Reader Case Study: Young Professionals Plan for a Wedding, Gender Confirmation Surgery and Financial Independence
June and Daniel are young professionals living the DINK (dual income; no kids) life in Chicago. While they’re grateful for the higher salaries the city offers, they’re not loving the urban hustle. They have a number of near-terms goals, including celebrating their wedding, gender confirmation surgery for Daniel, buying their own home and eventually, achieving financial independence.
But given the pandemic and their uncertainty about staying in Chicago, they’re not sure when any of these things will happen. Capping it off is June’s unhappiness and anxiety around her job. They’ve asked for our help in untangling these knots and figuring out their next financial steps.
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 54 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 email@example.com.
Reader Case Study Guidelines
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 June and Daniel, today’s Case Study subjects, take it from here!
June and Daniel’s Story
Hello, Frugalwoods nation! We are June, 29, and Daniel, 28. Daniel is transgender and we both identify as queer, identities around which we feel a lot of pride. We met in college and have been together for over seven years. We are lifelong Midwesterners and have lived in Chicago for two years now. Prior to our move to the big city, we lived in Madison, WI after college, where we both worked full-time in retail. During that time in our lives, although it was financially tight, we adopted many frugal habits that continue to serve us well now that we’re earning more comfortable salaries.
June currently works in accounting for a hospitality company and Daniel works in development and communications for a local non-profit organization. We have each held these jobs for about 2 years. June’s passions include minimalism, DIY projects, oil painting, organizing, interior design, and she enjoys helping friends and family organize and beautify their living spaces.
Daniel is a lifelong writer and loves expressing himself through creative non-fiction. In his spare time, in addition to writing, he enjoys cooking vegan and vegetarian meals, working out, playing guitar, listening to music (especially metal), and bird-watching.
Together, we love taking walks in our neighborhood, spending time in nature, and hanging out with our friends and family. In non-pandemic times, we usually take a couple trips a year to visit friends or get away, with recent destinations including San Francisco, Nashville, Seattle, Costa Rica (with Daniel’s family), and a fun stay in Dubuque, Iowa. Right now, our goals are to be financially independent/retired early (FIRE) and to have more flexibility to pursue our passions and hobbies outside of our day jobs.
The Driving Forces Right Now
We want to be financially independent but don’t have concrete dreams or a path to realize them. The freedom granted by FI is a huge motivator to us both. We are hard workers and could feasibly continue to climb our respective ladders for a few years to save enough to stop working permanently or semi-permanently. However, it’s really difficult to feel motivated to work harder in the short term when our “career aspirations” are to stop working, and what we value and want to pursue in the long term is almost entirely outside of our careers. We’re looking for the freedom to explore these other parts of our lives and find our passions, and the constant stress and exhaustion of our day jobs feels like a huge roadblock to getting there.
In the meantime, we’re saving quite a bit for short- and intermediate-term goals, so we have robust liquid savings buckets but no real concrete timeline for any of them. We continue to set aside money for a wedding, but as we both have large extended families, it’s anyone’s guess with the pandemic as to when we might get married. We are passively saving towards a down payment because we feel like we may want to buy a house someday, but we really like renting and don’t anticipate buying in the near future.
Daniel is seriously pursuing gender confirmation surgery and has an idea of what it will ultimately cost, but the cost of multiple stages/procedures and what insurance might cover varies widely. Basically, we have all of these liquid savings for goals we may not actualize for years. In the meantime, we feel like we may be missing out on growing this money because we’re keeping it liquid. Depending on many factors, each of these goals could be years away, or they could happen in the next year.
The best part of our current lifestyle is that we’re pretty intentional about lots of things. It is important to us to lead a simple life and find joy in non-material things, like walks through our community and spending time with loved ones and each other. We make a great team and are usually very aligned in both our day-to-day and long-term decision making (including around money and saving), which makes for a strong and united partnership.
We are very privileged to be able to work remotely during a time when so many others do not have this luxury. We are also very privileged to be able to save at the rate we do as DINKS (double income; no kids) with no outstanding debts. While we’ve only had it for a couple of months, we have greatly benefited from the flexibility of having our own car, as it has allowed us to safely travel to visit family and to escape the city for forays into nature.
It turns out that it was easier to build an intentional life together when we didn’t have the financial resources we do now. We moved to Chicago because we wanted to be closer to our friends (many of whom live here in the city) and gain better access to well-paying job opportunities, which felt scarce in Madison. Big-city living and holding higher-paying jobs has allowed us much greater access to the amenities around us, but it has definitely been difficult to combat lifestyle inflation in an urban environment that offers limitless distractions and ways to spend our hard-earned money even as it has allowed us to build wealth at a rapid clip.
Additionally, while our move to Chicago allowed us to achieve higher earning potential and access to many of our friends and family members, we find ourselves missing the abundant green spaces, small-town feel, and slower pace of life in Madison. We find we’re easily overstimulated in such a dense urban environment and feel that at some point in the near future we will want to live somewhere smaller, quieter, and closer to nature.
Outside of the collective high anxiety, stress, and uncertainty of this moment in time, the worst part of our current lifestyle is that June is very unhappy at her job. She likens it to being in a toxic relationship: poor boundaries, poor communication, no respect for her needs, and–through continued layoffs and long-term facility closures–the near-constant alternating threats of being terminated or having to report to a physical workplace with nebulous safety precautions in place. This job is a huge strain on her mental and emotional well-being, but it is very hard to weigh the pros and cons of leaving this job without having another one lined up in the current job market. It’s also hard to feel motivated to find “better” or higher-paying jobs to get us to FI as quickly as possible when, ultimately, we don’t feel motivated to build careers at the expense of the things that are truly important to us in life.
Where June & Daniel Want To Be in Ten Years:
- Finances: In ten years we want to be as close to FIRE (financially independent/retired early) as possible, and ideally, we want to be there already.
- Lifestyle: We want to lead a life of freedom and flexibility, but one that doesn’t rely on extravagant things to feel exciting. Basically, we want equal parts “let’s try something big and new because we can” and “let’s drink coffee on the front steps all morning because we have nowhere to be.” We know pretty concretely what isn’t important or fulfilling for us (i.e. climbing a corporate ladder; building identities around careers) and we know what is important and fulfilling for us (exploring, expressing ourselves creatively, and spending quality time with loved ones), but we don’t have a clear picture of what our FI life would look like.
- Career: IF we’re still working in ten years, we want to be working only if and when we want and pursuing creative outlets or making “side hustles” into our main source of income because we no longer have to rely on full-time work to get by.
June & Daniel’s Finances
|June’s net income||$2,867||After health, dental, and vision insurance, 401k contributions, and taxes|
|Daniel’s net income||$2,160||After health, dental, and vision insurance, FSA, 403b contributions, and taxes|
|Item||Amount||Notes||Interest/type of securities held||Name of bank/brokerage|
|Liquid savings account (savings goals)||$56,638||We have a joint interest-bearing partitioned savings account. This is the total amount across all partitions including a $17,000 emergency fund.||Earning 0.595% interest||Simple/BBVA Compass|
|June’s 401k||$18,650||This is June’s pre-tax retirement account through work||“Trim 2060” target retirement fund||Fidelity|
|Daniel’s Roth IRA||$14,612||This is Daniel’s target retirement account. Maxed out contributions in 2020.||VTIVX||Vanguard|
|June’s Traditional IRA||$13,488||This is June’s target retirement account. Maxed out contributions in 2020.||Target retirement fund 2055 (VFFVX)||Vanguard|
|Daniel’s 403b||$10,298||This is Daniel’s pre-tax retirement account through work||Vngrd Bal Indx Adml||Nationwide|
|June’s Roth IRA||$8,904||This is June’s target retirement account||Target retirement fund 2055 (VFFVX)||Vanguard|
|Daniel’s SEP IRA||$778||This is Daniel’s employer-funded account from a previous job||Not earning interest – hoping to roll this into my IRA||Vanguard|
|Joint checking account||$553||Simple/BBVA Compass|
|Vehicle make, model, year||Valued at||Mileage||Paid off?|
|2018 Ford Escape||$20,387||33,000||Yes. This car was gifted to us by a family member (or, rather, they “sold” it to us for $25)|
|Groceries||$515||Our monthly grocery costs have been higher during the pandemic because we have opted mainly for grocery deliveries, which comes along with a significant markup after delivery fees and tip. Whether shopping in person or paying for delivery, we mainly shop at Aldi.
This number also includes an occasional produce box delivery from a local restaurant and a winter CSA half-share, paid in full upfront.
This category includes household expenses like toilet paper and dish detergent as well as liquor.
|Therapy||$390||This is our single biggest negotiable monthly line item after groceries, but it is worth the expense for us.|
|Vacation & travel||$121||Average of last 6 months. This is lower than in a “normal” year, as we would generally make several in-state trips and about 1 out-of-state trip per year. This will likely be higher in the future (here’s hoping!).|
|Utilities||$90||Electricity and internet. Heat, water, sewer, and trash are included in our rent.|
|Gifts||$71||Christmas, birthday, graduation, and wedding gifts (average of last 5 months in this category).|
|Home goods||$68||Mostly candles…|
|Clothing||$67||Average of last 6 months in this category|
|Car insurance||$65||Six month Progressive premium broken down monthly (paid in full)|
|Car-related expenses||$50||Includes: title transfer & registration fees, tolls. We only have one month’s worth of data right now.|
|June’s cell phone bill||$45||Service through Ting (average of last 6 months)|
|Personal care||$35||Haircuts (this was more or less the breakdown from 2019; it’s been significantly less during the pandemic).|
|Daniel’s cell phone bill||$34||Service through Ting (average of last 6 months)|
|Compost pick-up service||$25||We get a new bucket delivered to our house bi-weekly through a local urban farm|
|Entertainment||$16||The very occasional book, ticket, or movie rental|
|Spotify Premium Duo Account||$14|
Credit Card Strategy
|Card Name||Rewards Type?||Bank/card company|
|Chase Freedom Unlimited* (Daniel)||Cash back||Chase Bank|
|American Express Propel (Daniel & June)||Travel||Wells Fargo; this is the main card we use|
|PNC Points Visa Signature (June)||Points||PNC|
June & Daniel’s Questions For You:
Given our large liquid savings, is it wisest for us to select 1-2 short term savings goals to remain liquid and invest the rest?
- We’re holding a lot of cash for short-term goals and we don’t know if that’s the best way to put our money to work.
- What do we need to know about saving in a brokerage account? Is this “bucket” outside of a retirement account? Is this something we should look into for our intermediate cash savings goals? Long-term savings goals? Both? Is this money available to withdraw at any time?
- Mechanically/logistically, what do we need to do to get to our goal(s)? What changes do we need to make in order to achieve FI in the next ten years? Is this timeline possible for us?
- What’s the best way to balance using our jobs as a means to an end and pursuing work that’s actually fulfilling in the meantime?
- Is it disadvantageous for us to keep a down payment in liquid savings when we likely won’t be buying in the next 5-10 years?
Based on our calculations, we are approaching “coast FI.” Since our traditional retirement savings are almost guaranteed to keep growing, should we start saving more in non-tax advantaged accounts to financially sustain us before we reach traditional retirement age?
- We can’t know the long-term financial impact of June leaving her job without another lined up, but we imagine the mental and emotional gains could be worth it. Flexibility is the whole point of FI for us, but we worry about being set back by only having one income for an indefinite period. Do you have any advice on weighing this decision?
Mrs. Frugalwoods’ Recommendations
June and Daniel are doing an awesome job! They should feel proud of the wise choices they’ve made and the excellent financial position they’re in–before they’re even thirty! I appreciate the intentionality with which they spend their money and their careful mapping of their future.
Question #1: Given our large liquid savings, is it wisest for us to select 1-2 short term savings goals to remain liquid and invest the rest? and Question #5: Is it disadvantageous for us to keep a down payment in liquid savings when we likely won’t be buying in the next 5-10 years?
I’ve lumped questions 1 and 5 together because they’re driving at the same point: what to do with the $56k they’ve saved up.
I think this is more of a prioritization question than a financial question. In order to make a sound decision about this money, they need to identify the sequence of their upcoming major life events. I totally get that the pandemic makes a lot of this planning difficult, but, we can’t allocate this money until we know when it’ll be needed.
June and Daniel outlined three fairly expensive plans on the horizon:
- Gender confirmation surgery for Daniel
- Their wedding
- Buying a house
Depending on the cost and scope, those three items could gobble up their $56k real quick. If they’re thinking items #1 and #2 will happen in the near term–let’s say in under five years–it seems to me they should keep their cash liquid. We’ll dig into investing in a moment, but the general rule of thumb is that you don’t invest money you’re going to need in five years or less. In terms of a downpayment on a house, it’s tough to answer without knowing the purchase price (and thus the down payment amount) of the house in question.
June and Daniel alluded to this in their question and I agree it’s the best option: keep the $56k liquid until AFTER paying for the gender confirmation surgery and the wedding. At that point, they can evaluate how close they are to buying a house, which will inform what to do with the remainder of their cash. If house buying still seems 10 years in the future, they can feel pretty confident investing that money. Conversely, if they want to buy a place in under five years, they should probably keep the money liquid.
Question #2: What do we need to know about saving in a brokerage account? Is this “bucket” outside of a retirement account? Is this something we should look into for our intermediate cash savings goals? Long-term savings goals? Both? Is this money available to withdraw at any time?
Woohoo!!!! We get to do Investing 101, baby!!!! Before anything is invested, June and Daniel should ensure they keep an emergency fund liquid:
***As we all know, emergency funds are calibrated on what you spend every month. Three to six months worth of expenses are the standard recommended amount. June and Daniel’s current monthly spending of $2,945 indicates they need an emergency fund in the range of $8,835 (three months’ worth of spending) to $17,670 (six months’ worth).***
In order to know how much money you need in your emergency fund, you must know how much you spend every month. One way to accomplish this is to track your expenses with a free expense tracking service. I use and recommend Personal Capital because it’s free and easy to use (affiliate link).
Now hear this: do not invest or otherwise tie up your emergency fund. Your emergency fund is cash money held in an easily accessible checking or savings account.
After you’ve set aside an emergency fund and IF you don’t have any major expenses on the horizon (for example you’re not planning to buy a house or car soon), that’s usually considered a safe time to invest. Although, as I will note about 97 times, investing is inherently risky.
Once invested, you ideally don’t touch this money for decades. The historical returns from the market, which, of course, do not predict future performance, are based on people remaining invested for decades. There was once a (possibly apocryphal) study that showed the highest performing stock portfolios were held by people who were, as it turned out, dead… Meaning: don’t pull money in and out of the market!
If June and Daniel think they might need any of this money in the near-ish term (let’s say the next five years), the least risky option would be to keep it all in a savings account.
The reason: once money is invested, it very well might lose value in the short term. If, for example, you put $50K in the market in 2021 and then need that $50k in 2023, it’s totally possible the $50k would’ve lost value and now be only $30k. This is why you only want to invest money you don’t anticipate needing anytime soon. It’s also why you keep an emergency fund of liquid cash, as noted above.
The stock market goes up and down. It’s the natural cycle of it and you can’t panic in downturns because that’s what the market is supposed to do. Gotta gotta go down to go up.
When we talk about historical returns, we’re talking about the long-term trajectory of the market. For reference, many economists cite 7% as the expected historical return. But that doesn’t mean you’ll make 7% every year–some years you’ll lose money, some years you’ll make a lot more. The hope is that, over time, your gains flatten out to a roughly 7% return.
- Brokerage: the institution that holds your investments (Fidelity and Vanguard are both brokerages).
- Taxable investments: these are what we’re talking about when we discuss investing. They are called “taxable investments” because you will pay taxes on the gains you make when you cash them out. These are called long-term capital gains taxes and they apply as long as you are invested for longer than one year; you pay more in taxes if you liquidate sooner than a year.
- Side note: your retirement investments are referred to as “tax advantaged” because they have a different taxation structure, which we’ll discuss in a moment.
- Returns: the amount of money your investments make.
- Expense ratio: the fees you pay for the investments you hold, which are listed as a percentage. You want a low expense ratio, so that you’re not losing a ton of money to fees. Many a shady stock broker has raked in millions by charging high fees. When choosing a brokerage and a fund to invest in, it’s imperative to evaluate the expense ratio.
June and Daniel asked: are taxable investments outside of a retirement account?
Yes! Taxable investments are NOT retirement accounts. Traditional retirement vehicles, such as 401ks and 403b, are tax-advantaged accounts because you put money into them pre-tax. You don’t pay taxes on the money you contribute to these accounts. Additionally, you can’t withdraw from these accounts without paying a penalty until you’re age 59.5.
June and Daniel have the trifecta of retirement accounts and so I want to do a quick rundown to make sure we’re all on the same page:
Roth IRA (Individual Retirement Account):
- A Roth IRA is a retirement account that’s post taxes.
- This means you pay taxes on the money you put into a Roth IRA, but you don’t pay taxes when you withdraw the money in retirement.
- A Roth IRA grows tax free.
- You need to be age 59.5 before you can withdraw money penalty-free (although there are exceptions).
- Your eligibility to contribute to a Roth IRA depends on your income and your particular tax situation. June and Daniel should examine these factors and determine if a Roth IRA or a traditional IRA (see below) makes the most sense for them.
- I like this Nerd Wallet article on Roth IRAs if you want to read more.
Traditional IRA (Individual Retirement Account):
- A traditional IRA is a retirement account that’s pre-tax.
- This means you don’t pay taxes on money you put into an IRA, but you do pay taxes when you withdraw the money in retirement.
- There are no income limits. Anyone can contribute to a traditional IRA.
- You need to be age 59.5 before you can withdraw money penalty-free (although there are exceptions).
- More about traditional IRAs here.
401ks and 403bs:
Are tax-deferred retirement accounts. This means you don’t pay income taxes on the money you put into your 401k, but you will pay income taxes when you withdraw your money in retirement.
- You’re allowed to put a maximum of $19,500 per year into your 401k (in 2021).
- Employers can choose to match your contributions with money of their own:
- These matching funds do not count against that $19,500 limit.
- Matching funds are free money. I can’t stress this enough, people. If your employer offers matching funds and you’re not taking advantage of it, you are literally leaving free money on the table.
- You can begin to withdraw money from your 401k when you’re 59.5 years old. Prior to that age, you’ll pay a penalty to withdraw the money. For this reason, you shouldn’t ever liquidate a 401k prematurely except in the case of a life-shattering emergency. A 401k is not your emergency fund and it’s certainly not your “I’d like to buy a boat” fund.
A somewhat obscure loophole to the age requirements on traditional retirement vehicles is the Roth Conversion Ladder. Here’s how it works:
- You can roll a 401k/403b into an IRA.
- You then convert the IRA into a Roth IRA. This is a taxable event.
- In five years, you’ll be able to withdraw the amount you converted without paying additional taxes.
This is a great way to access “traditional” retirement funds prior to age 59.5, which is salient for folks planning to retire early. The Mad Fientist has a great article explaining the process. The reason I bring this up is because of June and Daniel’s FIRE goal. Utilizing the Roth Conversion Ladder may make sense for them once they’ve quit their jobs.
June and Daniel asked: Is this money available to withdraw at any time?
Well, kinda. Technically, yes, you can withdraw your investments (“cash them out”) anytime you want. However, if you do this prior to being invested for a year, you’re going to pay short-term capital gains taxes, which are higher. Additionally, investment strategy tells us that in order for investments to grow, they need to remain invested for the long term. It doesn’t make sense to pop money in and out of the market. You want to invest money that you’re not going to need to touch for at least a decade.
What I Do
I’m not a financial advisor and I cannot recommend specific investment accounts to you. What I can tell you is that I personally invest in low-fee, total market index funds, with a diversification of domestic and international stock. The reason I use “low-fee” funds is because they’re the least expensive. You pay for the privilege of investing and some brokerages (and investing professionals) charge A TON. You want to look at the “expense ratio” of a fund to determine if it’s a good deal.
I use “total market index funds” to make my investments uber diversified. Total market means I own a bit of most stocks on the market. If I instead owned all Apple stock, for example, I’d be out of luck if they went bankrupt and their stock price plummeted. Since I’m invested in the entire market, I just bump along balancing out losses with gains. It’s a great example of not wanting to put all your eggs in one basket. Especially if a toddler sometimes carries that basket.
Interesting Investing Facts:
- Investing is risky and you might lose all your money; investing is also how people make their money make more money, but it is not without risk.
- You will need to adjust your investments over the years to account for your ages.
- In general, many people start out (when they’re young) in an aggressive investment position–meaning with investments that have the potential for larger returns, but also larger losses.
- When you read about people who “lost all their money right before retirement,” it’s often the case that they panicked and sold when the market was down. Do not do this!
Personal aside: over the years, Mr. Frugalwoods and I have lost and gained money in the market. If we cashed out our investments during a downturn, then yes, we would’ve locked in the losses. Instead, we keep our money invested, we don’t track the market closely, and we continue to invest on an automated schedule. The crucial key again, is to invest and remain invested for a long time, and to not panic when the market dips (because it will dip, baby).
Financial advisors: if you ever want to hire a financial advisor, make sure to hire a “fee-only fiduciary.” Fiduciaries are legally bound to offer advice in your best interest. Advisors who aren’t fiduciaries are not legally bound to do so!!!! EEEK!
Question #3: Mechanically/logistically, what do we need to do to get to our goal(s)? What changes do we need to make in order to achieve FI in the next ten years? Is this timeline possible for us?
This is one of those questions I can’t answer. Largely because I don’t know what will happen with June and Daniel’s spending and salaries over the next ten years. In general, yes, they are on the right track:
- Their spending is low
- They are saving appropriately into traditional retirement accounts
- They are planning on investing in taxable investments
However, the missing element here is a higher-than-average salary. If June and Daniel want to retire in their 30s, they’re going to need to increase their salaries. It’s not possible to frugal your way to financial independence in your early 30s without higher-than-average salaries. It is possible to frugal your way to FI at a later date–your 40s or 50s–without higher salaries. But, if June and Daniel are set on super early retirement, they’re going to need to increase their salaries.
I also think it’s really important for June and Daniel to identify what they’re retiring to. Wanting to quit your jobs won’t be enough of a motivator: there needs to be an overarching, lifelong goal to carry you through. I hear threads of this goal weaving together in June and Daniel’s reflections on city life and where they’d like to eventually live. I see a plan taking shape through their diverse and engaging hobbies. And I applaud the thoughtful intentionality with which they live. All of that will help them crystallize a specific goal. Once that specific goal comes into focus, the money will follow. This is not a “manifest some money” mantra, this is a practical analysis:
- Once you know what you want in life, you can price it out.
- Once you’ve priced out your dream, you’ll know how much you need to earn and save to get there.
- Then, you can calculate how many years until you get there.
That’s what I mean by “the money will follow.” Figuring out what they want to do in life will help them understand why they want to FIRE and will enable them to create a list of upcoming big expenditures and timelines. They need to start at the beginning of the flow chart. Long term goals make short term sacrifices tenable. FIRE is not the end goal–it’s the lifestyle that FIRE will enable. The money follows the dream. You have to retire TO something.
Question #6: We can’t know the long-term financial impact of June leaving her job without another lined up, but we imagine the mental and emotional gains could be worth it. Flexibility is the whole point of FI for us, but we worry about being set back by only having one income for an indefinite period. Do you have any advice on weighing this decision?
In short, my advice is: don’t leave your job without another one lined up. It sounds like June is really unhappy in her job and so, I’d say, start a job search ASAP. There’s nothing preventing June from searching, interviewing, and securing a new job while working her current job. When/if she finds a new position, she can give her two weeks’ notice and be done. While yes, the job market is not in a great place right now, there’s no harm in June looking around. Plus, since so many companies are now operating fully remote, she might be able to secure a position with a company based somewhere else in the country–or the world.
- Do some discernment and prioritization work. Determine the rough timeline and cost for the big three events on the horizon: Daniel’s gender confirmation surgery, the wedding, and buying a house.
- Keep the $56k liquid at least until the surgery and wedding are paid for.
- Determine at that point when the house-buying goal will come to fruition.
- Depending on when the house-buying comes into focus, make a determination to either keep the remaining cash liquid for the downpayment OR invest it in a brokerage account.
- June should start a job search ASAP and see what she finds!
- Identifying what they’re retiring TO will be instrumental in June and Daniel’s success. Considering the value of this retirement goal vis-a-vis the salaries they can command is also paramount. If early FIRE is their goal, they’ll need to find higher-paying positions.
- Enjoy the beautiful life they’ve created!
Ok Frugalwoods nation, what advice would you give to June and Daniel? We’ll all 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 (firstname.lastname@example.org) your brief story and we’ll talk.
Never Miss A Story
Sign up to get new Frugalwoods stories in your email inbox.