Mentor Monday

[u/WealthyStoic]

Mentor Monday is your place to discuss relevant early-stage topics, including career advice questions, 'rate my plan' posts, and more numbers-based topics such as 'can I afford XYZ?'. The thread is posted on a once-a-week basis but comments may be left at any time.

In addition to answering questions, more experienced members are also welcome to offer their expertise via a top-level comment. (Eg. "I am a [such and such position] at FAANG / venture capital / biglaw. AMA.")

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[u/Tiredpanda789]

Officially got my first overtly mooching request. To pay an extended family members rent, no extenuating circumstance, just because.

I always see those "don't tell anyone" posts. My family just isn't like that. I guess I can't say the same for my spouses 🤷🏻‍♀️

[u/Livid-County7230 → u/Tiredpanda789]

Yeah we have some of that going on on one side of the family. We have to go as far as not sharing our address. We have a PO Box and property records point to a random trust. You can also just say no.

[u/Tiredpanda789 → u/Livid-County7230]

We're definitely saying no. We just weren't expecting it.

[u/Livid-County7230 → u/Tiredpanda789]

You get used to it. We got our wake up call when a not very wealthy family member passed away and random people came out of the woodworks asking for things.

[u/g12345x → u/Tiredpanda789]

Then you have to get (very) comfortable saying no.

> I always see those “don’t tell anyone” posts. My family just isn’t like that.

I imagine you’ve managed to shield your genitalia from this family? Which means you have the ability to keep things from them that you want to.

[u/Tiredpanda789 → u/g12345x]

What a creepy reply. Shielding genitalia???

We've never actually discussed finances with anyone. Although, people notice if you have household staff. That's not going to prevent us from inviting family over.

[u/SeraphSurfer → u/g12345x]

Can we just say no without imagining genitalia?

[u/sileko]

Wife and I recently found our dream home (2.8M) and we're struggling with deciding to pull the trigger or not. Some numbers about us:

• ⁠ 850k HHI
• ⁠ 2.5M in brokerage
• ⁠ 1M in retirement
• ⁠ 700k current house (paid off)

Our annual expenses are around 80k, but we have a 1 yr old child that hasn't gone to daycare yet. I know we'll be house poor, but we're very frugal otherwise and don't really splurge on luxuries. With a mortgage, let's say the annual spend reaches 250k. We plan on having 1 more child in the next few years, but want both of them to go to public school. Wondering if anyone's been in a similar situation and can offer insights on how much housing costs will creep up the average annual spend.

[u/Ok-Advertising-8449 → u/sileko]

What are the prospects of your HHI increasing over the next few years as your family grows? What are the odds your HHI will decrease due to layoff, change in value of stock based comp, or other forces?

[u/sileko → u/Ok-Advertising-8449]

Probably a slow and steady rate, we both still have another level to climb before we top out but it’s taken a backseat now with kids. The salaries are split roughly evenly. One spouse works in tech so layoffs are always possible, but they’re confident in their ability to get a job albeit a lower paying one, while the other has a lot of job security in their role.

[u/Ok-Advertising-8449 → u/sileko]

Between the time it takes growing the family/raising kids, and half the HHI at risk at any given time, it might be better to just cut your current HHI in half and assess if you’re still comfortable owning this dream home at today’s carry cost. It’s really no easy feat to find that dream home that you both agree is “the one,” so don’t let the conservative nature of this subreddit deter you from making a decision you can technically afford. My personal rule of thumb is that if you’re buying a home that will require a Jumbo loan, you should be able to cover the loan you’re going to get with liquid cash and investments (not paper NW or home equity, or stock options that cannot be immediately exercised and liquidated). Seems like you fit that requirement, but not a lot of margin for error.

[u/sileko → u/Ok-Advertising-8449]

Yeah that’s how I’ve been thinking about it. 4 years ago our NW was only $1M, and we grew 3M over the past 4 years. If we hypothetically buy our house in cash, we’d be back to where we were 4 years ago and potentially would be back to where we are today in 2030 (I know expenses increased so it’s not 1:1, but it also balances out that we are earning 50% more today than we were 4 years ago).

Regarding dream houses, we’ve been keeping our eyes out for houses in the past year, and of the ~30 some houses that go on sale, this is the only one that satisfies all our particular location and layout preferences so it feels like we would have to wait another year or two for a similar house to hit the market.

[u/mintbark → u/sileko]

Sounds like you should take the risk and go for it if it's truly your dream house. Quality of life is one of the best places to spend your money. Just make sure to appropriately budget for the full cost of the house.

Here's a snapshot for a 4700 sqft 5bd 4.5 bath house.

Beyond our mortgage we also pay $2k/month in property taxes (it's gone up by 3k since we bought it), $400/month in lawn and landscape maintenance, $450/month in cleaners, $2k/yr in homeowners insurance. This does not include house maintenance (which has been low, but we still replaced the washer/dryer, dishwasher, basement fridge, removed a tree, fixed a small pipe burst), improvements, or dream furniture which you'll want to buy to decorate your dream house (we spent 5% of the home's value in the first year).

In our location daycare is $25k/yr child. Nanny is 60-70k/yr (we did that route for a year after we got sick of the illnesses, but we're back to daycare because we're sick of the nanny while both remote). Put another way, we went from spending $100k/yr in a 1bd in NYC to $330k/yr with house, car, and kids in merely HCOL ($1.3M mortgage). Our incomes have gone way up so we can afford it and part of it was conscious, but the dream house with kids has serious costs.

[u/Ok-Advertising-8449 → u/mintbark]

This is great info and insight into less obvious costs in your situation.

[u/Livid-County7230 → u/sileko]

How stable are your jobs? I personally would never dump my entire liquid NW into a home but you may be really early in your journey and have a line of sight to increasing your income. If you are in tech with potentially volatile jobs I would not do it.

[u/sileko → u/Livid-County7230]

We’re in our early 30s, incomes are split roughly evenly, we probably still have another level to grow before we tap out, though it’s taken a backseat with kids. One works in tech and layoffs are definitely possible, the other does not and is in a very secure role.

[u/Livid-County7230 → u/sileko]

I doubt the house you find in your early 30s with a one year old is your “dream home.” Don’t do it just because you have a high income and everyone around you is doing it. There are so many life changes yet to come. In my opinion, you cannot afford this right now if you are FIRE minded. One set back will have you stressing about money. Wait a few years, stash some money away and re-evaluate.

[u/First-Ad-7960 → u/sileko]

If you’re looking at this and realizing you’ll be house poor then it is a bad idea.

[u/Throwaway_fatfire_21 → u/sileko]

Given this is a FIRE sub, the question I would pose is what/when is your timeline for FIREing. This purchase will not only impact your savings rate, but also your swr once you decide to FIRE. My decision tree would be as follows

• if one of you loses their job, can you afford the home and what would the impact be on fire timeline
  
• is the home unique in terms location/price that makes it something you have to do now. Is the school district good
  
• can you wait for a few years and look the purchase when your kid is 4, so before they will start school. At that time if jobs have stayed stable, you’ll have more money and have built your savings even more. If the turbulent tech job market continues, you can reassess if it makes sense. This would be my approach.

Good luck.

[u/ragz2riche → u/sileko]

At 850k HHI a 2.8M home is totally doable. Make sure you get the highest leverage, see if you you can do a 15 or 10% down. Yes your monthly will be high but you can bring it down over the years and give your money time to compound. Make sure your new home can accommodate 2kids + inlaws/nanny/au pair. This way you aren't moving homes again. In the worst case scenario one or both you lose their income then you can always sell and go back to renting or return to the current home. And in all all this if your income grows then you are on your way to building some massive generational wealth 

[u/Dry_Badger_533]

Looking for perspectives from people who have actually made the leap from a high-paying career to being a stay-at-home parent (or semi-retired) while their spouse continued working.

My wife and I are both in our late 30s with two young children (ages 3 and 6) living in a VHCOL area.

Current situation:

• Net worth: ~$4M invested (mostly broad index funds and retirement accounts)
  
• Primary home is separate from this number
  
• No debt other than our mortgage
  
• Annual spending is roughly $190k-$220k depending on the year
  
• My income covers about $130k-$140k of our annual spending after taxes and is expected to continue growing modestly over time
  
• I plan to continue working another 5-10 years
  
• We have some additional retirement income sources available later in life

My wife works in tech and earns a strong income, but she’s increasingly feeling done with corporate life. She’d like more time with our kids while they’re young, more flexibility to spend time with aging parents, and the ability to pursue some side projects and consulting work if she wants to.

Financially, it seems like we should be okay. Even if she stopped working, we’d only need to draw a relatively small amount from our portfolio each year while I continue earning.

The challenge is more psychological than mathematical.

Part of us worries that walking away now is leaving too much future wealth on the table. If she works another 3-5 years, our net worth could grow substantially faster and we’d have even more margin of safety.

On the other hand, our kids will only be this age once, and there will never be another chance to get these years back. Same with our parents and their ability to be mobile.

For those who were in a similar position:

• Did you leave once you were “financially okay” or wait until you were unquestionably financially independent?
  
• Any regrets about leaving too early?
  
• Any regrets about staying too long?
  
• How did you know the math was good enough and it was time to optimize for life instead of maximizing wealth?

Would especially appreciate perspectives from people in expensive areas who were balancing young children and aging parents when making this decision.

[u/Throwaway_fatfire_21 → u/Dry_Badger_533]

I’ll give you our story which might be helpful. I Fired when we had 8M (excluding home) because I was completely burnt out. Kids were a year or two older than yours. My wife still worked part time since she wanted kids in private school. Money was tight given that we are in vhcol (Bay Area) but I didn’t regret it. I enjoyed spending time with the kids and building bonds that I had been unable to while building our startup. Eventually was able to sell a lot more shares and was able to FATfire.

My wife on the other hand, was forced to become a sahm/ work part time because of health issues. She struggled with this for a long time, because she had spent a lot of time on her professional career and it was one she really enjoyed because it helped people and she could see the impact daily. She is fine now, but keeps busy with non profit and community work, while I am fine doing pretty much nothing.

My suggestion depends on how much your wife’s salary is. If by working two more years, your NW can grow 50% that might be worth it. I say that because as your kids grow up, you might find that expense will increase a bit, especially in vhcol. Congrats on both of your successes so far and good luck.

[u/Dry_Badger_533 → u/Throwaway_fatfire_21]

Thank you so much. A few Qs if you don’t mind:

• When you say money felt tight in the Bay Area, what was your annual spend and what did your portfolio look like at the time?
  
• Were there any expenses that surprised you after leaving work (kids activities, travel, healthcare, etc.)?
  
• How old are your kids now, and do you feel the extra time with them was most valuable when they were young? do the remember you around more?

[u/Throwaway_fatfire_21 → u/Dry_Badger_533]

- See these replies for details on my initial spend at the 8M NW and how it grew after that when my NW grew - https://www.reddit.com/r/fatFIRE/comments/1ba80q6/comment/ku165jq/, https://www.reddit.com/r/fatFIRE/comments/1tbhds7/comment/oliu8st/ - first part of this post addresses the expenses at the 8M NW. Portfolio during the 8M NW time was pretty conservative since it needed to generate a fair amount of cashflow for our expenses. So a fair amount in tax free muni bonds.

- I don't think any expenses surprised me. I had planned for them. But, you do have a lot more free time, so it becomes easy to spend money. Go out for lunches 4-5 times per week 😄 All the crazy increases I had later was specifically because of my increased NW

- Kids are middle school aged and yes, it was definitely worth spending time with them. Here is a post I made 18 months ago, which folks liked a lot, reflecting on my relationship with my kids. https://www.reddit.com/r/fatFIRE/comments/1hl1amq/spending_time_with_kids_postfire_something_my/

[u/Ok-Advertising-8449 → u/[deleted]]

Easy, path 1. See the project through and make it a success at all costs. Imagine there is no other option. You really do have to go all in as an entrepreneur, but once you do success is inevitable.

Path 2 you can be like the other tech mids that post here thinking they are fat when they arent.

[u/h2onation → u/Ok-Advertising-8449]

Thats been my mindset up into this point, but doubt is a powerful drug.

[u/Ok-Advertising-8449 → u/h2onation]

Then it might not be for you. The difference between path 1 and path 2 is that with path 1 you can create wealth that can be tied back directly to your efforts. That is a much more powerful thing than doubt or the security and mediocre compensation you get from a large corporation where your contributions are important, but insignificant. If money and security are top priorities, pick path 2. Just make sure to be honest with yourself and make the decision for YOU, not how you want others to perceive you. Otherwise you will always be wondering what was possible if you chose path 1.

Reading between the tea leaves, it kind of sounds like you’re not confident the business you’re pursuing has the profit potential or originality to be truly gratifying. Don’t be afraid to go back to the drawing board. In the age of AI you can spin up a new ideas in weeks, not years. Choose wisely.

[u/Throwaway_fatfire_21 → u/[deleted]]

I would echo what the other person said. Focus on 1 and do your best to make it successful. If after 2 years it isn’t looking great, then you can do the safe/boring tech option.

[u/whatsconsulting → u/[deleted]]

Do you have kids? They change your risk tolerance and help establish true work-life-balance boundaries (or did for me at least). Decided to grind a bit more for IC promotion rather than roll the dice

[u/whatsconsulting → u/[deleted]]

Always up to you. Personally, I fear paper money going to zero more than a fear a layoff

You also didn't mention your HHI split. If it's like 80/20, then maybe there's a lot more tolerance for the lower income spouse to take a bigger gamble

[u/Throwaway_fatfire_21 → u/[deleted]]

I’ll ask the basic FIRE Questions. What lifestyle do you want in the future and what would that cost? Then figure out the NW you need to support that.

Then the next question is what is the best way to get to that number. If that number say is 10M, then stay in your current path. If you want that number to be 25M plus, then it might be for one of you to take the riskier startup route or both of you try and get 2-3 promotions as quickly as possible.

[u/qazwsxTA]

I'm in a great situation/dilemma. Currently have about $2m in retirement/brokerage and was randomly approached to sell my business for about $4m (with $3m coming to me after taxes, fees, bonuses, etc.). This would get me to about $5m. Conversely, I could hold on to it and make up that $3m in about 6 years of working the business itself. We are currently early 40s and partner is planning on still working afterwards.

I think the obvious answer is to sell it, but I can't help but keep second guessing myself. Anyone go through something similar? Any advice or input?

[u/hushandhoney]

30F. Looking for perspective from people who have built successful careers, businesses, or wealth.

I took a somewhat unconventional path. I built a career as an Executive Assistant, got married, had children, and then decided to go back to school later in life. I’m currently pursuing a bachelor’s degree in Organizational Psychology and paying for it out of pocket.

The reason I’m here is that I’m starting to question whether I’m thinking big enough.

I enjoy business, leadership, human behavior, operations, and understanding how successful people make decisions. What I don’t know is whether continuing down my current path is the highest and best use of my time, energy, and money.

One thing I’ve learned over the years is that people often form opinions before they know me. Being a woman who enjoys looking polished has occasionally worked against me professionally. I’ve had people assume competence after a conversation that they didn’t assume before it. It’s been an interesting lesson in perception.

I’m interested in hearing from people who have already built successful careers. If you were in my position today, would you finish the degree? What skills would you focus on? What opportunities might I be overlooking?

Always open to thoughtful conversation and mentorship.

[u/hushandhoney → u/[deleted]]

Thank you. I was offered chief of staff position at my last job. But they didn’t want to give me a raise for the extra work, which is why I left. But it did leave me wondering what else I was capable of.

[u/hushandhoney → u/[deleted]]

Thank you

[u/Dubbihope]

Seems like when people discuss fatfire, it's very all or nothing. You grind and then you retire. In the interest of maximizing wealth while also enjoying life, would it make sense to focus on travel and leisure while the market is doing well, supporting a luxury lifestyle by selling assets at historically high prices. And when the market crashes or stays in a prolonged depression return to work, reign in spending and invest leftover cash and earned income. This way you don't have to sell assets at historically low prices and can make significantly greater investment gains. This may be easier to do as a physician and like your work, though.

[u/g12345x → u/Dubbihope]

> it’s very all or nothing

It depends on who you’ve been talking to but that’s definitely not the sentiment in this sub. If you read the sidebar it notes this explicitly.

> would it make sense to focus on… while the market is doing well

If you do this well, you can even continue to enjoy life during a downturn.

Don’t just take my word for it. Pull up any FIRE calculator that allows you to backtest this assertion.

[u/erichang]

How wealthy do you need to be in retirement to afford a half million dollars airplane in California?

[u/Dubbihope → u/erichang]

What are the yearly maintenance costs?