Update on what is going on with my life

[corn18]

Lots of things happening in my life right now, so thought I would update everyone on what's going on.

First, I took a new job in the same company and started 1 Oct. This requires a move to the Dallas area. No change in pay. I took the job to open up my upward mobility.

We bought a house in TX for $727,000. We are putting 20% down. 3.875% 30 year mortgage. Monthly payment will be $4,415.

We will be selling our house in OH. Expect to have a net gain of $94,000. Monthly payment was $3,077.

The company is paying for all costs to sell, buy and move, so net net, we will have an additional $51,400 in home equity and a higher monthly payment.

The next bit is both exciting and terrifying.

My company is merging with another company. This triggers a change of control clause for my Restricted Stock Units (RSU's). This means all of my RSUs ($700,000) will vest next year when the merger closes (supposed to be in May). That will bring my total income to just shy of $1.2M. Total savings at that point will be $1.6M.

I wish that were enough to retire, but it won't be.

I think we will pay off the TX house. Then continue to save all of my salary, bonus, RSU's, and pension. Also plan to save the P&I that we would be paying on the mortgage ($2700/mo).

The goal is to be @ $1.8M in retirement savings with a paid off house by age 56 (2022). That should set us up nicely to retire.

Retirement budget is very generous:

$101,000 base budget. Includes taxes, insurance, health care, money for a new car every 5 years and house repairs.
$45,000 for blow that dough. This can be spent on vacations or whatever we want. It is not required to meet other needs/wants.

Would love to be able to retire @ 55, but One More Year (OMY) sets us up for some pretty care free retirement years.

We'll see how things pan out over the next 8 months.

[disneysteve]

Congrats on the new job and the new house! That all sounds great. And awesome that the merger has that effect on your RSUs. On a much smaller scale, I encountered something like that years ago when the hospital I worked for got sold and everyone got immediate 100% vesting in the retirement plan. I would not have been there long enough to see that money but thanks to the merger, I got it.

One thing really struck me about your post. When I saw the price of the new house, I thought, "Wow, that's a lot of money." But then you mentioned your income. If you earn $1.2M and your house is 727K, you will only have spent about 60% of your annual income on the house. How many people can say that? It really shows how the rules of thumb primarily apply to folks in the middle of the bell curve, not those to either end. Try telling someone making the median income of 55K to go out and buy a house for 60% of that ($33,000). Good luck with that. At the same time, for you to go out and spend 3 times your income, the typical limit we talk about, would be sort of ridiculous. Sure, you could buy a house for $3.6M, but it is far from necessary to get everything you need in a home. So many routine expenses are regressive, favoring those with higher incomes.

Thanks for the update.

[scfr]

Unsolicited advice: With all going on over the next several months, don't forget to file for the Homestead Exemption.

[corn18]

Unsolicited advice: With all going on over the next several months, don't forget to file for the Homestead Exemption.

It's on the todo list.

[Singuy]

Congrats on the new job and the new house! That all sounds great. And awesome that the merger has that effect on your RSUs. On a much smaller scale, I encountered something like that years ago when the hospital I worked for got sold and everyone got immediate 100% vesting in the retirement plan. I would not have been there long enough to see that money but thanks to the merger, I got it.

One thing really struck me about your post. When I saw the price of the new house, I thought, "Wow, that's a lot of money." But then you mentioned your income. If you earn $1.2M and your house is 727K, you will only have spent about 60% of your annual income on the house. How many people can say that? It really shows how the rules of thumb primarily apply to folks in the middle of the bell curve, not those to either end. Try telling someone making the median income of 55K to go out and buy a house for 60% of that ($33,000). Good luck with that. At the same time, for you to go out and spend 3 times your income, the typical limit we talk about, would be sort of ridiculous. Sure, you could buy a house for $3.6M, but it is far from necessary to get everything you need in a home. So many routine expenses are regressive, favoring those with higher incomes.

Thanks for the update.

I believe that 1.2 mil is a one time deal and it's like a forced stock selling? Sounds complicated but yeah, if he was making 1.2M a year, he wouldn't need to wait till 2022 to retire

[disneysteve]

I believe that 1.2 mil is a one time deal and it's like a forced stock selling? Sounds complicated but yeah, if he was making 1.2M a year, he wouldn't need to wait till 2022 to retire

Gotcha. So even if the 700K is a one-time thing, that means he's earning 500K and bought a house for 727K or just under 1.5 times income. My point still applies. If you are earning 60K, it's highly unlikely that you will find a home for 90K.

[corn18]

I believe that 1.2 mil is a one time deal and it's like a forced stock selling? Sounds complicated but yeah, if he was making 1.2M a year, he wouldn't need to wait till 2022 to retire

That is correct. I get RSU's every year that vest after 3 years. So at any one time, there are 3 years worth of RSU's sitting in my account. Under normal circumstances, my comp would be my base salary, bonus and the RSUs that were granted 3 years ago. Because of the change of control, I will get 3 years of RSU's all at once vs. one year. My normal total comp is $590k, so this is a one time deal @ $1.2M. I also have my pension of $45k.

DS, you are correct that $727k is not a stretch for that level of comp. We will be saving $600k of the $1.2M, of which most of it will go to pay off the mortgage.

Sometimes I wonder what our life would be like right now had we saved 15% of our income throughout my career. I actually made a spreadsheet to see what that would look like.



Had we been saving throughout my career, we could retire right now. At least we figured this all out while the big income was still rolling in so we could fix it.

[disneysteve]

Pretty impressive that despite many years of not so good financial habits, you're going to reach the same point very soon that you would have gotten to anyway. That really speaks volumes about what you're managed to accomplish the last few years.

[corn18]

There is a hole I could dig myself back into. If I had saved throughout my lifetime and continued to only save 15%, I would be at the same place next year as if I saved 50% next year. That would free up a truckload of money to spend on stuff. But if I spend that money on more stuff, I need to save a lot more money in order to retire. It's like a never ending hell. If I make more, I save more but if I also spend more, I need to save even more. I can retire if I keep spending under control and let the savings grow. If I let my spending grow, even modestly, I will have to work for years more to save enough to support the higher spending. This is exactly where I would be had I not made those big changes 5 years ago. I like this a lot better.

[Singuy]

Now imagine if you saved over 50% throughout your career! I think the bar set at 15% savings rate is too low. Of course it's miles ahead the national average of 3%. My wife and I have hit 50% + savings rate ever since we got out of school. The only thing that have changed is actually our savings rate just end up increasing since our take home increased while expenditures stayed relatively flat. We are reaching 70% savings rate and have just hit 1.8 mil net worth in our mid 30s.

[corn18]

Now imagine if you saved over 50% throughout your career! I think the bar set at 15% savings rate is too low. Of course it's miles ahead the national average of 3%. My wife and I have hit 50% + savings rate ever since we got out of school. The only thing that have changed is actually our savings rate just end up increasing since our take home increased while expenditures stayed relatively flat. We are reaching 70% savings rate and have just hit 1.8 mil net worth in our mid 30s.

50% would be quite impressive over my entire career. 25% is more achievable and still impressive. It is what it is at this point.

[Like2Plan]

You may have dug yourself a hole a while back, but it’s nice to have a big shovel to dig yourself out

Again, I love your graphs. It is a real life example about how Time is such a powerful tool for investing for retirement.

[rob62521]

Congrats on the new job and new home! Hope the move and the resettling go well for you.

[LivingAlmostLarge]

congrats on the new home. Why are you waiting to retire? Why not pull the trigger now after the RSU vest? $1.2m year and you are netting $600k and can pay off the mortgage. That would mean the portfolio will be $1M plus $45k pension. That's a solid $80k without a mortgage. And you only need $56k to retire/annually, almost covered by the pension. That would mean to my calculations you are set this year. Pull the trigger. Even at 3% withdrawal you are set. That's $75k with a tiny bit of flex. the pension is equivalent to $1.1M and $1M saved means $2.1M. You are box checked done.

Right now we are sitting DH and I at around $1.5 not including home I believe. But we have 10 more years to pay for and 2 kids for college. So our needs will likely need to be greater. I've been contemplating but the more we talk the more my DH is digging in his heels that he won't retire until DK2 is done with college. I think he's a nervous nelly and won't pull the trigger until our kiddos are secure.

[prosper]

Lots of things happening in my life right now, so thought I would update everyone on what's going on.

First, I took a new job in the same company and started 1 Oct. This requires a move to the Dallas area. No change in pay. I took the job to open up my upward mobility.

We bought a house in TX for $727,000. We are putting 20% down. 3.875% 30 year mortgage. Monthly payment will be $4,415.

We will be selling our house in OH. Expect to have a net gain of $94,000. Monthly payment was $3,077.

The company is paying for all costs to sell, buy and move, so net net, we will have an additional $51,400 in home equity and a higher monthly payment.

The next bit is both exciting and terrifying.

My company is merging with another company. This triggers a change of control clause for my Restricted Stock Units (RSU's). This means all of my RSUs ($700,000) will vest next year when the merger closes (supposed to be in May). That will bring my total income to just shy of $1.2M. Total savings at that point will be $1.6M.

I wish that were enough to retire, but it won't be.

I think we will pay off the TX house. Then continue to save all of my salary, bonus, RSU's, and pension. Also plan to save the P&I that we would be paying on the mortgage ($2700/mo).

The goal is to be @ $1.8M in retirement savings with a paid off house by age 56 (2022). That should set us up nicely to retire.

Retirement budget is very generous:

$101,000 base budget. Includes taxes, insurance, health care, money for a new car every 5 years and house repairs.
$45,000 for blow that dough. This can be spent on vacations or whatever we want. It is not required to meet other needs/wants.

Would love to be able to retire @ 55, but One More Year (OMY) sets us up for some pretty care free retirement years.

We'll see how things pan out over the next 8 months.

Wow!!!! Congrats.