How We Plan to Quit Full-Time Work in our 40s

It took us 8 years to pay off about $300k in debt including the house. I am 46 and Mr. NaD is 42. It never occurred to me before finding Early Retirement sites that we wouldn't have to work till 65 or more likely 70.  But find them I did! I'm still formulating the plan for us to semi-retire, but here are my thoughts.


Mrs. NaD's income - $1000

My last day of full-time work will be Feb 5, 2016. It will be such fun to stay home with NaD Jr. At 4 he's bursting with energy. I'm lucky that I get to have a year off with him. My plan for the coming year is to de-stress and explore part-time income ideas.  Once he's in school I'm hoping to be bringing in $1000 a month working from home about 2 hours a day.

I do not want to have to trade my time for money. I work in a call center now. I do not want to be on the phones any more. I don't want a boss/client. I don't want a set schedule. I want to work if I feel like working. I want to do work that doesn't feel like actual work. I like the sharing economy. I like getting paid for doing things I'm already doing.

So I'm looking for ways to make money for little to no work. I can hear my Dad now saying to my teenage self that there is no such thing. But you know what? I'm already making $82 a month doing "nothing" by having a bank pay us $20 a month, by collecting $52 a month in credit card rewards, and for us each using Bing. So I'm going to see how far I can take this idea. In another post I'll show how I've achieved this in more detail and what my plans are to bring this up to $100 a month. Then $300. Then $1000 a month regularly.

If I fail and have to work at a regular part-time job for someone else, so be it. At least it won't be working full-time. But I think I can make this work. We nickeled and dimed our way out of debt. Why not nickel and dime our way into semi-retirement?


Stocks - $1000

We currently have $50k in retirement. My goal is to add another $250k so that we can have $1000 coming in from stocks.

                           $300,000 x .04 = $12,000 per year.

Of course I'll aim for a little higher amount. MadFientist mentioned that the first few years are critical. If the stock market severely crashes within the first X number of years (number of years and "severely" being subjective), then you may be among the few whose retirement doesn't last when withdrawing at 4%.

After digging and reading all the links I've decided I feel comfortable with 5 to 7 years. Meaning if we recover from the crash back to where we would have been without the crash (meaning our account should be more than $300k after accounting for inflation) by Year 5 or 7, then we will be fine. If the stock market severely crashes after Year 5, I won't care.

So I'd like to have some cushion here. Maybe put the $300,000k in 75% stocks and the rest in bonds while having an additional $20k in bonds as well. If the stock market tanks, we can take the bonds and buy stocks, then cut back on spending. Most crashes recover within 2 to 3 years (or so said Ric Edelman in a podcast. Can't remember which one).  If that's accurate, we wouldn't have to cut back for too long and it shouldn't be too hard. We're both healthy and young so I think we can manage cleaning our own house for a while. ;)

Our core expenses should be around $2k and I would prefer to have $3k in spending. Right now I've only figured out how to have $2457 in spending, which isn't bad.

We would like to have someone help clean as we both have bad backs but I'm thinking for the first few years we won't have anyone help so we can keep more money in stocks to help build it up in case of a crash. Probably Years 1 - 3 we will not spend the $1000 from the stocks at all. Year 4 I would be comfortable hiring lawn guys and a maid once a week. Then Year 6 go all in and feel free to spend the full $1000.  Right now we're spending $3600 a month and that's with paying $180 in house insurance a month and $380 in property taxes each month. I think we can work with $3250 in a lower cost of living area.

To get the $50k out of retirement we can do a Roth Ladder. We could also wait till I'm at retirement age to pull from the $50k account and just put all the money we will be saving into taxable accounts.


Rental Property - $1000

We've owned rental property before and loved it.  Once Mr. NaD finishes his Master's Degree, we are planning to move from Houston to a college town someplace cheaper like TN. The idea is to find a house with a garage apartment that we can rent to a college student. Mr. NaD plans on teaching at the University eventually so finding tenants shouldn't be a problem.

I'm not sure we can make $1000 a month off of one garage apartment, though. We may need to build another apartment if our property is large enough or we would need to find a second property somewhere. It may be a problem coming up with additional funds for the 2nd rental since I don't want to add too many years to our time line. Our goal is for each of us to quit working full-time in our 40s. But we can figure this out once we are making more money and once we figure out where we are moving to.

Mr. NaD's Income - $1250

A Google search revealed $1500 was the level of pay per class for most entry level, on line teachers. Since Mr. NaD has been teaching for 11+ years (I should know the exact number. lol), I think $1500 is a reasonable low number to use.

At 50 minutes x 3 days a week + an hour of student/teacher time and .5 hours of class prep, we are looking at about 4 hours a class give or take. then there's the grading. Grading papers may take more time than he's thinking but he's estimating 5 hours total. He reads pretty quickly.

At 5 classes each Fall and Spring semesters, that's 25 hours a week and $7500 a semester. $15,000 a year divided by 12 months is $1250 a month. He will most likely earn more than this but that money will just go to pay for SS and Medicare. With three dependents and earning $27,000 a year, we won't owe any income tax.

Eventually, he wants to get his doctorate for fun and having this doctorate will increase the pay scale. So at some point he will be bringing in $2000 a month. He loves teaching. Going from 40 hours a week to 25 or so hours will seem like a dream and won't feel like work to him.

Mr. NaD has had to write 7 different lesson plans for 7 different classes every single year of teaching. All of his off period time usually is comprised of either teacher meetings or parent meetings. He has very little time to plan. So he now has creating lesson plans down to a science and thinks he can do lesson plans for only 5 classes  pretty quickly. As time goes on, teaching the same class over and over should require even less prep time.

Money Budgeted but Not Spent over the Summer Vacation - $207

We have $500 a month coming out of all 12 months' budget to give us $6k to spend each summer on fun and expenses.  As we already have an RV, this seems reasonable.  This $6k is to cover all expenses of the 2.5 month trip except food. We will maintain our normal food budget since we can cook in the RV. This is in addition to our normal spending money that we will still be getting over the summer months.

Since we plan on traveling 2.5 months every summer, expenses we incur while living at home will not occur over the summer. So we created a School Year Budget and a Summer Budget.

Our gas and water company charge a flat fee plus services used. We will have to pay the flat fee, but otherwise will not spend money on these utilities. Although we do have an automatic sprinkler system, we don't water our lawn. There's pretty much no grass. It's all weeds so there's no need to water the weeds. At least where we live now anyway. This may change when we move and it's something for us to think about when buying a house.

We normally leave the AC at 80 while we're gone so the crazy high AC bills of the summer will be less. Our AC bill is about $80 to $85 during most of the year. During the summer it's between $120 and $170 a month.

Over the summer we won't be paying for a maid and we won't be using the normal $200 we have set aside each month for one RV trip during the school year. Our School Year Budget includes $250 in gasoline. We won't need this as gas used over the summer is included in the $6k Summer Budget. (Although the plan is for Mr. NaD to work from home, life doesn't always work out the way you would like. So for now our School Year Budget includes gasoline for his commute. Plus he wouldn't mind teaching in person so driving to work is not out of the question).

In my hypothetical budget this adds up to $1972 for the 2.5 months we will be gone. $1972 / 9.5 months while we're at home = $207 a month.

Other Things We Can Do to Meet our Goal of Bringing in $5000 a Month

Our Primary Goal is for both of us to quit working full-time in our 40s. That comes first. While it would be nice to be able to have our targeted $3000 a month spending money, that's not as important. Earning $4457 a month leaves us $543 short of our goal. Though we will be leading fairly luxurious lives, being short $543 will disappoint because I'm fairly competitive once I set a goal and being short will drive me insane.

Options I can think of include Mr. NaD getting a job that pays higher than the expected $65k per year once he finishes his Master's. Mmmm. Probably not. He's pretty set on being a technologist for a school district if he isn't going to teach. I could work for someone else while doing my side gig to bring in extra cash once NaD Jr. goes to school (just for two years so I can be 49 and quit to meet the goal). Naaahhh. 

The 2 rental properties will most likely bring in more than $1000. Our two one bedroom properties in Houston brought in $1100 after all expenses including a property manager. So that may be an option though I'd have to learn the market in our new town to know for sure. We wouldn't have a property manager in our new town. 

Mr. NaD is bent on getting his doctorate. This will bring in more money during his full-time working years and also while he's semi-retired. This is a viable second option as well.

My side gig may take off as well. You never know.

Most likely it will be a combination of Mr. NaD and I earning more and the rental property earning a little more. It would take too long to save more money in stocks to make up the full $543 we are short.

But if Mr. NaD does earn more than the projected $65k a year before he semi-retires, we will definitely throw this money into stocks. He needs another year to finish the Master's. Then let's say maybe he spends a year earning $65k. Then with 6 years left on the clock to semi-retire in his 40s, he gets a different job and is making an extra take home of $6,000 a year. That would give us an extra $36,000 if we earn no interest at all (and don't lose any money either. lol).

So acquiring the $543 may look something like this:

            $120 stocks ($36,000 x .04 = $1440 / 12 months = $120 per month)
            $100 rental
            $100 Ms. NaD's side gig
           $223 Mr. NaD's teaching income with the doctorate. ($223 x 9.5 months =  
                     $2118.50 a year extra divided by 10 classes = earning an additional
                     $211.85 extra per class. I don't know. Seems maybe reasonable?)

These are my rough ideas for semi-retirement in 8 years for him and soon for me.  What do you think?