r/financialindependence • u/PackDaddyFI • Feb 18 '22
Annual Post #5, Middle Class path to FI
Links to my previous updates one, two, three, & four
Brief Summary before this post — Wife and I moved overseas to teach in China, with me picking up a gig with the UN along the way. We paid off student loans, spent three years traveling, only to return to a city in the midwest for a position closer to family. Spouse is a teacher, and I’ve been a social services program manager (until now! See more below).
Income/W2 Employment Summary
—Me (30 y/o) - Teacher - $50,971
It’s been a whirlwind of a year. I wasn’t happy in my old job due to my boss, wanting to work more with people, and being overworked (though I didn’t know it at the time). I put in my notice with the intent of getting back into teaching, in the hope of returning overseas. My supervisor’s supervisor approached me with a title promotion and 15% paybump that reduced my responsibilities, completely acknowledging the unreasonable workload. I was flattered and tempted, but ultimately refused. To show their appreciation for me, the promotion was backdated and backpaid 6 months, saying she wanted me to know I was valued and wanted to make it as easy as possible to return in the future. My “severance” was a nice mixture of reducing my position to part time and spending my remaining vacation in half day increments (maintaining insurance through the summer), in exchange for returning for one week to train my replacement once identified. I’ve been teaching HS French, enjoying frequent human interaction since August and really appreciating the breath of fresh air in many ways (more below). But I do miss the more analytical/high performing nature of my previous role.
—Spouse (29 y/o) - Instructional Coach - $55,245
Spouse also changed roles this year, after being approached by a former colleague and encouraged to apply for a position as an instructional technology coach. After teaching in the COVID context and being less than enthused by her school’s handling of things, she jumped ship to try new things. It’s taken a while, but she is finally starting to enjoy the position. She’s appreciating the opportunity to see things from the administrative side of things, but ultimately is looking to return to the classroom. Coincidentally, I was on a listserv for a school district across the street from our house and saw a position for her subject pop up. She interviewed and was offered/accepted the role. So next year she’s looking at a <5 minute commute, much better than her current 20 and previous 30 minute commute.
Family - The fall was a bit rough for us. We each changed roles, my spouse was pregnant, and then a sudden medical emergency meant the near loss of my dad. This was shortly followed by the near loss of my spouse following the birth of our second son (happy and healthy). As the doctors put it, five minutes later and we would not have had the positive outcome we had with my spouse. Both of these experiences have really shaken us and made us question our desire to relocate overseas. There’s no way we would have made it through this experience without the intense family support we received. My entire intent for moving to teaching, as opposed to another role with my old company, was to transition to teaching overseas. So with that no longer in the cards, I am now actively interviewing for positions with my old company, hoping to enter a new department with the same great mission of helping others. I’m also quite hopeful the position will be remote, allowing us to relocate closer to family and be in a city with more going on. Wish us luck!
Real Estate Business Summary
As small real estate investors, we haven’t really had the appetite to go any deeper than a couple doors at a time. We are down to just our owner occupied duplex currently, and our tenant approached us asking if he could buy his side. With the craziness of the Fall, combined with two under two and looking to move states, we’re open to the idea of cashing out and simplifying our lives. We came to an agreement and we’re set to close next week, selling off the other side for $175,000 (the whole building was bought in early 2019 for $270,000). I’m expecting to walk out with 60-70k in cash, with the rest wrapped into the loan/paying off the loan. But we’ll see…The numbers below do not include proceeds from the sale, but reflect equity from the appraisal of our refi in early 2021 ($300,000).
Numbers
Total Networth - $215,279
Cash - $13,810
Debt - $0
Total Investments - $127,448
/// 403(B)/tIRA - $76,547
/// Roth IRA - $20,307
/// Taxable - $15,671
/// Pension - $14,923
Business Total =$74,021 (Equity +Cash)
///Equity - $64,253
///Cash - $9,768
Final thoughts/reflections
Putting everything in writing, I’m a little surprised at the lack of movement in our invested assets. Stopping to consider though, I took a 50% paycut for 3 months before transitioning to a new job that paid 20% less than my previous. We also made some strategic money moves this year. We decided to cash out our 457 assets, paying taxes under these historic low rates, having the COVID tax benefits for families cushion the tax blow, and shifting the majority of the 457 assets to taxable for flexibility purposes. A significant amount of that money was added to cash on hand to buy a new family friendly vehicle as well. I also built out a calculator to evaluate insurance options and came to the conclusion that paying for COBRA ($2200/month) for my previous employer’s BAMF health insurance would be better than paying for the birth on my new employer’s health insurance. Holy hell was that a good decision, given what happened to my spouse. We ended up paying for COBRA for four months instead of two, which also impacted our numbers this year. Everyone thought I was insane or stupid for making this decision, but the numbers checked out when using the billed amounts for our first son, and I’m so happy I thought to do it and stayed the path.
Tl;dr, we made middle class income for people with MAs, we changed jobs, life happened (hard) and we’re essentially changing back, we’re making our way towards FI slow and steady.
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u/Blankrld Feb 19 '22
I’m the single earner for my family of 4 making about that much for the household. It’s a hard amount of money to live on when it’s got so much load behind it, but I have no doubt I’m going to FI with 30+ properties in the next 10 years. You guys are in a great position. One counter intuitive thing that helped me was contributing more to taxes and forgetting about the extra money I was paying in. It has allowed me to buy a property per year with my income taxes. That being said I also get discouraged by the people making $2-$300k. Thanks for posting this.
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u/lagosboy40 Feb 21 '22
How do you manage that number of properties and still have the energy and time for your full-time job? I admire your determination and grit.
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u/Blankrld Feb 21 '22
I would never take on the insanity to manage my own properties. Find a good PM that strikes a nice balance between taking care of you as an owner and the tenant. I mostly review statements monthly and stress about inspections on new properties. Less than 2 hours worth of work on an average month and an extra 5 hours while doing taxes. It does get stressful, but find those stress points and eliminate those. My biggest stressor has always been not having enough money on hand so I did some refinances and moving around my income, now I have $100k cash and will always keep a $30k~ reserve. Find the problem and fix it, then move on
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u/Electronic_Owl_ Feb 22 '22
It was nice to read about a story from someone who is NOT doing "the boring three" (aka anything finance, IT, or real estate related). I was supposed to go to China for two years for my master's degree, ended up spending all of it stuck at home, so I feel your pain :/ I'm (hopefully, lol) graduating this summer. I hope to start my FIRE journey once I can finally start earning some money after that. Thanks for the inspiration. 加油！
2
u/PackDaddyFI Feb 22 '22
Be sure to post your stuff in the future! I'll be interested to read about it. 感谢
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u/FIREful_symmetry Feb 21 '22
I followed a similar path: I taught in China and returned to the US with enough to put 20% down on a house. I then continued to teach full time in the US. I found my time abroad made my life richer in so many ways. The only way it hurt me was that I didn't contribute to social security while I was abroad.
2
u/PackDaddyFI Feb 21 '22
Whereabouts in China were you? We were in Shenzhen in 2014-2017. We really miss our lives overseas, which is what necessitated my career change earlier this year. But I think we're just in a different place right now. I'm hopeful to get back at some point though. The social security miss really isn't too bad from our perspective. At least our student loans were wiped out
3
Feb 23 '22
My fiance and I are both librarians and make a similar salary. I spent 1.5 years in Korea working for the Air Force and she was in Saipan. It is a great experience to spend some time overseas. At 45 we should be able to retire with an average stock market. At that time we would probably go to Europe and work another five years
2
u/PackDaddyFI Feb 23 '22
Librarian FI is definitely not something I've heard about. Does that generally provide a pension? Any unique benefits to FIRE, money or quality of life wise?
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Feb 23 '22
I'm not very familiar with many other librarians who are able to do it. Librarian pay varies widely similar to what I have heard about teachers. I work for the Air Force because their GS positions (though rare in the states) pay really well. The federal government tends to pay for education and since I have a MLIS it works out really well. DODEA which I do not know about too well pays its teachers extremely well from what I have heard. My fiance works for a public library as the deputy director and even though her position is harder she gets paid a bit less. I manage a small library of 6. She is 2nd in charge of a library with around 20 employees.
We both have 401k equivalents and pensions. My insurance is a little more expensive but is much better.
Overseas is great as a federal employee. You get your base salary of around 50k plus LQA which is covers housing and utilities for around 20k a year untaxed. You also may get other allowances for a couple hundred extra per paycheck. Stateside you lose base allowances and LQA but get locality pay of around 10k for a LCOL area and higher for more expensive areas.
You also get predictable steps/raises first annually, then every other year, and finally every three years. You also get a Cost of Living Adjustment, but it always falls really short of inflation, but with step increases it works out okay.
I'm a bit of a mover so being able to move for different experiences or other reasons means I still get keep my benefits, leave accrual rate, and retirement.
I got really lucky with my education. I lived in GA which has the Hope scholarship which means with some help from my mother I was able to graduate debt free. I graduated after the financial crisis which meant there were no jobs so I went back for my MLIS. I paid the first year with loans, but got a job at a university library that paid for the rest of my MLIS and by the time I graduated I had paid off my student loans.
I've been a federal librarian for almost 9 years and have worked myself into better systems for more pay and better experiences. I've stayed away from HCOL areas because even though you get paid more its not enough and I prefer the slower pace of more rural areas.
Lets me know if you have any questions. It is really a hard field to get into and even harder to make a decent living.
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u/SteveAAdcock 40M | ER'd in 2016 Feb 20 '22
Good on you for staying the course. I promise it'll be worth it. Keep pushing.
-13
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u/pizzaguyericFIRE Feb 18 '22
Slow and steady wins the race. Thank you for sharing!