Reader Case Study: Furloughed Behavioral Therapists Wait Out The Pandemic
Anne and her husband Michael live in rural Colorado where, until the pandemic, they worked as behavioral therapists for children with Autism Spectrum Disorder (ASD). Now, they’re on voluntary unpaid furlough and requesting our help deciding what to do next. They recently sold their behavioral therapy practice, have a five-acre homestead with dogs and farm animals and are wondering if now’s the time to transition to full-time homesteading.
What’s a Reader Case Study?
Case Studies address financial and life dilemmas that readers of Frugalwoods send to me requesting advice. Then, we (that’d be me and YOU, dear reader) read through their situation and provide advice, encouragement, insight, and feedback in the comments section. For an example, check out the last case study. Case Studies are updated by participants (at the end of the post) several months after the Case is featured. Visit this page for links to all updated Case Studies.
The Goal Of Reader Case Studies
Reader Case Studies are intended to highlight a diverse range of financial situations, ages, ethnicities, geography, goals, careers, incomes, family composition, and more!
The Case Study series started in 2016 and, to date, there’ve been 52 Case Studies. I’ve featured folks with annual incomes ranging from $17,160 to $192,720 and net worths ranging from -$317,596 to $1.5M. I’ve featured single, married, partnered, divorced, child-filled, and child-free households. I’ve featured gay, straight, and trans people. I’ve featured cat people and dog people. I’ve featured folks from the US, Australia, Canada, England, South Africa, and France. I’ve featured folks with PhDs and folks with high school diplomas. I’ve featured people in their early 20’s and people in their late 60’s. I’ve featured folks who live on farms and folks who live in New York City.
The goal is diversity and only YOU can help me achieve that by emailing me your story! If you haven’t seen your circumstances reflected in a Case Study, please feel free to apply to be a Case Study participant by emailing firstname.lastname@example.org.
Reader Case Study Guidelines
NEW INFO: Based on popular demand from you all, and a TON of submissions, I’m going to start featuring TWO Reader Case Studies per month!
I probably don’t need to say the following because you folks are the kindest, most polite commenters on the internet, but please note that Frugalwoods is a judgement-free zone where we endeavor to help one another, not condemn. There’s no room for rudeness here–the goal is to create a supportive environment where we all acknowledge that we’re human, we’re flawed, but we choose to be here together, workshopping our money and our lives with positive, proactive suggestions and ideas.
A disclaimer that I am not a trained financial professional and I encourage people not to make serious financial decisions based solely on what one person on the internet advises. I encourage everyone to do their own research to determine the best course of action for their finances. I am not a financial advisor and I am not your financial advisor.
With that I’ll let Anne, today’s Case Study subject, take it from here!
Hi Frugalwoods and Fam! I’m Anne, I’m 39 years old and my husband Michael is 42. We live in a semi-rural unincorporated community outside of Colorado Springs, Colorado on a little 5 acre homestead with our family of dogs and various farm animals. Due to the pandemic, we’re currently on unpaid voluntary furlough from our jobs as behavioral therapists for children with Autism Spectrum Disorder (ASD).
Michael and I met while we were both working at a private school for children with autism. I have a Master’s degree in Psychology and am a Board Certified Behavior Analyst (BCBA) and Michael has a BS in Elementary & Special Education.
Anne & Michael’s History of Travel
We both have a passion for farming and travel. We often used our work breaks as opportunities to travel and volunteer on farms. Going through an organization called WWOOF, we enjoyed working farm stays in Nova Scotia and Florida. We also took a year off to teach English at a school in rural South Korea. This time overseas was transformative for us. We loved the experience of cultural immersion and the freedom and excitement that came with seeing something new and different each day. We were also surprised at how cheaply we were able to live and travel while in Asia and even in Korea, where our housing and most of our meals were paid for.
During this time, we traveled to 10 countries–including spending a month in India–and we still came home with more savings than when we left. We grappled with the decision of whether to remain expats long-term or return to the US and to our careers and our homesteading dreams. At that time, we’d rescued a dog from a meat farm in Korea and the logistics of traveling and living abroad with a pet seemed much more difficult.
The Move to Colorado
When we returned state-side, we relocated to Colorado Springs from our hometown in the Northeast after I received a job offer, without ever having visited Colorado before. Returning to the US and its high cost of living was a big wake-up call for us and we quickly went into debt with the purchase of our two vehicles and all the other expenses that came with furnishing our apartment and getting situated in our new life.
We also had to re-learn that eating out, travel, and entertainment are not as affordable in the US. We struggled for a long time with finding this balance and were very uncomfortable with the amount of debt we acquired in such a short amount of time while all of our savings disappeared.
Starting a Behavioral Therapy Private Practice
This began us on a path of getting out of debt and then learning about financial independence. After being unhappy at many of our jobs, Michael and I started our own private practice providing behavioral therapy to children with Autism Spectrum Disorder (ASD). At our happiest, we were both working four-hour days while making a low six-figure income. We began to pay down our debts and fund our retirement. Five years ago, we were able to buy our first home: our 5 acre homestead. We adopted other rescued animals including another dog, two goats, one sheep and five chickens, and slowly learned through trial and error about gardening in our region.
We experienced enormous pressure to grow our business and, what began as our ideal work-life balance began to transform into an all-consuming business. We eventually leased a clinic location and had 10 full-time employees. I began to take on too many roles in the business and was really struggling to manage all my duties. I was under constant stress, which took a toll on my health, relationships, and our marriage–and I knew I couldn’t continue much longer. It took about a year to find a buyer for our business and after that, there was a one-year transitional employment contract for Michael and myself to remain full-time with the company.
The sale was a huge relief and a lot of weight was lifted from my shoulders, but I was so burnt out that my plan was to finish out my year long contract and then transition to a part-time role, or even better, take some time off. I’d also started a few side-gigs, one of which was teaching make-and-take chunky blanket classes; and would make a little more than $300 a class, often teaching two classes a month. I began to consider the possibility of making a living somehow doing various side gigs that I enjoyed instead of having an actual job or career.
And then… COVID
Then COVID happened and everything changed. Michael and I took a voluntary furlough from our company in mid-March. I stepped down from my Director position and Michael and I began homesteading full-time and living a mini-retirement lifestyle. We’ve developed a friendship with the buyer of our company and have not been pressured to return to work during a pandemic. Because I have a potential health complication, we continue to mainly self-isolate at home and I have reduced my side gig classes to smaller classes once or twice a month.
Being at home on our property, with many of the previous stressors removed from life, has been healing and transformative. Our days consist of taking care of our animals, gardening, preparing meals from scratch, exercising, and pursuing hobbies and creative projects. As a 40th birthday present to myself, I’m taking an online creative writing class at a university, something I have always wanted to do—but never felt like I had the time or the right mind-set to dedicate to.
This time has given us a unique opportunity to re-evaluate our lives and what we want our future to look like. I would like to take a slower and more balanced work flexible path to FI (financial independence). I enjoy work as long as I am passionate about what I’m doing. While I enjoy my career, I sometimes find it stressful to work with families who are experiencing the trauma of having a special needs child and I don’t like how the insurance landscape has been transforming our field and limiting our ability to serve our clients. I’ve always felt that my career had an expiration date, particularly as I get older and it becomes harder to keep up the energy and manage the injuries from working with the special needs population.
I’d like to find more ways to generate passive income so that we can continue doing the things we love. I would also like to explore location independent work in a career I’m passionate about. Michael spent the last few years developing a specialty garlic crop, which we hope we can begin to sell commercially next year. But we have no idea how much income this will produce for us.
With the change in our employment status, we were able to crunch down our finances and get a better idea of how much our lifestyle costs when we aren’t working. We eliminated insurance on all but one of our vehicles, cancelled our landline and alarm system, stopped our cleaning service, and reduced a lot of our eating out, clothing, travel, and personal care expenses. We are hoping to be able to avoid having to work in an office or school setting until after the pandemic.
My current position does not offer remote work and, although I’ve applied for a number of remote positions, we don’t have high speed internet service in our area, which might make our ability to work remotely a challenge.
We Want A Plan
Our lifestyle is very serendipitous and we lack a clear budget or financial plan. We’re both disorganized, free-spirit types who struggle with spreadsheets and organization, and I worry that we may end up in debt again or with a poorly planned out retirement. Last year our spending was $50,758 and in these last six months our spending has been $24,472. We have various unexpected emergency expenses each year that always drive our numbers up.
Where Anne and Michael Want To Be in Ten Years:
- Finances: I’d like to be fully funded for a traditional retirement, and ideally on track for an earlier retirement if possible.
- Lifestyle: We’re considering relocating in the next 5 years out of state up north to a lower cost of living area with lower wildfire risk. Once all of our animals pass, we’d like to live and slow travel abroad indefinitely.
- Career: We enjoy work when it’s something we’re passionate about doing—but don’t want to return to full-time employment.
- My goal is to have a location independent career and multiple streams of income.
- We’re also interested in rental real estate, but would most likely want to buy in a resort area or other area out of state where we would want to visit or live in in the future.
- If we do return to our previous jobs, I wouldn’t want to remain for more than 5 years.
Anne and Michael’s Finances
|Monthly payments from the sale of our therapy practice||$4,166||Through 2024 with interest beginning at 5% in 2021 and increasing each year.|
|Unemployment Income||$2,660||This likely won’t last much longer.|
|Side gig income||$350||Etsy Store sales and Art Classes|
|Item||Outstanding loan balance||Interest Rate||Loan Period and Terms||Equity||Purchase price and year|
|Mortgage||$162,394||3.87%||30-year fixed||$387,606 (current value is $550k+)||$390K in 2015|
|Item||Outstanding loan balance||Interest Rate||Monthly required payment|
|Student Loan||$3,198||1.62%||I pay the $125.64 monthly minimum|
|Item||Amount||Notes||Name of bank/brokerage|
|Michael’s Brokerage Account||$128,695||Vanguard|
|Emergency Fund||$85,000||ENT Federal Credit Union|
|Michael’s Brokerage Account||$65,920||Schwab|
|Michael’s Roth IRA||$41,755||Schwab|
|Anne’s Rollover IRA||$38,952||Our old company 401K rollover|
|Anne’s Roth IRA||$30,693||Schwab|
|Anne’s SIMPLE IRA||$30,237||Vanguard|
|Michael’s Rollover IRA||$29,351||Our old company 401K rollover||Vanguard|
|Michael’s gold||$20,000||Precious Metals 10 oz.|
|Joint Bank Account||$16,724||ENT Federal Credit Union|
|Michael’s HSA||$16,629||Health Savings Administrators|
|Anne’s HSA||$16,014||Health Savings Administrators|
|Michael’s SIMPLE IRA||$15,532||Vanguard|
|Anne’s SEP IRA||$9,428||Vanguard|
|Traditional IRA Contributions for 2020||$1,000||To fully fund both of our accounts. We don’t have access to any other tax advantaged accounts right now.|
|Groceries, Household Items, and Dog Food||$800||We buy only organic and support our local farmer’s market. This also includes all of our household supplies and some pet food expenses since I homecook for our dogs|
|Health insurance, medications and co-pays||$950||Health insurance ($650/month) plus medications and co-pays (we have high deductible health plans).|
|Pet Expenses||$250||All food and supplies for our animals each month|
|Homeowner’s Insurance||$238||Through Geico. We live in an area that had a wildfire recently and we haven’t been able to find cheaper coverage.|
|Gifts and Charitable Donations||$166|
|Debt Payment||$125||Student Loan Payment|
|Gas and Car Maint.||$100||Gas, Maint., Tolls, and Registration fees for 3 vehicles and 2 trailers|
|Cell Phone||$89||Verizon – 2 lines. This is the only carrier that services our area|
|Vacation and Travel||$66||We inherited a time share from a relative and split the costs with a family member. We have no plans to travel until after the pandemic.|
|Car Insurance||$50||Geico. We currently only have one of our vehicles insured due to us being home|
|Internet||$44||Century Link. This is the only service provider in our area.|
|Dental Insurance||$41||Humana Dental Insurance for both of us.|
|Beer/Alcohol||$30||This has INCREASED since the pandemic|
|Restaurant||$25||This has decreased significantly since we’re always home|
|Quickbooks Intuit||$15||We wanted to better track our expenses but will be canceling this service because it doesn’t really meet our needs.|
|Clothing||$0||We haven’t purchased any new clothing in 6 months and don’t have any need|
|Vehicle make, model, year||Valued at||Mileage||Paid off?|
|2010 Toyota Corolla||$2,800||190K||Yes|
|2005 Ford Mustang||$2,300||135K||Yes|
|2004 Honda Pilot||$2,000||165K||Yes|
Credit Card Strategy
|Card Name||Rewards Type?||Bank/card company|
|Chase, Southwest, United, Citi||Travel||We have them all and have used them to travel internationally 2x a year for the last several years as well paying for flights for some domestic flights.
We’re thinking of canceling them all since we’re paying fees and not able to travel right now and having so many cards at a time makes budgeting more complicated.
Anne’s Questions For You:
I’d like to know how long we can wait out the pandemic or figure out alternative income streams/remote careers before we need to return to work to avoid derailing our retirement/going into debt.
- How do we realistically come up with a budget for retirement planning? We know what our fixed expenses are, but how much should we budget for “emergencies” so as not to deplete our emergency fund?
- Over the past two years, we’ve had many unexpected expenses such as needing to replace a well pump for $5k, $3k in car repairs, $8k on dental implants and, just this month, $3,500 on surgery and medical expenses for a goat plus $1,700 on a new washer and dryer.
- With so many unexpected expenses that throw off a budget, how much should we reasonably be budgeting each year for emergencies annually and in our retirement (where our living expenses and emergency expenses due to not owning a home or pets or being overseas might be much less)? Also due to inflation, a retirement budget of $50k might be a lot less when we’re 90.
- Should we consider buying a condo or house out of state in an area we might want to move to in the future, which could bring in some passive income as a rental now? How should we allocate funds for this?
- Should we fund our traditional IRA’s this year with money we have set aside, or should we add that to our emergency fund since we’re not earning much income and don’t know about our future work situation?
Mrs. Frugalwoods’ Recommendations
Anne and Michael are in a good position to do what we’re all doing right now: wait for the pandemic to end. They’ve done a great job of paying down their debt, accelerating their savings, and trimming their expenses. While being unemployed is no one’s cake walk, Anne and Michael are fortunate to be in sound financial shape. Congrats to them both for getting on solid ground!
Before diving into Anne’s questions, I want to reflect on the word that comes to mind as I read their story: discernment. Anne and Michael are at a juncture right now and they have a lot of options and ideas about what to do next. Before they make any major decisions–financial or otherwise–I suggest taking time to discern what matters most to them.
Some of their goals conflict with each other–such as homesteading and full-time travel–and I think giving themselves the time and the grace to reflect on their options is wise. There’s no pressing need for them to make any decisions ASAP, which is a blessing.
They can absorb today’s Case Study, their own thoughts on what it’s like to homestead full-time, and what they think will fulfill them in this next stage of their lives and careers. I’m a person who loves to jump from one big project or decision to the next, so I completely understand the struggle of stillness. But if they can, I recommend they practice the art of Be Still and Know (don’t worry, I’ll be doing this right alongside them). It’s also true that you can’t make a longterm plan without knowing the parameters of that future.
Anne’s Question #1: how long can we wait out the pandemic or figure out alternative income streams/remote careers before we need to return to work to avoid derailing our retirement/going into debt?
Short answer: for awhile, but not forever.
They have plenty of money to wait out the pandemic (assuming it doesn’t gone on for years and years). They’ll start to deplete their savings when unemployment runs out, but they do have an $85k emergency fund (side note: way to go, Anne and Michael!!!!!).
This question is, in large part, dependent upon how much they spend every month. Anne noted that they’ve already reduced their monthly spending and the math is always the same: spend less, earn more, or do both.
Anne and Michael’s Monthly Spending
At present, Anne and Michael spend $5,829 per month and make $7,176/month. Once unemployment stops, they’ll be making $4,516 a month, which would put them in the red. However, I think we can find a way to get their spending to fit into $4,516 a month. They won’t be saving or investing, but that’s ok to do (for a short period of time). To be clear, I don’t recommend a long term strategy of breaking even every month, but it’s completely fine to do for a short period of time, particularly since Anne and Michael already have robust savings, taxable investments, and retirement investments. So, what can they cut to reduce their monthly expenses by $1,313?
- The quickest and easiest thing would be to cease their $1k monthly IRA contributions. Again, this is a short-term proposition. I don’t suggest they cease contributing to their IRAs forever, but they could stop for now. It doesn’t make sense to go into debt while contributing to an IRA. The hierarchy of financial needs is that you (almost always) want to prioritize breaking even and not going into debt ahead of investing and saving for retirement.
- If they’d prefer to continue their IRA contributions, they can comb through their expenses item by item and lop off everything that’s discretionary and reduce everything that’s reduceable. If you’re unfamiliar with this system of categorization, check out this post, in which I lead you through the full exercise of categorizing your expenses. The basic idea is to look at your spending and figure out what stuff you HAVE to pay for (i.e. your mortgage or rent), what stuff you have to pay for but could spend less on (i.e. groceries, utilities, gas) and finally, what stuff you LIKE, but could reduce or eliminate if needed (i.e. haircuts, take-out, alcohol).
Here’s the list of Anne and Michael’s Reduceable and Discretionary Expenses:
|Groceries, Household Items, and Dog Food||$800||Reduceable|
|Gifts and Charitable Donations||$166||Discretionary|
I’m not suggesting–or advocating–that they eliminate all of these expenses. To the contrary, this list gives them insight into what they have the ability to reduce or eliminate each month in order to fit into their budget. And if they decide to cease their IRA contributions for the time being, they’ll only need to save $13 more dollars per month in order to break even.
One thing they could save money on pretty easily is their cell phone service. I too live rurally and understand the pain of having only one service provider that works in your area. The good news is that there’s an MVNO for pretty much every single cell phone service provider!
Ting, the MVNO I use, re-sells Verizon service and I pay about $11 a month for each of our phones (that’s an affiliate link). For the full rundown on how to switch to an MVNO, check out this post: My Frugal Cell Phone Service Trick: How I Pay $10.65 A Month.
The Bottom Line
To (finally) get around to answering Anne’s question, if she and Michael can get their spending low enough to break even every month, they can essentially exist in this liminal state for as long as they need/want to (or at least, until the payments for their business stop). Like I said, this isn’t a viable long-term strategy since they won’t be saving or investing, but it’s a tenable short-term option while they figure out their next steps. Reducing their spending will give them time and space to think.
Anne’s Question #2: How do we realistically come up with a budget for retirement planning? We know what our fixed expenses are, but how much should we budget for “emergencies” so as not to deplete our emergency fund?
The best way to do this is by tracking your expenses. Not for one month, not for one year, but for many years. I know, I know, it’s boring and arduous, but past data is the best way to predict future spending. At the end of the day, data is all we have, folks. Plus, in many instances, “emergencies” aren’t actually “emergencies.”
Here’s what I mean by that:
- If you own a car, you can be 100% guaranteed that thing is going to need repairs, maintence, and to one day be replaced. A car breaking down shouldn’t be a surprise–it’s a super annoying, but EXPECTED, part of owning a vehicle.
- If you have kids (goat or human), you can be 100% guaranteed those things are going to need food, medical attention, toys, clothes, washable markers, etc.
- If you own a house, you can be 100% certain that mofo is going to need stuff alllllll the time: a new roof, a new toilet in the master bathroom, paint to cover the spot where a four-year-old accidentally banged a trampoline into the wall (just for example).
All of this–and more–is why we have emergency funds, but I think “emergency” is kind of a misnomer here. This is all stuff we KNOW is going to happen. An actual emergency would be if like, I don’t know, there was a global pandemic. THAT we didn’t 100% see coming. A new roof? You can see that bad boy coming from about a decade away.
And no, these expenses aren’t all going to crop up in the same year, but rest assured they’ll crop right on up. This is why you want to track your spending year after year. What I’ve found (from sharing my monthly expenses here on Frugalwoods for six years now) is that, in large part, my annual spending often shakes out to be about the same–even though some years I’ve bought cars and some years I’ve had babies and some years I’ve replaced dishwashers. Big expenses happen every year.
The best advice I can give Anne is to keep up the excellent work of tracking her spending and then figure out averages year over year. Then, round-up a bit because something is always going to break.
I use the free online service Personal Capital to keep track of my money–my spending, my investments, my net worth, etc (that’s an affiliate link). If you’re not tracking your spending every month, you might consider using Personal Capital or another free service. Here’s my explanation of how Personal Capital works and why I use it.
To Anne’s question on inflation–this is why you have your retirement savings invested in the stock market. If you kept your retirement savings in cash stuffed in your mattress, then yeah, you’d be in some inflationary trouble. But as long as you’re invested in risk-appropriate assets for many decades, your retirement funds should keep pace with the broader market and inflation.
Anne’s Question #3: Should we consider buying a condo or house out of state in an area we might want to move to in the future, which could bring in some passive income as a rental now? How should we allocate funds for this?
My inclination here to say no. Real estate prices are actually up quite a bit in light of the pandemic and so it doesn’t seem like an opportune time to speculatively buy a rental.
To more nearly address Anne and Michael’s desire to generate an income, I wonder if they’ve thought about leaning into their entrepreneurial tendencies? They built a successful therapy business together and then sold it, which tells me they have some serious aptitude in this area. Anytime folks come to me wanting to make a mid-career transition, it’s often the case that the way to make the most money is to do something adjacent to what you’re trained to do.
If they don’t want to work as therapists any more, I wonder if there are therapy-adjacent things they could do? Perhaps consulting with other practice owners/therapists who want to buy or sell a practice? Perhaps serving in a consultation role to behavioral therapists in some capacity (like therapy for therapists?) Clearly I have no idea what this would be precisely, but I do know that leaning into your expertise is often the best route to follow. Regarding Michael’s garlic crop–I say go for it! They clearly know how to build and manage a business and it strikes me that garlic could be a more shelf-stable farm product that could be sold online.
Another avenue I’m curious about are animals. Is there an opportunity/desire to run an animal sanctuary? Or to board animals? Or, or, or? Not sure, but I hear their love of animals threaded throughout their story and wonder if there’s a way to build revenue into this passion.
Anne’s Question #4: Should we fund our traditional IRA’s this year with money we have set aside, or should we add that to our emergency fund since we’re not earning much income and don’t know about our future work situation?
At this point, I personally wouldn’t fund the IRAs. I’d keep any extra money as a liquid emergency fund in order to buy them the time and space to discern what they want to do next. As I noted above, this isn’t a long-term strategy, but it’s a short-term stop gap to help them avoid debt.
- Consider this as a time of discernment and reflection. Avoid making major changes, but use this opportunity to explore and research where they’d like to go next with their lives and careers.
- Reduce their monthly expenses–either by ceasing IRA contributions or through the other suggestions I noted above–to fit into their new monthly income (after unemployment benefits run out).
- Commit to tracking their spending so that they can utilize several years of data to determine their average annual expenditures.
- Consider leaning into their strengths of starting a business and/or their professional therapy careers and connections.
- Know that they’re in a solid financial position to take this time to figure out where to go next.
Ok Frugalwoods nation, what advice would you give to Anne? We’ll both reply to comments, so please feel free to ask any clarifying questions!
Would you like your own case study to appear here on Frugalwoods? Email me (email@example.com) your brief story and we’ll talk.
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