Savings for 5 Years Living Expense: Is It Enough FU Money to Quit My Job? I have savings sufficient for 5 years living expenses. Outside my day job, I already have a consulting firm that gives me income double that of my job pay. Is this sufficient FU money to enable me to quit my job and the rat race for good? |
And that's what I'd recommend. Nobody knows what the future will hold so I'd be a bit worried relying on money I've already saved up for the rest of my life. Plus, not working may cause stagnation and motivation issues. But you seem to have enough money where you can push back on your company without worrying about being fired, and search for an easier, more flexible job even if it pays less.
Alternatively, if you're confident that you could have no income for 5 years and go back to the rat race without any difficulty, then sure, go for it.
FU money is being able to quit without worrying about expenses before finding another means of living.
Financial freedom is reaching retirement threshold (financial escape velocity): having enough money to not work anymore based on your desired expenses. That means having enough money invested in index funds such that you could withdraw the annualized return each year and live on that for the rest of your life (typically 4%).
In my personal experience, I have found that waiting for “enough to do x” never really pans out how I thought it would anyway so just go for it, back yourself and figure it out on the way down.
Then obviously yes...
Since you claim to be very risk averse, then you need to consider how robust your consulting firm income is and the effects of inflation on your savings. But no job is guaranteed either. Sometimes you have to go with your gut. Analysis paralysis can lead to worse outcomes.
Said that, despite working in a cool organizations, I think I might need sometime for myself. Also said that, I have family, so I need to keep going because things are getting insanely expensive and my FU money which was suppose to be worth a decade, is not worth it about 5 years.
The "6%" inflation is terrible because as we all noticed, nothing has increased only 6%.
This is the case in the country I am from. It is like that since I was a kid, every 10 years everything got at least 5x more expensive, including buying a house and food.
Now I moved somewhere else and the situation here is about the same. I used to spend 30 per week in groceries now I spend almost 60. Electricity bills went up about 80% when compared to previous year. The rent in the place I lived before raised about 30% but I ended up living somewhere closer to the office so it is even higher.
In summary, I am not filling the FU pot as fast as I want and expenses are increasing much higher than I expect.
All this situation of layoffs and etc make it worse. At least I had a conversation some days ago with some friends that work more close to the guys with money and they are already preparing the pockets for hiring again.
I have 2 buckets for my FU money One is a reservation for serious emergencies that should remain untouched while I have other resources. Then I have my true FU bucket which I hold in an investment easy to get it back. Unfortunately, I pay for liquidity with low ROI, but I feel safer this way so I consider it as taxes for my own sanity.
No point paying living expenses in the west if you can generate a western salary remotely.
The better way is to look at your big picture finances. You will always have costs associated with housing - make sure you account for that in your withdrawal rate.
Paying off debt is a safe thing you can do with liquid cash until the debt is gone (with sensible emergency funds). It's a perfectly sensible thing to overpay your mortgage.
Are you a bank shill or something?
Interest payments are a loss. The less you pay in interest, the less you lose.
Anything else you do with the money is going to have a risk attached.
A HELOC is certainly easier but there's no guarantee you will get approved, plus rates will likely be higher than whatever you're paying now.
My point is that getting credit is not guaranteed, and that having liquid assets has significant value. If you are not working I especially recommend prioritizing cash.
That's not what you were advocating for though.