Phew!
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Look into it for yourself, but Medicaid eligibility is based on monthly income, so if you both lost your job at the same time it’s possible your insurance costs would be $0 for as long as your unemployed.
I add this to every single discussion about COBRA because I didn’t know it until the state of NY wouldn’t let me get marketplace insurance because we were eligible for Medicaid and I was so surprised (and saved so much money)
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Hey @Sunflower would you be willing to do an update? Updates are my favorite part of advice columns/podcasts. If it’s too much work/too invasive no worries!
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IM YELLING AT YOU!!! Idk why I’m yelling this actually seems very reasonable. I just felt like being rebellious for a moment. 
If you had your whole life savings in these investments and were depending on it to live I would say to consider something a bit more stable. But given the amount and your age and life state I think it’s fine.
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I like to take the “rules of thumb” and change “income” into “expenses.” So 1x a year of expenses by 35?
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TIL! This is great to know, I’ll see how it works in CO. Our fertility benefits are not generous enough to motivate us to pay for COBRA to keep them, so a potentially good option.
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Sure! I’ll try to remember this weekend when I have some free moments
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Hopefully I’m not jumping in too quickly after @Bernadette.
I call this “We were LeanFIRE, then the market and our discipline dropped. What now?”
I’m going to write this in third-person as if it were in the podcast, sans Ramit therapizing and just narration because I’m bored. I’m also using a fake real name for Greyman and my real name Greyweld Greyman will get too confusing and my YouTube is Linked places anyway so meh.
Beth and Frank are 31 year old retired software Engineers. Or at least, they thought they were retired shortly after they quit their jobs in February and March of 2021.
Their intention was to downshift and become self-employed: Frank intended to build a small business, and Beth to take a few months off to recover from burnout and then seek a part-time software engineering position that fit her better.
In May 2021, Beth had hit the amount of time when she’d planned to start applying for jobs again, but she hesitated.
“At the time, I was actually doing pretty well. I was making about $500 per month doing very very casual survey taking on like mturk and prolific and stuff and doing user testing, and I was also like, doing a lot with 3d modeling and working on learning how to make games and I thought, well maybe I could make money maybe I could be self-employed. But I still needed to justify continuing to not work in like a job.”
Beth ran the numbers and found that with their current spending and their current investments, they were at the “5% rule” touted by Mr. Money Mustache and some other FIRE advocates as a safe withdrawal rate.
Frank: “I was excited. Like, oh wow, we made it, this is permanent this is our life now. And for a while it pretty much was.”
So what changed?
Beth: “I feel like it was a lot of things. My productivity and psychological well-being dropped hugely between a health scare, two deaths in the family, us starting to try to conceive (which meant I went off adderall, which is huge for my productivity), getting pregnant just as I was getting out of the funk of seasonal depression and my health scare, and then losing that pregnancy. Like, I went through hell in the last six months or so.”
Frank: “And we spent a lot of money dealing with those things.”
Beth: “I mean, yeah. Even aside from medical expenses. I got into a really bad takeout habit during pregnancy, and since my loss have had kind of a YOLO treat yoself mindset.”
But at the time their spending was going up, the markets were going down.
Beth: “I was making withdrawals as we needed them, and one night I had a nightmare that we only had 10k left in our assets outside of our 401k, and the next day I checked and we only had 10k left in our assets outside of our 401k.” nervous laughter
Frank: “Right after we make a few material investments in my business and my parents finally say they are ready to move to Colorado to be near us.”
Beth: “Which they only decided to do because I was pregnant when they first decided. Yeah. And I guess in their minds, we are like, kind of on the hook to support them in their transition, and I kind of feel that way too, but also like, all of our assets are illiquid.”
The Greys have about $500k in assets in a paid-off house and around $300k (maybe less market drops I’m afraid to look ahhhhhh) in 401ks and traditional IRAs, but very little left in other investments and in the bank.
Beth: “I feel like we’re broke, which feels both true because there’s almost nothing left in the bank account, and silly because we have like $800k in assets at 31.”
Frank: “And I feel like we’re doing great. Taking money out of the 401k is expensive, but even if we liquidated it all and started over on that front we would still be doing better than our peers. I’m not saying we should, need to, or will do that, just that it’s probably the worst case scenario and we would be what a lot of people would consider better than fine for our ages if we did that.”
There’s also a difference in how they want to approach moving Frank’s parents out.
Frank: “I told them we could manage a $4000 loan to get out here and they could pay us back when they sold their house. Nothing else.”
Beth: “See I feel really bad doing that. I feel like I basically bait and switched them into moving out here and they can’t afford it. Like I feel like we should at least get them moved into a rental and help them while Greenie (Frank’s mom) gets a job and gets a few paychecks and while they are waiting for their house to sell.”
Frank: “I think she’s manipulating you. She’s a master of passive aggression and you can’t be a doormat with her. If they really couldn’t afford it they should have told us so and refused to leave.”
Regardless of how the moving-parents situation shakes out, Frank has begun to ramp up and diversify his very casual ~$1k per month mini-business to something more serious, with a goal to make $4k per month by the end of the year. Meanwhile, Beth wants to go back to a W-2 job.
Beth: “I’m just existentially tired. I can’t fathom trying to squeeze my part of what would be a comfortable living wage for us out of something like my own creativity, passion, drive, whatever. Like I need to build my confidence back up and heal from everything that happened, and putting pressure on the things I love that help me heal to make money while I’m worrying about the number in the account reaching zero or worrying that my in-laws will be homeless is not helping that healing.”
Frank: “I just don’t want you to get back in a crappy work situation and undo the healing of your burnout.”
Beth: “Me neither. I honestly don’t know if it’s the right solution and when I think about doing the same work or being in the same environment as before it scares me shitless. But I don’t know what else I can do to keep up with our higher expenses after inflation plus keeping your parents at least sheltered until their house sells.”
Frank: “I can make enough for all of that if it’s important to you.”
Beth: “But then I’ll feel like crap making no money while you and your mom do everything.”
While they are working on figuring out their shit, the Greys and the Greyparents have taken out some low-interest personal loans totaling $15k to get them through moving, getting jobs, and ramping up income.
Beth: “I absolutely hate it. But it means we pay about $1000 to get several months of breathing room. To get that from the 401k with all the penalties and taxes might cost as much as we want to get out. Like at least 10k. I’d rather sell sexy feet pics than do that.”
What do you think? Does Beth desperately need a better therapist? Will getting a real job destroy her further, or help her recalibrate? Are the Greyparents out of line or just accepting what seems like Beth trying to be generous? Was getting a personal loan a better idea than selling 401k shares or should they go do the 401k transfer to get that shit out of here?
HALP!!! (But please be nice Beth is still stressed AF)
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PS that was oddly therapeutic.
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I really enjoyed this transcript and am looking forward to what the guests decide next.
… Oh wait feedback. Uh, puts thinking hat on
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Obviously sexy feet pics.
preens at how good my feet look post-pedicure
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Ok, it sounds like especially without adderall available to you right now, a structured part time job that you are a bit picky about the work culture would be a great fit for you, even ignoring the money aspect.
Also that it is OK to give Frank’s parents more support but agree with him that it should be clearly laid out, especially if he knows his mum has a habit of taking more than people offer.
Need to read through again, hang on.
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I definitely think doing sexy feet pics rather than taking money out of retirement accounts is the way to go, and you should write it down as “Plan Y” (plan Z is “take money out of investments”).
How much are you spending as a household per month right now?
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Greyman and I unrestrained is 4k/month
on-plan is 2k/month
cutting nonessentials we might be able to get it down to ~1.7k
To fully support GM’s parents minus food would be about hmmm 2.5k for living expenses, but without their mortgage, taxes and insurance for the house they have to pay for in the meantime (eta not high for three whole things but still $650ish per month we didn’t have to worry about before).
A current thought is “here is the rent account. Your rent account sends a check to your landlord every month. You do not see the rent account. You do not touch the rent account. Anything you need outside of rent from us must be a necessity and have proof of need and a receipt.”
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Um squints at Frank You’re doing well compared to peers but your peers dont matter when it comes to actually managing your own finances and household. You need a liquid emergency fund (i suggest chocolate sauce, but also like $10k or something) and an ongoing income that actually covers expenses. It sounds like Frank increasing business is also part of a good plan, so that if you decide to quit the new job in 12 months, you can do so more comfortably because you’re relying much less on whatever savings you made in the meantime.
I also would not do well at art&craft business with that amount of pressure on it! For me that’s a recipe for a mental block and anxiety spiral, sounds like its similar for you. When you are ready to come back to it, I think looking into diversifying your income streams from your art could be worthwhile - you may decide that it’s not worth it, and I haven’t made any money off it yet, but I think only doing the pet paintings and originals being the only point of money making is kinda limited.
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Ok so we use $4k for your expenses in your planning and $600 for their rent? Did I understand that right?
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Author’s note: I also failed to mention that at some point what we had liquid totally got away from me though I had responsibility for it. Running out of money was reallllly not Frank’s fault even though I think he’s being too optimistic, and was probably optimistic to let the unmedicated ADHD poster adult (vs poster child) handle it.
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$600 is for expenses for their owned but moved out of house until that house is sold.
cheap rent here I’ve seen for maaaaybe $1400?
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Oh ok so $4k for your household, $2.5k for their household until their house is sold? So the total your household is fronting per month is $6.5k?
((Hugs)) for being the person responsible for the money and then realising it didnt work. You did good realising things weren’t working instead of hiding from it!
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Yes, that looks right based on my numbers.
And once their house is sold, there is a pay-back plan.
eta MIL should be getting a job ASAP after they land to contribute, even if they still need support.
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