is 1.8M NW enough to relax a few years?
i don't want to work a 9-5 anymore after studying and grinding my whole life like everybody here, these are my stats can i take a chill few years and exit the rat race? age 30 1.8M NW mortgage + housing expenses is 4k/mo food + other stuff is 2k/mo my small businesses generate anywhere from 5k to 50k per month depending on the time of year, so hopefully i don't need a 9-5 though it is nice for stability businesses could go to 0 if i lose traction TC: idk it ranges anywhere from 200k-1M every year
my whole life — 30 yo op is 🤡
get back to work your shift starts tomorrow at 8am
Are you including your house in your net worth? If it is all wrapped up in your house, you can't get cash flow from it unless you move or rent out a MIL. If you had $1.8M in a taxable account, you're golden at 4% withdrawal, not even counting your side gig. But maybe you just need vacation.
portfolio w/o mortgage would be 1.3M is it alright still?
At the 4% withdrawal rate, that's $1300*0.04/12 = $4333. I'd round down to be safe. As long as you don't withdraw more than $4000/mo, you should be okay. If I were you, I'd make sure I had at least a year's expenses worth in an HYSA. We are getting 5%, so it's not as good as the 10% market average but you're protected against any downsides so you don't have to be selling in a down market if you don't have to. Every month or two, re-evaluate whether things are going okay and you have enough post-tax to make it to 62-1/2 and enough pre-tax to make it to the rest of your life (if you don't have enough in your retirement account, don't forget you can continue to contribute with your business). 4% safe withdrawal rate is a popular rule of thumb for retirees. I am not sure how it works for "retiring" at 30 but you have other income, so that should be good. This also assumes your portfolio is in index funds. If it's in company stock from RSUs, you might want to limit that exposure and switch everything to $VTI. If your mortgage rate is high, like 7%, it might be worth just paying it off so you don't have that hanging over your head. If you got in at like 3%, maybe not. That would eat up most of the money you have but could be worth it. Going the other way, $2*12/0.04 = $600. At the 4% withdrawal rate and if your true expenses are only $2000/mo (including sinking funds for property taxes, home repair, new appliances, car repair and replacement, kids' 529, etc), then you're good at $600k. This assumes you're not working. If your side-gig, now your primary business, is bringing in at least $5000/mo or more in net profit, obviously paying $6000/mo is not that hard and you can pull from your nest egg if you have to. You're young, so you can be more aggressive than someone retiring at 65, who may not be able to re-enter the workforce if they have to. I think your business could turn out to be even profitable than working for someone else and I think you're in a good position to take that chance.
How does TC range 200k to 1M?
unstable income sources so i should count it as 0 for now until it's stable
I’m in a very similar spot as you but I’m older (42) and I have a wife and 3 young children. My networth is a tad more than yours at 2m. However, part of my networth is rental properties that cash flow. Since I have a family, my monthly costs are also higher, more like 9k/month including mortgage. I also have a side business where I help out of state investors invest in cash flowing real estate in Midwest markets. It generates anywhere from 0-40k a month, average is around 14k give a take a couple k. All this to say, I dropped out of the rat race at the end of February. I have yet to regret it for a single second. I live in a VHCOL area where it’s sunny all year round. I surf every other day and spend time with my family and friends. I do work on my side business (3-4 hours a day) but it’s much less stressful because I work for myself and create my own schedule. My real estate brings in about 3k in profit a month. My wife works (less than 100k but provides insurance) and my side business averages about 14k a month but it varies greatly. You can start to do the math and figure out that that my TC is fairly low but let me tell you, my mental health has never been higher. The rat race was great and helped me accumulate money and skills to put me in my current position. But if you are in it too long, you lose the point of life. Which to me, is not to just make money. It’s to enjoy life. Money will help with that but it’s not the point of life. You are in a position to work for yourself and get out of the rat race. Do it now before you get trapped further.
How do you get by at 9K per month with mortgage?
Mortgage is 2600/month. That leaves 7400 to spend. Works for us.
You are top 1%. You can retire if you want. That said, you didn’t even work hard in life yet and you need a break already?
Yes hell yes
What kind of small business do you run? If you don’t mind sharing🙏🏼
Same.