his fifties whose role got outsourced away after 20 years of DBA admin at a telecom. I was worried for him because those skills aren't so hot anymore. He started applying to "devops" jobs even though he had no experience with that, and he got two offers in less than a month.

When you say you want "very secure, enjoyable, good quality of life job", I'm concerned you might be overcorrecting from the very hectic and insecure environment of your current job. When you have had a few months to relax, you might start being bored with it instead.

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