Less than a month after getting laid off, I accepted a job at another company making similar money. My hustle, focus, and networking—combined with a little luck—paid off.
The last couple of months was intense and stressful. I’m taking a month off to spend quality time with family and friends, get ready for the holidays, and get back into healthy habits (eating, sleep, exercise). And I’ll be able to start my new job in early January refreshed and ready to dive into it.
This change also gives me the opportunity to take a close look at my finances. I’ll be combing through the benefits offered, and I’ll also take a close look at my retirement contributions, savings, and spending.
Background…I am planning to work a W2 job for another 9 years or so. During that time, I’ll build a real estate portfolio. Then from age 60-70, I will manage my real estate investments and work on personal writing (this blog, books, etc.) and then fully retire at 70 and invest more passively. So for the next 9 years, I need to boost my retirement and other investments while flattening my expenses.
Since I begin the new job in January, it’s easy to determine what my full gross income will be. From that, I subtracted what I’ll pay in taxes (about 30% for federal and state). From there, I look at retirement, investments, savings, contributions to kids’ college, and spending.
First retirement…
After six months, I’m required to contribute 5% to my retirement, and six months later, the company starts to contribute 11%. This is great; it gets me to 16%. But I am committed to raising this further, so I’m going to start (from day 1) contributing 10%. Then, I’ll have 21% going to my 401K. I’m also going to put another $2,000 in a traditional IRA. Collectively, this will keep me well on my path to retirement, and it will help reduce what I pay in taxes. Win/win.
Other investments…
Previously, I have not been investing outside of retirement. But that’s about to change. I’m going to have between 5 and 7 years where I will not draw from retirement and will not have W2 income. So, I will rely on real estate income, other income, and savings during this time. Starting in January, I will contribute $100/month to an Index fund (likely with Vanguard). $1,200/year isn’t a lot. But it’s a good place to start, and I will increase it over time. I will also put $250/month into a special real estate savings account. I also have additional money from the severance package that I will place here. My girlfriend and I are planning to purchase a rental property this year (spring/summer). More to come on that.
Savings…
I’m increasing my savings to $250/month ($3,000/year). I also have some additional funds from the severance that I will place here.
Expenses…
I will help my kids out a couple more years while there in college. I’m saving each month for this. Total is about $11,000. The budget I’ve mapped out puts my other expenses (including mortgage, health insurance, car insurance, food, and more) to less than $60,000. This is great because that’s the number I’d like to hold for my spending for the next 40-50 years.
Having a financial roadmap for the year ahead brings be comfort. And I’m excited to continue to make steps toward financial independence.