Husband wants to take a huge paycut to join a startup

[Anonymous]

Anonymous wrote:I have a spouse who works in tech startups and has for 15 years+. Some things to think about.

-He will have insane hours. It's the culture. Most others in the company will be in their 20s and this won't be a problem for them. No one will care that he has a wife and kids.
-Zero job security. Zero. Could get fired on a Tuesday.
-A lot of startups fail. The percentage that end up getting sold and making equity partners a good deal of money is pretty slim. 10 percent of anything but a fairly big number isn't much.
-What is the health insurance situation? Health insurance for a family of 5 isn't cheap and if I was you, one of my biggest concerns would be stable health insurance for your family. Depending on the size of the startup and where they are as a company, they might not offer great family plans. They're probably dealing with a lot of singles, which is a different market.

My advice is plan out the worst case scenario with him and make sure you can live with it. The worst case is you spend down all your savings and in 3 years he has a 100k salary and you have no savings. What happens then? What happens if he gets let go? Just work out your contingency scenarios and maybe you'll feel better.

Good luck. If they've got the bug to go this route, not much you can do about it. I only have 2 kids, but the way I sleep at night is I have a very stable job and I am the stable and steady presence in our family income and carry our health insurance. But I understand that might not be possible for everyone.

This is good advice. I would be a bit uncomfortable spending $50K to redo a basement in the first two years of the startup. Wait till the third year to see where the startup is at. The payoff of a startup is very attractive. That's why people do it for way less money, and work insane hours. I had the opportunity to work for a startup but passed on it because I didn't want to work those hours (and I was single back then). The startup got bought out, but no one except the executives made money out of the buyout.

[Anonymous]

Anonymous wrote:I am concerned that DH was doing all this "planning" and OP apparently did not know either that DH was financially setting himself up for this position, or that he wanted to do something like this at all. That is a weird disconnect. If my DH saved over a million dollars in cash, I think I would need to know why... right?

Good observation. DH has set himself up nicely over years and the wife seems clueless as to his ambitions. I think he did everything to put her at ease for the next step.

[Anonymous]

Anonymous wrote:

Anonymous wrote:How much is currently in retirement? In 529's? Maybe you would feel better if you guys sat down with a fee-based financial planner who could show you how much of that money you need for college, and just how really safe you are now. I don't think your concerns are coming from a realistic view of your financial situation.

That's a good idea -- OP doesn't seem to have a good concept of financial planning. They have a huge nest egg, and that will definitely tide them over.

Is the $1.2 in cash plus the investments their retirement savings, or "extra" money on top of savings for college and retirement? It is hard to imagine leaving a secure 600k job that I love.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:He well earned that shot. Let him or he will regret it.
Even if it fails, that's life. With your assets you don't have to live in fear. I guess as a SAHM you don't feel powerful enough to dig yourself out of a hole. Maybe work on that.

What does this mean? Not being snarky, I just honestly don't know what you're saying here.

NP. It probably means the for OP the man was her plan, and she has no means to support herself by her own admission.

And honestly a man like this who makes half a million and saved up millions and still isn't satisfied may have ambitions for improvements outside of his career, not sure if OP is worried about their marriage too. Hence be supportive and weather this phase, OP seems vulnerable

OP here. No I am not worried about my marriage. We have always seen ourselves as a partnership and that the money he makes is "our" money. He is asking me if he should do this, he's not telling me. I don't think it's fair to paint me as a leech. I've made sacrifices too. He went back to work two days after I had each of our babies and I didn't say anything. He frequently goes on last minute business trips and I don't say anything. It's not like I've been on easy street all these years. I've been home with three little kids.

OP, you are not a leech. Marriage in the 21st century is a partnership. I am sahm right now. DH still talks to me about big purchases. And actually, DH has a chance to go with a startup next year. We've been discussing it. The health insurance thing that a PP mentioned is super important. What kind will you get with the startup? If it's a high deductible plan, then you need to budget for this as well.

[Anonymous]

Anonymous wrote:

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Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How much is your mortgage?

we don't have one (he paid it off a few years ago, I guess this was part of his plan too) but we do have a property tax bill that works out to be ~ 1k a month.

He sounds really fiscally conservative, op. I genuinely don't understand where your fears are coming from.

I am really risk adverse. We have a really nice life right now. Aside from the equity thing, he actually really likes current job and the people he works with a lot. So I just never thought he'd seriously do this. He always talked about it in a "if things were different" kind of way. But things are not different. We have three little kids.

Op, I'm going to come right out and say your fears are not rational. Your dh (and you!) have done an amazing job with money so far. Let him roll the dice on this one. He's literally earned it.

Sounds like a classic mid life crisis. Startups are for your people. Has he bought a sports car yet? Was the basement remodel going to add a wet bar?

what does this mean?

I think he/she meant "young people." The PP has no experience in the start-up environment and is giving bad advice.

Which one is bad advice?

[Anonymous]

Anonymous wrote:

Anonymous wrote:A relative moved jobs frequently for better gigs. The thing I see looking back on that career is that even the missteps were steps up. Everything was experience on the resume, and the next step was always up from there (and always for more equity).

He did the start up venture routine. Three times. They lived very frugally, but fine, for years (without the nest egg you guys have and more kids). One venture was going well, a better opportunity came by, and he jumped; that one totally failed, and he found another one ... that one paid off big time. I mean BIG time. You just never know which one will work out, but if you don't try ...

Every step was a learning experience that built and built and ultimately paid off. They feel strongly that this could not have worked for them if SIL had not SAH because making a venture work is all consuming. They are a mighty strong team. That is what worked best for their family (but I also see great value in PP's model).

If he has the skills to develop a company, and you trust the team he's joining (no major personality issues), then I say take a leap of faith. You have done the financial prep work to make this risk possible. But you have to take control of the home finances and home front and keep him in line and prop him up. He'll be very busy elsewhere if he's doing it right.

^^by PP I meant 8:25

This seems like sound advice? Why do you think it is bad?

[Anonymous]

Sounds like a great opportunity. It's not like he's going down to $0 compensation, he'd still be bringing in $100k. $100k +10% equity is actually a really attractive offer for a startup. Many startups offer less equity or less compensation (or both) for even very senior roles.

What are your annual after-tax expenses? Do you know how much you'll have to dip into savings? I wouldn't sweat the $50k remodel. Your husband is right, that's not going to make or break you.

Overall it sounds like a good opportunity to me. My only questions would be (1) how much do you spend per year? this is much riskier if you spend $300k per year than if you spend $150k per year. And (2) how marketable is your DH in case the startup fails? My guess is pretty marketable considering he's currently bringing in $600k and has an offer to join a startup with $100k +10% equity. As I said, that's actually a really attractive offer from a startup. This is less risky the more confident you are he can land on his feet if things go south.

Go for it!

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have a spouse who works in tech startups and has for 15 years+. Some things to think about.

-He will have insane hours. It's the culture. Most others in the company will be in their 20s and this won't be a problem for them. No one will care that he has a wife and kids.
-Zero job security. Zero. Could get fired on a Tuesday.
-A lot of startups fail. The percentage that end up getting sold and making equity partners a good deal of money is pretty slim. 10 percent of anything but a fairly big number isn't much.
-What is the health insurance situation? Health insurance for a family of 5 isn't cheap and if I was you, one of my biggest concerns would be stable health insurance for your family. Depending on the size of the startup and where they are as a company, they might not offer great family plans. They're probably dealing with a lot of singles, which is a different market.

My advice is plan out the worst case scenario with him and make sure you can live with it. The worst case is you spend down all your savings and in 3 years he has a 100k salary and you have no savings. What happens then? What happens if he gets let go? Just work out your contingency scenarios and maybe you'll feel better.

Good luck. If they've got the bug to go this route, not much you can do about it. I only have 2 kids, but the way I sleep at night is I have a very stable job and I am the stable and steady presence in our family income and carry our health insurance. But I understand that might not be possible for everyone.

This is good advice. I would be a bit uncomfortable spending $50K to redo a basement in the first two years of the startup. Wait till the third year to see where the startup is at. The payoff of a startup is very attractive. That's why people do it for way less money, and work insane hours. I had the opportunity to work for a startup but passed on it because I didn't want to work those hours (and I was single back then). The startup got bought out, but no one except the executives made money out of the buyout.

That is always true, and I think people here are assuming OP's DH is on the executive team and getting equity in the company at the get-go. If you don't hold significant equity, you won't be cashing out on the buy out. Also, the executives are often bound by the buy out contract to work for the new company, which sometimes involves relocation, so that is another thing to consider.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:He well earned that shot. Let him or he will regret it.
Even if it fails, that's life. With your assets you don't have to live in fear. I guess as a SAHM you don't feel powerful enough to dig yourself out of a hole. Maybe work on that.

What does this mean? Not being snarky, I just honestly don't know what you're saying here.

NP. It probably means the for OP the man was her plan, and she has no means to support herself by her own admission.

And honestly a man like this who makes half a million and saved up millions and still isn't satisfied may have ambitions for improvements outside of his career, not sure if OP is worried about their marriage too. Hence be supportive and weather this phase, OP seems vulnerable

OP here. No I am not worried about my marriage. We have always seen ourselves as a partnership and that the money he makes is "our" money. He is asking me if he should do this, he's not telling me. I don't think it's fair to paint me as a leech. I've made sacrifices too. He went back to work two days after I had each of our babies and I didn't say anything. He frequently goes on last minute business trips and I don't say anything. It's not like I've been on easy street all these years. I've been home with three little kids.

Never meant to paint you as a leech. But your financial plan is solely your DH.

For most working parents DH has to go back to work a couple days after having kids too; it's actually much worse to leave you 6 week old crying infant with some sub daycare worker you just met, so please shut the F up about sacrifice in your paid off McMansion and MILLIONS in assets.

FFS, you are the living defintion of EASY STREET.

But your DH wanderlust for better pastures does seem to be jeopardizing that, hopefully just professionally.

I am curious how you consider yourself partners when he has been crafting this secret plan (paid off mortgage, huge growth stifling cash savings) and not discussing with you years ago.

Op here. It's not a "secret" plan. I knew he had this in the back of his mind. He's been approached by other startups but they could afford to offer to pay a salary so I said no and he agreed. And they were just never the right people. He feels different about this this one though. I suspect that if he doesn't do it he'll have major FOMO.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How much is currently in retirement? In 529's? Maybe you would feel better if you guys sat down with a fee-based financial planner who could show you how much of that money you need for college, and just how really safe you are now. I don't think your concerns are coming from a realistic view of your financial situation.

That's a good idea -- OP doesn't seem to have a good concept of financial planning. They have a huge nest egg, and that will definitely tide them over.

Is the $1.2 in cash plus the investments their retirement savings, or "extra" money on top of savings for college and retirement? It is hard to imagine leaving a secure 600k job that I love.

NP. She says in the OP that it is extra on top of their investments of 1.5M. He's been saving up to do this.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A relative moved jobs frequently for better gigs. The thing I see looking back on that career is that even the missteps were steps up. Everything was experience on the resume, and the next step was always up from there (and always for more equity).

He did the start up venture routine. Three times. They lived very frugally, but fine, for years (without the nest egg you guys have and more kids). One venture was going well, a better opportunity came by, and he jumped; that one totally failed, and he found another one ... that one paid off big time. I mean BIG time. You just never know which one will work out, but if you don't try ...

Every step was a learning experience that built and built and ultimately paid off. They feel strongly that this could not have worked for them if SIL had not SAH because making a venture work is all consuming. They are a mighty strong team. That is what worked best for their family (but I also see great value in PP's model).

If he has the skills to develop a company, and you trust the team he's joining (no major personality issues), then I say take a leap of faith. You have done the financial prep work to make this risk possible. But you have to take control of the home finances and home front and keep him in line and prop him up. He'll be very busy elsewhere if he's doing it right.

^^by PP I meant 8:25

This seems like sound advice? Why do you think it is bad?

Not sure who you are asking, so to clarify, this was just me fixing up an unclear reference in my own post (while I typed it a ton of other posts got in between so my reference to "PP" became ambiguous).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:He well earned that shot. Let him or he will regret it.
Even if it fails, that's life. With your assets you don't have to live in fear. I guess as a SAHM you don't feel powerful enough to dig yourself out of a hole. Maybe work on that.

What does this mean? Not being snarky, I just honestly don't know what you're saying here.

NP. It probably means the for OP the man was her plan, and she has no means to support herself by her own admission.

And honestly a man like this who makes half a million and saved up millions and still isn't satisfied may have ambitions for improvements outside of his career, not sure if OP is worried about their marriage too. Hence be supportive and weather this phase, OP seems vulnerable

OP here. No I am not worried about my marriage. We have always seen ourselves as a partnership and that the money he makes is "our" money. He is asking me if he should do this, he's not telling me. I don't think it's fair to paint me as a leech. I've made sacrifices too. He went back to work two days after I had each of our babies and I didn't say anything. He frequently goes on last minute business trips and I don't say anything. It's not like I've been on easy street all these years. I've been home with three little kids.

Never meant to paint you as a leech. But your financial plan is solely your DH.

For most working parents DH has to go back to work a couple days after having kids too; it's actually much worse to leave you 6 week old crying infant with some sub daycare worker you just met, so please shut the F up about sacrifice in your paid off McMansion and MILLIONS in assets.

FFS, you are the living defintion of EASY STREET.

But your DH wanderlust for better pastures does seem to be jeopardizing that, hopefully just professionally.

I am curious how you consider yourself partners when he has been crafting this secret plan (paid off mortgage, huge growth stifling cash savings) and not discussing with you years ago.

Op here. It's not a "secret" plan. I knew he had this in the back of his mind. He's been approached by other startups but they could afford to offer to pay a salary so I said no and he agreed. And they were just never the right people. He feels different about this this one though. I suspect that if he doesn't do it he'll have major FOMO.

Not secret but in your OP: Unbeknownst to me, this is why we have so much cash.

[Anonymous]

The chances that your DH is going to hit it big on his first startup experience ever with a 10 percent stake are slim to none. That's just fact-based reality.

Yes, you have a lot of assets but other factors are your age and how much of those assets are planned for college, retirement, etc.

You need to sit down with a financial planner or a spreadsheet if you are good with that kind of thing and map out what this all really looks like. Yes, you can all make it work but you have 3 kids and you have to be responsible and know how you're going to make it work.

Also, if you think he's not around now, he will never be around. Startups mean working all the time, no real vacations, a lot of stress, and often dealing with a lot of growing pains and personality challenges. It will be his main focus, 24-7. If it's not, chance of success goes to zero, not slim.

[Anonymous]

Anonymous wrote:I think people here are assuming OP's DH is on the executive team and getting equity in the company at the get-go. If you don't hold significant equity, you won't be cashing out on the buy out. Also, the executives are often bound by the buy out contract to work for the new company, which sometimes involves relocation, so that is another thing to consider.

I think DH would be on the exec team if he's making $600k now. He's gotta be at exec level already where he is.

As for the buy out contract, he'll have a hand in deciding what they choose if they get that far. Many startups see the existing exec team given the boot, which is fine since they have cashed out anyway. Otherwise, typical is a 1-3 year vest plan (golden handcuffs).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:He well earned that shot. Let him or he will regret it.
Even if it fails, that's life. With your assets you don't have to live in fear. I guess as a SAHM you don't feel powerful enough to dig yourself out of a hole. Maybe work on that.

What does this mean? Not being snarky, I just honestly don't know what you're saying here.

NP. It probably means the for OP the man was her plan, and she has no means to support herself by her own admission.

And honestly a man like this who makes half a million and saved up millions and still isn't satisfied may have ambitions for improvements outside of his career, not sure if OP is worried about their marriage too. Hence be supportive and weather this phase, OP seems vulnerable

OP here. No I am not worried about my marriage. We have always seen ourselves as a partnership and that the money he makes is "our" money. He is asking me if he should do this, he's not telling me. I don't think it's fair to paint me as a leech. I've made sacrifices too. He went back to work two days after I had each of our babies and I didn't say anything. He frequently goes on last minute business trips and I don't say anything. It's not like I've been on easy street all these years. I've been home with three little kids.

Never meant to paint you as a leech. But your financial plan is solely your DH.

For most working parents DH has to go back to work a couple days after having kids too; it's actually much worse to leave you 6 week old crying infant with some sub daycare worker you just met, so please shut the F up about sacrifice in your paid off McMansion and MILLIONS in assets.

FFS, you are the living defintion of EASY STREET.

But your DH wanderlust for better pastures does seem to be jeopardizing that, hopefully just professionally.

I am curious how you consider yourself partners when he has been crafting this secret plan (paid off mortgage, huge growth stifling cash savings) and not discussing with you years ago.

Op here. It's not a "secret" plan. I knew he had this in the back of his mind. He's been approached by other startups but they could afford to offer to pay a salary so I said no and he agreed. And they were just never the right people. He feels different about this this one though. I suspect that if he doesn't do it he'll have major FOMO.

Not secret but in your OP: Unbeknownst to me, this is why we have so much cash.

I thought we were saving up for a "rainy day" so to speak. He has talked about this but I never thought it would seriously happen. I always assumed it was a pipe dream. He really likes his job, the hours are really good, the people are nice. We have a good thing going. Why rock the boat on the off chance that you might make 10M in a buyout, kwim? We don't need a 10M payout. We live fine as it is.