I haven’t updated my Exit Strategy for a while and I thought it best to go back and review them. I will be 40 in 2013 and time is running short. Overall, my exit strategy hasn’t changed much.
- up to age 40 – Work and build up net worth as much as we can and live a somewhat frugal lifestyle. See my How to Retire By 40 post to see what I’ve done so far.
- age 40 to 60s – Execute my exit strategy and become a stay-at-home dad. I’ll explore part time self employment options and finds opportunities that generate some income. Mrs. RB40 will keep working for now. She likes her job and isn’t cut out to be a stay-at-home mom. She might explore other employment options if there is a good opportunity. I wouldn’t mind moving if she got accepted to the foreign service program or something like that. Do not draw on the nest egg at this time. Put off withdrawal is one of the key in my exit strategy.
- age 60s to 100 – Both retire at some point and start to draw on nest egg.
Cash Flow Goals
Expense: Less than $4,000/month. I kept track of our expenses over the last year and we went over $4,000 quite a few times. Most of those were related to refinancing and we’re pretty much set now. I think we should be able to maintain the $4,000/month budget most of the time this year.
Income: My target is about $5,000/month.
- Mrs. RB40’s income – $2,900/month after taxes and 401k contribution.
- Rental income – $800/month. The 4 plex rental has been doing well and we are mostly done with the repairs. It needs a new coat of paint this year, and I think that’s the only major expense.
- Dividend and interest income – $550/month. Recently, I took profit on some equities and beefed up our Dividend Portfolio, so now we’re on target.
- P2P lending – $100/month. Currently I’m only making about $15/month on prosper.com, but I am planning to increase the P2P lending investment until I generate about $100/month.
- Online Income – $200/month. I’m reducing my online income estimate to $200/month. Retire By 40 can make about $100 on pay-per-click programs like Media.net and Adsense. I’ll work on affiliate income and hope to reach $100/month at some point.
All of these income streams add up to about $4,550/month. This is a bit short of my target, but we still have a $550 cushion. I’ll have to explore other online options and raise a few more hundred dollars/month that way.
Back up Plan
Always have a back up plan before you jump into any new situation. Here are some of our options if we have a cash flow problem.
Taxes – Reduce Mrs. RB40’s 401k contribution. She is maxing out her 401k contribution right now and we can reduce that a bit if we need extra income. We can also increase her W4 tax withholding so she’ll get more take-home pay. I think she only has 1 withholding right now.
Savings – We can draw from our $50,000 savings account at ING Direct.
Part time work – I can take up part time work if we really need some cash. Perhaps I can baby sit other babies a few times/week. Hopefully, we won’t have to do this.
In a few years, baby RB40 will go off to school and then I’ll have more time to do part time work or grow my online business.
What do you think of my exit strategy? What are some other ways that I can make money while being a stay-at-home dad? I’ll probably try online surveying and see if I can make any income from that source. I’m sure I’ll find other ways to make a few bucks online once I have more time.