Thursday, June 10, 2010

Brainstorming Again

I have been thinking about what I would do if I lost my job, or quit my job before my early retirement plan is complete (meaning that I didn't have enough reserve money to live on for a long period of time). Ideally, I would find a new job quickly but with the way things are right now I don't think I could count on that. If I lost my job then I could get unemployment benefits which would help a lot. But if I quit my job then I wouldn't have any money coming in.

Let's assume that I quit my job at the end of this month. I would also like to assume that my renter has caught up on the rent and is paying regularly (I hope that happens by the end of the month). If I sold my RV for $7,000 and sold my stocks for $3,000 and used my $3,000 emergency fund, I could put $13,000 towards my mortgage. I would still owe $3,000. It would take 5 more months to get rid of the mortgage by paying the minimum, which would be covered by the rent. That means I would have to find a way to support myself (and the dogs and cat).

Looking at my budget I would be able to cut propane out because I wouldn't need it without the RV. I would love to cut my phone bill but I am stuck in a contract until September. I noticed that Verizon cut out their cheap plans. My $50 plan (after taxes and fees) is the lowest that they offer besides the $20 for 100 minute basic phone plan that isn't even advertised. But after September I could cancel it and use Skype if I really needed to.

I don't think I could bear to part with the internet. It is my lifeline and entertainment and the library is very far away. I don't have a water or sewer bill. Well, I take that back, I buy drinking water but it only costs about $8 a month. I suppose I could make the dogs drink rainwater. That would save me around $6/m.

Food is my biggest downfall. I go over budget on food every month especially since I got the dogs. If I wasn't working I would have plenty of time to do what this guy did at Grocery Coupon Guide
He maximised his coupons and deals and lived on $1 a day for food.

So, my minimum budget (with a major medical health insurance plan in a health saving account) would be $530 per month. That's still a lot of money to make appear out of nowhere. I hope that I could sell $100 worth of stuff for a few months. That wouldn't last forever but it only needs to last for 5 months until the mortgage is paid off and I have rental money coming in that I can use for myself. I should be able to use $550 of the rent for myself and keep $200 for taxes and insurance.

(oops, I just realized that I forgot to subtract the RV insurance and registration. So I can subtract another $30 but I should probably add that in to my Christmas fund, or birthday fund.)

If I did get a home health aid job part time then I would bring in $663 per month after taxes. Problem solved. But if not I could offer to check on people's pets in their home. Hopefully I could make $200 a month at that. With selling $100 of my stuff, I'm only up to $300 a month. I think I would have to offer to clean houses too. That might bring in another $200 for a total of $500. I am still $30 short. I have always wanted to try those websites like cafe press where you can sell you shirt/mug/hat designs. I've never had the time but if I was jobless or partially employed then I would have the time to investigate. Maybe I could even earn $30 per month at it.

The best choice, obviously, is to not quit my job until my mortgage is paid off. And if I can make it that long, keep working until I have enough financial reserves so that I don't have to take another job that I might grow to hate (like cleaning houses, not that there is anything wrong with it...except for the bending, crouching, kneeling part).

I'll take one day at a time and hopefully I will make it. Another weekend is only one day away.


Anonymous said...

I feel that way about 10 times a month. I do a budget probably 4 times a week to see if I have enough. Try and coast through this bad time - get a tad closer to what you need and want - the next bad time is close enough to feel miserable about. Rinse, lather, repeat.

Dave said...

You answered your own question ["My best choice....") here.

You are going to have to pay off the mortgage before you can even consider retiring early. Your passive (rental) income seems too small and shaky to be relied upon to be your primary alternate source of income. Would you want to be late on your own bills because of your tenant who pays you late? That's no way to live.

You need to build up good reserves of investments so they can generate a more steady source of income to supplement the shaky rental income.

Is there any way you can switch to part-time work at your current place? This way, you can semi-retire and relieve some of the job stress while trying out your other possible jobs (hopefully less stressful ones). If that could help you add to your reserves, that would be helpful, too. It would delay a full retirement but make your life more enjoyable.

I paid off my mortgage in 1998 (while still working full-time) then used the additional budget surplus to build up my investments reserves. It wasn't until 2001 when I switched to part-time work (still adding to my investments, just not as much) and remained that way for 7 years as I got my life back. I did not have any other wage income in those 7 years, however, but my investment income rose continued to rise.

While it is good to plan for the possibility of losing your job, I do not think you are ready to voluntarily give it up.

Dot said...

I absolutely believe that if you set your mind to it anything is possible however, that is a REALLY tight budget. I live in Florida and can not believe that you can live in the desert during summer with only a $50.00 electric bill. I try not to run my AC much at all but to live in a mobile home in the middle of summer with no AC at 110 degrees seems unrealistic. And food at $40.00 a month? I do believe this is doable however it will require alot of work and a hugh learning curve for you to master it.
After all these sacrifices you still will not have an emergency fund, or a reliable source of investment income.
I have to agree that you should not voluntarily leave your job just yet.I would try the part time route or just find another job.
I was so high with excitement and pride when I paid off our mortgage two years ago I think my head was in the clouds! Then reality hit again and I realized although it was a great feeling to be debt free we still had a long way to go to generate income producing investments that would ensure true financial freedom.
I still need to work full time for about another couple of years.
I can only image how difficult it is to spend so many hours at a horrible job. I have a stress free wonderfully flexable job and still feel like a slave.Many many times a day I dream about leaving so I can have my freedom back!
Make sure your exit plan is well thought out and planned with several future options.

Lizzie @ her homeworld said...

How about really annnoy boss so that he sacks you and you can claim unemplyment benefit?
Okay, maybe not, but it was worth considering!

Daizy said...

I know, I know. It would never work. I have to go through it all every month or so just to convince myself how miserable I would be if I quit too early.

Dave, I kind of expect to go to part time after I tell them I want to quit, so they have time to hire someone. I couldn't pull it off until they knew I was leaving.

Dot, yes that electric bill is low. Last month's bill was $50. Before that it was $40. But next month, well, probably $70. Averaging them all to $50 is a little too optimistic.

Lizzie, I must say that I wouldn't be terribly sad if I got laid off. Not likely though with business picking up. I couldn't stand the embarrassment of really messing up. I would cave in and quit first.

AlexK said...


Why do you have life insurance? That is for people who have (human) dependents.

Daizy said...

AlexK, I always thought I would have human dependents by now. Now it is for my animal dependents although I really should write it out. I just read today that a lady left her dog 20 mil or something like that. My pets won't get anything close to that. The rest is for nieces and nephews college funds. Hopefully I won't need it and I will be able to provide other support for my pets and relatives.