Freed by 50

It’s February and this is my second post of the year. Not a great start.

Things have gone from bad to worse at work. It’s taking up a lot of my time. I’m job hunting for myself, trying to find roles for my team internally, and being ridden like a rented mule by my new management. To top it off, our company stock (which makes up half of my pay) hasn’t seen a green week in a year, and is down nearly 50% from its all time high. As you can imagine, morale is in the gutter.

As someone who is well along the path to financial independence, every day I question why I don’t just walk away from this situation and save myself the stress. As it turns out, there are several reasons:

• Health insurance – According to my research, for someone in my situation with a family of five in New York state I would be looking at somewhere around $2,200/month. That’s actually more than we tend to spend on doctor’s visits for the whole family in a year. It’s also close to the same amount of money as the principal + interest on my mortgage. This seems absurd.
• The Tech job market – You’re probably reading it in the news every day. Another Tech giant cut 16,000 people just last week. All of these people are looking for work. All of the other Tech companies were already flooded with resumes. Even in my network of friends and former coworkers the feeling is that referrals get you nowhere anymore. It’s bad out there, and it feels like I should just be happy to have a shitty port in this storm.
• The money – I’m close, but not yet financially independent. By the end of this month I could probably quit and be able to live a pretty lean life for a very long time without working. But that’s not the life I want for me and my family. Even though the work and my new managers suck, they do pay me a lot of money. It’s a crappy excuse to go to a job you can’t stand and get brow beaten by condescending a-holes day after day, but it amuses me to think about how much they’re paying me to waste my talents every day.
• Severance – I hate to say it, but I’d rather be laid off than quit. I’ve worked at this company for ten years and helped build departments and products. If we part ways, I do feel that I’m owed something, and there is company policy to back that up. Whether it’s because I’m too jaded to do the job successfully, or because they want to replace me, I’m sticking around and rolling with the punches until they give me a package or the situation improves.
• My Family – I’m a single earner and provider for my family. No matter what my situation is, providing for them comes first. I’m doing my best to improve the situation, but at the same time, if it doesn’t improve I owe it to them to soldier on.

With everything that’s going on it feels like a precarious position to be in right now. I want to start taking steps to reduce my amount of risk in the event I find myself suddenly out of work.

I was already maintaining a three month emergency fund, but I want to have A LOT more cash on hand. I’ve already had two scares where I thought I was about to be put on a performance improvement plan (PIP) and I wouldn’t be surprised if I’m on one by May. I want to make sure I have up to a year of expenses readily available without having to sell stock as soon as possible.

In order to do this, I’ve shifted from putting 18% of my post-tax pay in my mega-backdoor Roth account, and I’m now collecting the majority of that money in cash. I couldn’t bring myself to stop contributing to it entirely, so I’m still contributing 1% to the MBD Roth, but this will give me nearly $1,500 per paycheck extra cushion. This will all be stored in my money market fund earning 3% per year (lower than I could get elsewhere but quickly accessible from my checking). I will not touch my 401k contributions, which will remain maxed, or my ESPP, which is basically a savings account anyway.

I’ve also decided to pay off my car loan. I was going to do this back in November, but decided to let it ride through the holidays. I’d actually planned to use my bonus at the end of February, but given my situation with my managers, I’m operating as if that money is in jeopardy. I just cashed out my employee stock purchase plan (ESPP) money for a meager 10% return over six months (/sarcasm), and later today I’m paying off the car. Since it was an $80k+ car on a three year note this will free up $1,700/month! (Dave Ramsey just got chills and doesn’t know why)

This frees up $4,700/month in cash to add to my emergency fund. Without the car payment, my monthly household expenses drop to about $7,500/month, which means I’ll be able to save one and one quarter months of expenses every two months, which, when added to my existing emergency fund and including this month’s RSU’s should put me around 9 months of saved expenses by May, when I’ll hopefully have another restricted stock (RSU) vesting period. Provided I’m employed here that long, I’ll have well over a year’s expenses in cash stacked up.

I’m really sad that it’s come to this, but this is life in the corporate world. Sometimes everything is great, sometimes one bad person placed high enough up can screw things up for hundreds of people.

Hopefully I can find a way to pivot to a safer position or another company before anything goes wrong. If things follow a happy path, I’ll wind up still employed, with a paid off car, more than a year’s expenses in the bank, and can reinstate my mega-backdoor Roth contributions. If not…well that’s why I’m trying to minimize risk.

I’m very grateful that I found the FIRE movement all those years ago and don’t also have to worry about living paycheck to paycheck. I hope everyone reading this can find that kind of peace too.