Can I Quit My $200K Job to Travel the World?

A 25-year-old making $200,000 a year wants to quit his job and travel the world. He already has $800,000 invested. Sounds great, right? But he might be making a very expensive mistake. Today, I'm breaking down real money decisions, huge financial decisions like this one. Or can we afford to have a baby? Or is it time to move out on my own? I'm going to break down their numbers. I'm going to challenge some of their assumptions. And I will try to figure out what's really going on beneath the surface. Because sometimes the answer is not obvious. It's actually very counterintuitive. I'll show you what they're missing and what I would do instead, because one of these decisions could dramatically change the outcome of this person's financial life. Let's find out what's going on. Can I quit my job and travel for a year? All right. First one. Here's what I know about this person. TM is 25, lives in Sunnyvale, California, and works as a product manager. He says, one of my dreams has always been to travel the world for an extended period of time. However, due to constraints of PTO, I don't get many opportunities to do this while working for my employer. I've been saving a portion of my income towards a dedicated savings bucket to go on a 1-year trip, and I've been fortunate with outsized returns on my investments. So I feel like I'm in a good position to do this. To be honest, I'm not even sure I want to return to the same career once I'm back. My rich life would include a lot more flexibility, a lot fewer meetings compared to my current packed schedule. On the other hand, I'm doubtful I would be able to maintain my high income if I were to pivot in another direction. First of all, I can already tell this person is smart and they overthink everything. I fucking love it. Let's take a look at the numbers. Salary is about $200,000. Assets, zero. Typical for somebody who's young and probably rents. Investment total at $773,000. Very impressive at that age. 63% of gross income. Holy shit. $23,000 a year to a 401, $5,000 a year to an HSA, and $8,000 a month post-tax. Does this person live with their parents? This is very impressive. Savings total $50,000 with $450 a month to a travel fund. Debt $1,768. Probably their credit card bill for the month that they're going to pay off. Fixed costs are 20%. Okay, they live with their parents, probably. Guilt-free spending. What the fuck? $724. Okay, now I understand. Without even knowing anything more, this person is way oversaving, way overinvesting. They probably haven't gone out to a restaurant in 3 months. And if they have any friends, when their friends invite them out, they might be like, I don't know if I can do it because I need to contribute $8,432 this month to my retirement. I love an aggressive, young, high earner. I fucking love it. I was in a similar position earning a lot of money in my 20s and putting away a huge amount. But when I look back, one thing that I could have done differently was actually to have more fun. Yes, continue investing aggressively. Yes, continue saving. But taking out, let's say, $200 a month, even a week for special occasions that you will never get back later in life. Probably would have been really meaningful. So while this person is way underspending on guilt-free at 6%, when in your 20s you have the opportunity to do things you can never do later, I think it's really cool that they're thinking like, hey, maybe day-to-day not as important to me, but I do want to take this big awesome trip. I noticed this tension between working at this job and staying in this career versus freedom, and I would like to propose the answer might be yes And yes, I remember when I was in high school and I was applying to colleges and the colleges had these FAQs on the application. It was like, should I take the easier class and get an A or take the harder class and get a B? And the college said one of the most straight up OG things I've ever heard. They were like, we always encourage our applicants to take the more challenging class, but in our experience, students who get admitted take the more challenging class and also get the A. In other words, yes and yes. Should you pursue this career because it's incredible and perhaps it's rewarding financially and spiritually? Yes. If that's what you want. Should you also pursue a lifestyle that allows you to travel or do the things you want? Yes. How can you do both? That is the question I want you to answer. Now, this role you mentioned, hey, I don't really love as many meetings. Okay. If you take this trip and you come back, you may want to look for a role that has fewer meetings. You could do that. They exist. And I think it's really cool to be able to spend money on the things you love now and later. Now, if you want to see something funny, we need to actually factor in the math here. Let's assume that this person continues doing exactly what they've been doing for the next 40 years. They make this income, they contribute this much money, which is $126,000 a year to investments. By the time they are 65, they will have $38 million. That's $38 million post-inflation or real return. The amount they will have in their bank account will be $96 million. What are we even talking about? But instead, if this person stopped investing today, like just stopped, guess how much they would have at age 65? They would have $11.5 million. That's a real return. How much would they have in the bank? A nominal return? $34.9 million. And when I look at these numbers, it actually tells me that you have probably gone too far. The fact that you're going to end up at 65 with tens of millions of dollars and you are kind of like agonizing over this trip tells me it's time to build some balance into your life. You can afford to cut your contributions down by $10,000 a year, $20,000, $50,000 a year or more. And you will still be incredibly wealthy. In other words, you won at the age of like 25 at the game of personal finance. Now you have a new game. Turn that page and focus on building a rich life. We want a $1.2 million house and a baby. Can we afford both? Sally is 32 years old. She lives in the Bay Area with her husband Brett and a program manager. She works as an account manager. Sally says, "We'd love to buy a $1.2 million house in the next 2 years. We also wanna start a family around the same time, but we're nervous that we'll be financially stretched. We've been lucky to travel a lot and we are okay pulling back on that. I still want a feeling of security. I also feel like I may need to step in and help my parents financially someday." Sally's question, can we really afford a $1.2 million house in the next 2 years and also start a family without feeling financially stretched? Here are the numbers. Their assets, $70,000. Investment totals, $314,000. Savings, $195,000. Debt, $18,000. Fixed costs, $6,916, or 44%. Wow, that's quite low. Okay, that gives them a lot of margin. Their housing is only 14.6% of gross. Wow, that's really good. Investing, $1,800, or 11%. Savings $2,400 or 15%, and that includes $2,000 a month for their house. And finally, guilt-free spending at $4,712 or 30%. That's quite interesting. Before I even go on, just some things I notice about this. You see, their fixed costs are super low, including their housing costs at only 14.6%. So the first thing that goes through my mind is amazing. By keeping your fixed cost low, you've built up this buffer or this margin What are you doing with the rest of the money? I can see that they like to spend money. They spend money on guilt-free spending. 30% is at that higher end of the 20 to 35% recommendation that I make. Of course, they're investing a nominal amount and they're saving quite aggressively at 15%. That's nice. But overall, I can see that the money has flowed down to their guilt-free spending, which is totally fine. Let's play out the numbers on their house. At a $1.2 million purchase price, If they were to put 20% down, that would be $240,000. They could use their savings and they could tap into their investments, or they could put down less than 20%. I typically like to model out 20%. Their loan would be $960,000 and their mortgage at a 7% rate would be $6,390. If we add in phantom costs like maintenance, also transaction fees that need to be spread out over the cost of that mortgage, that number might go to something like $7,200 to $7,800 per month. Personally, I think higher. Childcare at $2,000 a month and baby supplies, medical, etc., we can add on another $500 to $1,000 a month for that. That's about $2,500 to $3,000 a month. If we are looking at the house costs and the baby costs, that would mean fixed costs of around $9,500 a month. To $10,500 a month. That right there, just those two categories, are over 60% of your take-home pay before groceries, before savings, before investing or guilt-free spending. That tells you it's too much right now. You cannot afford both. This is primarily because the house is expensive at $1.2 million, the interest rate is high at 7%. That's adding on a huge amount of interest every month to that mortgage. And finally, even by putting 20% down, your income does not allow for the house plus the baby at the same time. One of the biggest mistakes that people make with their finances is to take on massive new costs all at once. The most common example is that people will buy a house and get a new car all at the same time as having a new baby. 1, 2, 3, that is way too much stuff to take on. Let's not do that. A better approach is to slow down. Do we really need the SUV or the house right now? Can we wait 6 to 12 to 18 months or even more? That allows you to spread these costs out and actually recover financially from these brand new expenses. If you want security, you got to really probe into what that means. Does it mean owning a house? Because you're not going to own that house for 30 years. Does it mean knowing that even if your landlord says you got to go, that you have a fat cash cushion so you can weather any storm? There are lots of routes to get to financial security in America. We tend to think that buying a house is the only one, but there's so many more than that. When I look at this couple, the first thing that occurs to me is your fixed costs are amazingly low. Stay in that house for as long as you possibly can, because every month you stay there, you are saving thousands and thousands of dollars. Now, what do you do with that money? That is a very important question. If you want to be able to buy a house, you probably need to be saving a little bit more aggressively. Right now at 15%, that's nice. But if you really want to buy a house in some reasonable amount of time at the expensive rates that you have to, you're going to need to put more aside. You could probably take some of that money from your guilt-free spending, like $1,000 a month, perhaps even $2,000 a month, and you could save it. What does security mean to me? Explore all that. Do I need to buy a house? If so, when does it need to be? In the next 2 years? Could it be in 5 years, 8 years, 10 years? And then start to allocate your money accordingly. Can I afford an engagement ring? All right, let's see what's next. Here's what I know. John is 33, lives in Miami, Florida, and works as a product manager. He's been supporting his girlfriend Jill, who is pursuing an accelerated RN program and has also been financially assisting his mother with Alzheimer's. How can I get out of this hole and move towards wealth? I am also trying to save for an engagement ring and hit a 6-month emergency fund. I feel like I am drowning. Okay, let's take a look. Assets, $0. Investment totals, $95K. Savings totals, $10K. And debt is $47,300. Fixed costs are $7,100 or 75%. That's a lot. Housing is 26% of gross. Quite good, actually. But debt payments are $1,370 a month. That's drowning him. Credit cards at $500. Debt consolidation loan at almost 8% or $650 a month. Student loans, $220. Groceries at $800 and miscellaneous at $816 per month. Investing is at zero. Savings at $705, 7%. That's good. And finally, guilt-free spending at $1,600 or 18%. Wow. I think, John, that you have an opportunity here to totally transform your financial life, but you will have to make very, very difficult decisions. Your fixed costs are too high. That is why you feel like you are drowning. And if we drill down into what part of your fixed costs are high, it's your debt. $1,370 a month at your income is very, very difficult. I can tell from your types of debt that you have had a poor relationship with money. Very commonly, people get into credit card debt and they do debt consolidation when they have an overspending problem. So I'm almost certain that you have not been in control of your money. I would also be willing to bet you probably have not read a book about personal finance. You certainly have not set up automation for things to flow correctly. So I want to encourage you, it is now the time to take control of your money and to not be spending on the things that you cannot afford. This directly correlates with you asking about spending on an engagement ring. This is the first decision that you will have to choose. Can I get engaged to the partner of my dreams, but right now I cannot afford a ring? You might be able to afford something modest, maybe a few hundred dollars, but you simply cannot afford a more expensive ring. Would you be willing to have that conversation with your partner? Couple of other things I noticed on your fixed costs: your groceries are at $800 a month. I think that can be a reasonable amount, but if you're in debt, that number needs to come down. You need to find a way to economize. I would try to find an extra $200 a month on that, maybe $100, redirect that towards your debt. And finally, miscellaneous at $816. No fucking way. In what universe can you be in debt and have $816 in miscellaneous fixed costs every single month? No way. Fix that. You can take it down to $100 because sometimes things come up, but that's $700 a month that can go towards accelerating your debt payoff and building up some of your savings. Let's go down to guilt-free spending at $1,683 a month at 18%. That's really nice. That's nice for me, not for you. I don't have debt, so I can spend $1,683 or more. You cannot. When you have debt, that number needs to come way down. You know how I talk about 20 to 35% for guilt-free spending? You're nowhere near that. If it were my recommendation, I would say something like 10, 11% max. The rest of that money, you know where it goes. It goes to saving and debt payoff. This is how you go from feeling overwhelmed to feel like you are ferociously attacking this problem. That debt is going to start getting paid off faster and faster. In fact, if you go to a debt payoff calculator and you will see you can shave off years of payments by making these aggressive moves. That is my challenge to you, because it is easy to go the other route. You can make tough decisions right now, make a plan, attack aggressively, and within a few years you're debt-free. You've continued building up your savings, even investing, and you are set to be moving forward in your rich life. That's what I would do. John, one other thing that you mentioned in your question, which I really want to take a second to acknowledge, is that you are taking care of your mother. Who has Alzheimer's. And first of all, I just wanna say how sorry I am that you are going through that and that she is going through that. I can't imagine how difficult that is. So I appreciate you bringing that up. And let's talk about the financial aspects of it. Right now, the fact that you are supporting her, very laudable. It will probably become more expensive over time. And that is an important thing to factor into your planning. The way that that can show up in your spending and your expenses is to set an even bigger savings buffer because it is inevitable at some point you are going to get hit with large unexpected bills. That is why if I were in your situation, I would be redirecting more money towards savings. I would call it Medical Unexpected Expenses savings account, and I would be putting money there every single month. First priority, build up your savings account. Next up, debt. And finally, the engagement ring. It's important, but it's not the ring that is important. It is actually the symbol that it represents. And that symbol is not about how big the diamond is or how ornate it is. It's actually about can you communicate with your partner and be candid enough to accept responsibility and talk about your plan and ask your partner if they are willing to come on that journey with you. You're seeing what happens when people make big decisions without a system. They're guessing, they're reacting, they're just going with what feels right. But I want to show you how to make better money decisions so you can build serious wealth. And inside my money coaching program, you're going to learn the specifics of how to know your numbers, how to make decisions about buying a car, moving into an apartment or a house, having children, investing more, and even spending on the things you love. Right now, how many of you are winging it? Just trying to make decisions, reacting to whatever's in front of you. No, no more reacting to money decisions. I want to show you how to build your own financial system. To get that, you can join money coaching today. Scan the QR code on screen or click the link in the description below. Can I spend $40,000 for my 40th birthday party? Ooh, this is a juicy question. Here's what I know about this person. Felicrist is a 38-year-old business analyst, and they say, I'm a hardworking immigrant who grew up as an orphan in Africa. Over the last 5 years, I've saved and invested at the same time, helping my family. I'll be 40 and I wanted to throw a party abroad and invite family and friends. The max cost is $40K. Am I crazy to want that? And will it set me back big financially? Before we go on, I just want to say this is a very cool and provocative question. When I turned 40, I threw a big party. And I realized we don't get a lot of opportunities to have a big party. And now I've realized whenever I have an opportunity, I want to do something awesome. So I did something very similar. I invited a bunch of friends and family to Mexico. We stayed at this beautiful resort and I told them, all you need to do is show up and everything was taken care of. And that was a memory I will never, ever forget. And that is what money can be used for. Off the cuff, this person can afford it. But I want to dive into the numbers a little more closely to double-check my intuition. Assets: $60K, which is a car. Investments: $340,000. Savings: $40K. Debt is $30K, the car loan. Fixed costs are at 62%, $4,967. Housing is 17% of gross. Okay, that's good. Cars, $1,050. Groceries, $400. Clothes, $200. Family support, $300. Subscriptions, $400. And miscellaneous, $237. This person is investing $1,000 or 13%. They're also maxing out a 401 and HSA. Okay, that's impressive. Saving 12% or $950. Finally, guilt-free spending at 14% or $1,084. The thing that stands out to me most about this is it is a big audacious goal that is centered around this person's rich life. You can tell they grew up an orphan in Africa. They are sending back money every single month to support their family. It's very clear what is important to them. And when someone sets a goal of spending money like this meaningfully, I'm in to try to help you find a way to do it. I noticed that for his 40th birthday, he is not simply talking about buying a beautiful suit or golf clubs. That's obviously not important to him. What is important to him is throwing a party and bringing the people he loves together. And presumably some of the people he would invite would not be able to afford it. So I think it's incredibly inspirational that he would take his money as a high earner and be able to help other people be able to experience this celebration for him. If he were to do it today, I would probably caution against it. What I notice is that he's got 2 years until that time and he is putting money aside, $400 a month aside for it. That's all very good. Here's how I might think about it. I might take that $400 and keep doing it. So if we do that, it's like roughly $5,000 a year. That would be $10,000 he would have of the $40,000 by the time he turns 40. But you know, the obvious thing going on here is this bonus that is not included in his CSP. He just included it as a side note. Of that $50K, he could take some of it and fund it towards his party. Now, the only question that we have to ask is, will he have enough to retire? Because that is the determining factor. If he doesn't, then he can't take this extravagant trip. If he does, go ahead. So let's run a quick calculation here. Okay, here are the assumptions that I'm working with. He's got $340,000 already invested. He is contributing approximately $42,000 a year to his investments. That is $1,000 a month plus maxing out his 401 at roughly $26K plus his HSA. Again, roughly $42,000. He's got 27 years before he turns 65 and we will assume a 7% return rate. How much is he going to have? $5.4 million. That is quite good. And just to give you a sense of how much that will be worth, that's over $218,000 of safe withdrawal income for the rest of his life. This question is answered. Yes, you can afford to party. Have a great time. Send me some photos. I love it. I'm very confident from the way he talks, he's going to hit it. He's going to end up with more money than he even knows what to do with. And I think looking back, he will be so thankful that he took this special opportunity at age 40 to invite his loved ones out to celebrate with him. Great question. I can't wait to see the photos from your party. I wanna show you how to get more confident about these big money decisions. So if you wanna learn how to become more competent and confident, hit subscribe. Anne, a 23-year-old engineer living in Orange County, California, she says, I'm a recent graduate who landed my dream job. And I've been working for only a few months. I graduated with just over $130,000 in student loans. I make $115K a year with up to a 20% annual bonus. I hit my employer's 6% 401K match. I contribute to max out my Roth. I put away $400 a month for an emergency fund, and I pay $4,000 a month towards my private loan. This is possible thanks to my parents' generosity. And our agreement that I live essentially no cost with them in exchange for helping with cooking, errands, chores, younger siblings. The question is, am I stupid for considering moving out with my partner in a year? At my current rate, I could be debt-free in about 3 years. I considered moving out in fall/winter until I saw how spending $1,500 a month on rent, utilities, etc. would affect the timeline of my loan. She writes, I'm 6 figures in debt. Can I move out of my parents' house next year? Let's take a look at the numbers. Assets: zero. Investment totals: $3,000. How can that be right? She already told me she's investing all this stuff. We'll find out. Savings: $5,000. Debt is $130,000. Let's go deeper. Fixed costs: $4,815. Oh, it's 77%, which I was like, that's really high considering you pay no expenses, but that's because she's paying $4,000 a month towards her student loans. It artificially inflates the fixed cost. Investing at $610 or 10%, saving $675 or 11%, and finally guilt-free spending at $150 a month or 2%. What the fuck? Okay, that's not a lot of money, but I appreciate it. Probably also living at home. It's like, what am I really trying to do here? I go to work, I come home, I help with the dinner. It's a good way to save money. It reminds me of me being a teenager and living with my parents. You think I was spending a bunch of money? No, I was banking that. My savings rate was probably 93%. I worked at a pizza place. I worked as a soccer referee, and I had a tech job. I was taking that money and investing that shit aggressively. That money has turned into a lot of money now, 30 years later. So if you can do it, fantastic. Now, as to the question, Can she afford to move out? The thing that stands out to me is this person is in a very fortunate position that they can actually live at home, and to their credit, they are taking advantage of it. I think that's awesome. When you have a lot of debt and you have this rare opportunity to live at home, a lot of people reflexively go, ugh, I don't want to live at home. That's for losers. In many countries around the world, living at home with your parents after you've graduated is totally normal. I think this person not only has a lot of courage to do that, I think that's awesome. They probably have a good relationship with their parents, but also they are aggressively paying the debt off. This is so important. The principle here is if you are saving money on something, what are you doing with the savings? Too often people go, oh, I shouldn't buy coffee. Oh, I shouldn't do this. And I'm like, okay, what are you doing with the money? And they're just like, huh? You need to take your savings and do something with it, and she is single-mindedly paying off her student loans, $4,000 a month. That is incredible. Looking at this question, I notice one thing that stands out to me above all else. She writes, I could be debt-free in about 3 years. Now, that is incredible. To be out of over $100,000 of debt in 3 years is Absolutely amazing. I wanna give you a round of applause for that, but it's really aggressive. So what if you could have a lifestyle that you prefer by moving out and you might extend that payout to 4 years or 5 years or even 7 years? Would that be a trade-off you would be willing to make? There are financial aspects to this answer. You'd be paying more in interest, of course, but there's also just the non-financial aspect. If I fast forward until I'm 60 and I look back on my life, what would I be happier to have done? Would it be to have paid off my debt super aggressively in 3 years, or would I have preferred taking my foot slightly off the gas, paying off 6 figures of debt in 5 and a half years, and being able to build some independence and live on my own with a partner and be able to go out and travel and do these kinds of things that important to me? That is a question you will have to ask. To me, the answer is obvious. If you're going super aggressively on paying off debt, dialing back just a little, just a little, allows you to open up an entire new part of your rich life, one that you have told me you want anyway. So why would you not? At 23 years old, some people look at this question, they go, I would do anything to move out from living with my parents. On the other hand, there are a lot of people, particularly people from other countries, including people from India who find it totally normal to live with your parents at 23, 25, 28. My parents would have loved it if I lived with them until I got married. So there's a cultural aspect here as well that we should acknowledge. With that said, it's up to this person as to what they want to do. And the good news is they have options. When you watch these, it is easy to look at other people and judge them. But every single one of these decisions made sense to the person asking. Now, if you want to see the exact decisions that can move your finances forward, watch this video next.