Last October we made the decision to move to Virginia. As part of the plan, I would quit my job and we’d give Coast FI a try.
Being a research chemist, I didn’t think there was much chance of scoring a remote role. But my company, apparently valuing my contributions over the past 15 years, asked me to stay on after our move. I’d serve in a temporary capacity until they figured out if there was a more permanent role for me. I said yes. To me, it was a chance to stash a few more paychecks, and had little downside.
Last week, the VP of Marketing came to me with a new opportunity. He offered me the chance to join our commercial team as a business development manager, expanding business in our highest growth, highest margin sector. This would be a promotion, with eligibility for quarterly bonuses, and I could continue working from home. They’d provide any training and support I needed, and give me every chance to succeed in the role. For someone looking to break into management and climb the corporate ladder, this is a golden opportunity.
There’s just one problem: I’m completely unmotivated by this offer.
What Motivates You?
To my thinking, there are three things drive people: status, purpose, and money.
I’ve never been motivated by status. I’m not really sure why, but it could be related to my upbringing. My parents have always lived modestly, and I think they’ve instilled that sense of modesty into me. I have nothing to prove, and gain nothing by inflating my appearance of wealth.
While my work can sometimes be rewarding, the feeling of purpose is fleeting. More often than not, I feel like a tiny cog in a global machine. Because that’s what I am.
So that leaves money. Early in my career, I was absolutely motivated by money. Why? Because I didn’t have any. Money was a necessary tool for subsistence. As such, I accepted any special assignments and additional responsibility that could help me get ahead.
As I began to earn more money, I started saving it. At first, it was an emergency fund. Then I started making 401k contributions, opened a Roth IRA, and eventually an after-tax brokerage account.
Over the years, those investments have built up, and compounded. It’s reached the point where the earnings on our investments outweigh our contributions. In other words, the quantity of money we save has reached a point of diminishing returns.
Which brings me to the point of marginal utility.
The Marginal Utility of the Next Dollar
In economics, marginal utility is defined as the benefit gained from consuming one additional unit of a good or service.
In effect, it’s another way of framing the receding value of getting more of something once you already have enough. What’s the marginal utility of a second Ferrari, or a sixth chocolate donut?
Whether it’s sports cars, or decadent desserts, there comes a time where “one more” is no longer worth it.
Even money suffers this fate. At some point, the opportunity to earn more money is no longer attractive, especially if it’s weighed against harder work, more responsibility, or some other detractor.
How do I determine what “one more dollar” is worth to me? That’s simple: how much closer will it get me to my FI goals?
Coast FIRE as a Compass
Coast FIRE is the point at which you can stop saving and still be able to enjoy a traditional retirement.
The higher your savings rate (the lower your burn rate), the faster you build that nest egg, and the sooner you can cut the cord from corporate life.
We’ve been saving and investing at least half of what we’ve earned since 2014. Combine this with a never-ending bull market, and we’ve seen tremendous gains in our net worth over the years.
More importantly, our spending has not differed significantly during this time. Yes, we spent an ungodly amount of money on childcare last year, but our core spending has been surprisingly consistent through the years.
The lack of lifestyle inflation is the key: as our incomes rose, so too did our investment contributions. Every extra dollar goes to savings, not indulgence.
If you’ve followed our story, you know we are well along on our path to FI, but I haven’t really quantified it lately.
Coast FI Projection
Let’s do a quick assessment of where we currently stand. I will use numbers based on “X” dollars of annual spending, to simplify and make it more broadly applicable.
Projected Annual Retirement Spending: X
Current Net Worth: 20X
Safe Withdrawal Rate: 3.33%
FI Number: 30X
The spending figure I used in this calculation is actually about 20% higher than what I’ve projected, and I’m also using a conservative 3.33% SWR to stay on the safe side. Here’s a grid I’ve constructed, which projects the “Years to FI” (30x spending) as a function of real return rate and savings rate.
I see two immediate takeaways from this projection:
- If we stop saving today (Coast FI), we will likely hit our FI number in less than 10 years, even with sub-average annual returns.
- For a wide range of savings and returns scenarios, we’re looking at 3-6 years until we can fully retire.
The second item bears repeating: regardless of our savings strategy and market returns, we will most likely hit FI in the next few years.
This also means that grinding it out for more money has a marginal impact on our FIRE timeline. Hence, a low marginal utility of higher earnings/savings.
Thanks, but No Thanks
Armed with the knowledge that a significant boost to our earnings (and thus savings) would have a limited impact on our FI timeline, my decision was easy to make.
I told the VP I wasn’t interested in the job.
OK, I didn’t say it exactly like that. I fed him some lines about focusing on family and not being able to fully commit to the demands of the role, including frequent travel. Actually, I was telling the truth. Time is my most precious commodity, and I will not sacrifice my life for my career.
So what’s next for me? I’m not really sure. I think my company will want to retain my services, but I can’t be positive of that.
At this point, I’m just running up the score during garbage time. I’m gonna keep padding my stats until the whistle blows.
What say you? Would you take a big raise and sacrifice a little quality of life to hit your FI target sooner? Or would you tell your boss to shove it? How do you view the opportunity to earn more, at this point in your journey?